WGU C213 – Accounting for Decision Makers Objective Assessment
(OA) 2026/2027 exam with correct answers and rationales
1. A company's total assets equal $850,000 and its total liabilities equal $510,000. What is
the company's owners' equity?
A. $340,000
B. $360,000
C. $1,360,000
D. $510,000
Correct Answer: A. $340,000
Rationale: The accounting equation is Assets = Liabilities + Equity. Therefore, Equity = Assets −
Liabilities = $850,000 − $510,000 = $340,000.
2. A business purchases office equipment for cash. What is the immediate effect on the
accounting equation?
A. Assets increase and liabilities increase.
B. One asset increases while another asset decreases.
C. Assets increase and equity decreases.
D. Liabilities decrease and equity increases.
Correct Answer: B. One asset increases while another asset decreases.
Rationale: Office equipment (asset) increases while cash (asset) decreases by the same amount.
Total assets remain unchanged.
3. A company records revenue before receiving payment from the customer. Which
accounting principle supports this treatment?
A. Cash Basis Accounting
B. Matching Principle
,C. Accrual Accounting
D. Conservatism Principle
Correct Answer: C. Accrual Accounting
Rationale: Under accrual accounting, revenue is recognized when it is earned, regardless of when
cash is received.
4. Which financial statement reports a company's financial position on a specific date?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Correct Answer: C. Balance Sheet
Rationale: The balance sheet presents assets, liabilities, and owners' equity at a single point in
time.
5. A company reports sales revenue of $900,000 and cost of goods sold of $540,000. What
is the gross profit?
A. $360,000
B. $440,000
C. $540,000
D. $900,000
Correct Answer: A. $360,000
Rationale: Gross Profit = Sales Revenue − Cost of Goods Sold = $900,000 − $540,000 =
$360,000.
, 6. Which cost changes in direct proportion to production volume?
A. Fixed Cost
B. Variable Cost
C. Sunk Cost
D. Opportunity Cost
Correct Answer: B. Variable Cost
Rationale: Variable costs increase or decrease as production activity changes.
7. A company has fixed costs of $80,000, a selling price of $50 per unit, and a variable cost
of $30 per unit. How many units must be sold to break even?
A. 2,000 units
B. 3,000 units
C. 4,000 units
D. 5,000 units
Correct Answer: C. 4,000 units
Rationale: Contribution Margin = $50 − $30 = $20. Break-even units = Fixed Costs ÷
Contribution Margin = $80,000 ÷ $20 = 4,000 units.
8. Which ratio best measures a company's ability to pay its short-term obligations?
A. Debt-to-Equity Ratio
B. Return on Assets
C. Current Ratio
D. Gross Profit Margin
Correct Answer: C. Current Ratio
(OA) 2026/2027 exam with correct answers and rationales
1. A company's total assets equal $850,000 and its total liabilities equal $510,000. What is
the company's owners' equity?
A. $340,000
B. $360,000
C. $1,360,000
D. $510,000
Correct Answer: A. $340,000
Rationale: The accounting equation is Assets = Liabilities + Equity. Therefore, Equity = Assets −
Liabilities = $850,000 − $510,000 = $340,000.
2. A business purchases office equipment for cash. What is the immediate effect on the
accounting equation?
A. Assets increase and liabilities increase.
B. One asset increases while another asset decreases.
C. Assets increase and equity decreases.
D. Liabilities decrease and equity increases.
Correct Answer: B. One asset increases while another asset decreases.
Rationale: Office equipment (asset) increases while cash (asset) decreases by the same amount.
Total assets remain unchanged.
3. A company records revenue before receiving payment from the customer. Which
accounting principle supports this treatment?
A. Cash Basis Accounting
B. Matching Principle
,C. Accrual Accounting
D. Conservatism Principle
Correct Answer: C. Accrual Accounting
Rationale: Under accrual accounting, revenue is recognized when it is earned, regardless of when
cash is received.
4. Which financial statement reports a company's financial position on a specific date?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Correct Answer: C. Balance Sheet
Rationale: The balance sheet presents assets, liabilities, and owners' equity at a single point in
time.
5. A company reports sales revenue of $900,000 and cost of goods sold of $540,000. What
is the gross profit?
A. $360,000
B. $440,000
C. $540,000
D. $900,000
Correct Answer: A. $360,000
Rationale: Gross Profit = Sales Revenue − Cost of Goods Sold = $900,000 − $540,000 =
$360,000.
, 6. Which cost changes in direct proportion to production volume?
A. Fixed Cost
B. Variable Cost
C. Sunk Cost
D. Opportunity Cost
Correct Answer: B. Variable Cost
Rationale: Variable costs increase or decrease as production activity changes.
7. A company has fixed costs of $80,000, a selling price of $50 per unit, and a variable cost
of $30 per unit. How many units must be sold to break even?
A. 2,000 units
B. 3,000 units
C. 4,000 units
D. 5,000 units
Correct Answer: C. 4,000 units
Rationale: Contribution Margin = $50 − $30 = $20. Break-even units = Fixed Costs ÷
Contribution Margin = $80,000 ÷ $20 = 4,000 units.
8. Which ratio best measures a company's ability to pay its short-term obligations?
A. Debt-to-Equity Ratio
B. Return on Assets
C. Current Ratio
D. Gross Profit Margin
Correct Answer: C. Current Ratio
