C213 Accounting for Decision Makers
WGU Exam Questions and Answers
Balance Sheet - ANSWER-financial position of company at a moment in time
Income Statement - ANSWER-Financial performance of the company over a period of
time
Statement of cash flows - ANSWER-cash receipts and disbursements of company over
a period of time
Lender - ANSWER-Predict ability to repay loans
Investors - ANSWER-Predict future earnings and dividends
Suppliers & Customers - ANSWER-ability to pay for goods and honor contracts
Company management - ANSWER-analyze company's strengths and weaknesses
single step income statement - ANSWER-all revenues are grouped together, all
expenses are grouped together, and net income is computed as the difference between
total revenues and total expenses. Note that income tax expense is shown separately,
to emphasize the fact that the amount of income tax expense depends on the amount of
income before taxes.
multi step income statement - ANSWER-includes multiple sub-totals (gross profit,
operating income, income from continuing operations, net income)
sales revenue - ANSWER-cash and credit sales to customers
cost of goods sold (cogs) - ANSWER-cost of goods sold to customers (expense)
COGS equation - ANSWER-beginning inventory + purchases - ending inventory
gross profit - ANSWER-difference between the selling price of the product and the cost
operating expense - ANSWER-expenses not associated with purchasing or production
of product
, operating income - ANSWER-performance of the fundamental business operations
conducted by a business
interest expense - ANSWER-interest incurred during the year based on amounts
borrowed or financed (PP&E Purchases)
income tax expense - ANSWER-federal, state, and local taxes incurred during the year
income from continuing operations - ANSWER-income from the segments of a
company's business that it considers to be normal and expects to operate in for the
foreseeable future.
net income - ANSWER-company attempt to summarize in one number the overall
economic performance of the company
Net Income Equation - ANSWER-Net Income = Revenues - Expenses
gains - ANSWER-Increases in equity from peripheral or incidental transactions of an
entity
comprehensive income - ANSWER-number used to reflect an overall measure of the
change in a company's wealth during the period
When is revenue recognized? - ANSWER-Goods delivered to a customer or services
are provided.
Statement of Cash Flows - ANSWER-A financial statement that provides financial
information about the cash receipts and cash payments of a business for a specific
period of time.
indirect method - ANSWER-A method of preparing a statement of cash flows in which
net income is adjusted for items that do not affect cash, to determine net cash provided
by operating activities.
Direct Method - ANSWER-adjusts the items on the income statement to directly show
the cash inflows and outflows from operations, such as cash received from customers
and cash paid for inventory, salaries, rent, interest, and taxes
Statement of Cash Flows terms - ANSWER-operating, investing, financing
Words used for receipt - ANSWER-collected, sold, issued, received, borrowed
Words used for payments - ANSWER-bought, purchased, paid, lend, disbursed, repay.
Cash Budgeting - ANSWER-Firms need to have cash available when bills are due and
plan to cover any shortages
WGU Exam Questions and Answers
Balance Sheet - ANSWER-financial position of company at a moment in time
Income Statement - ANSWER-Financial performance of the company over a period of
time
Statement of cash flows - ANSWER-cash receipts and disbursements of company over
a period of time
Lender - ANSWER-Predict ability to repay loans
Investors - ANSWER-Predict future earnings and dividends
Suppliers & Customers - ANSWER-ability to pay for goods and honor contracts
Company management - ANSWER-analyze company's strengths and weaknesses
single step income statement - ANSWER-all revenues are grouped together, all
expenses are grouped together, and net income is computed as the difference between
total revenues and total expenses. Note that income tax expense is shown separately,
to emphasize the fact that the amount of income tax expense depends on the amount of
income before taxes.
multi step income statement - ANSWER-includes multiple sub-totals (gross profit,
operating income, income from continuing operations, net income)
sales revenue - ANSWER-cash and credit sales to customers
cost of goods sold (cogs) - ANSWER-cost of goods sold to customers (expense)
COGS equation - ANSWER-beginning inventory + purchases - ending inventory
gross profit - ANSWER-difference between the selling price of the product and the cost
operating expense - ANSWER-expenses not associated with purchasing or production
of product
, operating income - ANSWER-performance of the fundamental business operations
conducted by a business
interest expense - ANSWER-interest incurred during the year based on amounts
borrowed or financed (PP&E Purchases)
income tax expense - ANSWER-federal, state, and local taxes incurred during the year
income from continuing operations - ANSWER-income from the segments of a
company's business that it considers to be normal and expects to operate in for the
foreseeable future.
net income - ANSWER-company attempt to summarize in one number the overall
economic performance of the company
Net Income Equation - ANSWER-Net Income = Revenues - Expenses
gains - ANSWER-Increases in equity from peripheral or incidental transactions of an
entity
comprehensive income - ANSWER-number used to reflect an overall measure of the
change in a company's wealth during the period
When is revenue recognized? - ANSWER-Goods delivered to a customer or services
are provided.
Statement of Cash Flows - ANSWER-A financial statement that provides financial
information about the cash receipts and cash payments of a business for a specific
period of time.
indirect method - ANSWER-A method of preparing a statement of cash flows in which
net income is adjusted for items that do not affect cash, to determine net cash provided
by operating activities.
Direct Method - ANSWER-adjusts the items on the income statement to directly show
the cash inflows and outflows from operations, such as cash received from customers
and cash paid for inventory, salaries, rent, interest, and taxes
Statement of Cash Flows terms - ANSWER-operating, investing, financing
Words used for receipt - ANSWER-collected, sold, issued, received, borrowed
Words used for payments - ANSWER-bought, purchased, paid, lend, disbursed, repay.
Cash Budgeting - ANSWER-Firms need to have cash available when bills are due and
plan to cover any shortages
