WGU C213 Final Exam Accounting for Decision Makers
NEWEST VERSION 2026 Actual Exam Questions and
Verified Answers | 100% Correct. Western Governors
University
Describe how basic cost behavior patterns change as sales volumes change. - ANSWER-Fixed costs are
fixed in total, but as sales volume increases, the per unit fixed costs decreases. Variable costs are fixed
per unit, but as sales volume increases, total variable costs increase.
Variable Costs - ANSWER-A cost that changes directly with changes in the level of sales or
production.
Fixed Costs - ANSWER-A cost that doesn't change based on changes in the level of sales or
production.
Product Costs - ANSWER-A cost incurred as part of the production process.
Period Costs - ANSWER-A cost incurred outside the factory or production facility.
These costs are reported as an expense in the period in which they are incurred.
Direct Materials - ANSWER-The cost of the primary raw materials used in production.
Indirect Materials - ANSWER-Materials that are necessary to a manufacturing or service business but
are not directly included in or are not a significant part of the actual product.
Direct Labor - ANSWER-The cost of the wages of the workers who are assembling the direct materials
into the finished product.
Indirect Labor - ANSWER-Labor that is necessary to a manufacturing or service business but is not
directly related to the actual production of the product.
Manufacturing Overhead - ANSWER-All factory costs that are not direct materials or direct labor.
Direct Costs - ANSWER-The costs that are created by a particular product or segment that is being
analyzed.
Indirect Costs - ANSWER-The costs that are assigned to a particular product or segment but that are
not actually caused by that product or segment.
,Differential Costs - ANSWER-A future cost that can be changed by a decision made now.
Sunk Costs - ANSWER-A past cost that cannot be changed by any decision made now. An example
would be last month's paid rent.
Out-of-Pocket Costs: - ANSWER-Costs that involve the outlay of cash or the use of some other asset,
like equipment.
Opportunity Costs - ANSWER-The benefits not received because of actions not taken.
Describe the three financial statements. - ANSWER-The balance sheet reports a company's assets,
liabilities, and owners' equity. The income statement reports the amount of net income earned by a
company during a period. The statement of cash flows reports the amount of cash collected and paid
out by a company.
Company Management - ANSWER-Managers use financial accounting data to formulate company
goals, to compute bonuses for employees, and to illuminate company weaknesses.
Suppliers and Customers - ANSWER-Suppliers, customers, and employees use financial statements to
tell them about the long-run prospects of a company.
Competitors - ANSWER-Competitors use financial accounting information to reveal strategic
opportunities within their industry.
Government Agencies - ANSWER-Government agencies use financial statement data to bolster
political and regulatory positions for and against companies.
Politicians - ANSWER-Politicians use financial statement data to bolster political and regulatory
positions for and against companies.
Public Company Accounting Oversight Board aka PCAOB - ANSWER-The PCAOB determines who
can audit public companies regardless of whether the audit firm is accredited by a state Board of
Accountancy.
Materiality - ANSWER-The question of whether an item is large enough to make any difference to
anyone.
Describe the purpose of net income on an income statement. - ANSWER-The accountant's attempt to
summarize in one number the overall economic performance of a company for a given period.
Describe the purpose of the statement of cash flows. - ANSWER-The statement of cash flows explains
how a company's cash was generated during the period and how that cash was used.
Accounting is what? - ANSWER-Accounting is the recording of the day-to-day financial activities of a
company and the organization of that information into summary reports used to evaluate the company's
financial status.
Financial accounting utilizes what? - ANSWER-Financial accounting utilizes three primary financial
statements: the balance sheet, the income statement, and the statement of cash flows.
, Users of Financial Statements - ANSWER-Users of financial statements, such as investors, creditors,
and management, rely on information to make informed decisions about the entity's financial health.
The practice of accounting involves what? - ANSWER-Adherence to the established accounting rules
as well as the use of judgment. U.S. accounting rules are established by the FASB.
In addition to the FASB, what other important accounting-related organizations exist? - ANSWER-The
SEC, the AICPA, the PCAOB, the IRS, and the IASB.
What 3 factors has made right now a time of significant change in accounting? - ANSWER-The rapid
advance in information technology, the international integration of worldwide business, and the
increased scrutiny associated with the large corporate accounting scandals.
What does increased financial information about a company make easier to attract? -
ANSWERInvestors, lenders, and other parties interested in the company's financial status.
What does the balance sheet report? - ANSWER-The balance sheet reports a company's financial
position at a specified point in time and lists the company's resources aka assets, obligations aka
liabilities, and net ownership interest aka owners' equity.
The income statement describes what? - ANSWER-The income statement describes a company's
financial performance for a period of time. A company's expenses are subtracted from its revenues in
computing net income.
The statement of cash flows details what? - ANSWER-The statement of cash flows details how a
company obtained and spent cash during a certain period of time. All of a company's cash transactions
are categorized as either operating, investing, or financing activities.
The notes to financial statements provide what? - ANSWER-The notes to financial statements provide
information on the accounting assumptions used in preparing the statements and also provide
supplemental information not included in the statements themselves. Notes are an integral part of
financial statements.
An audit performed by accountants from outside a company increases what? - ANSWER-An audit
performed by accountants from outside a company increases the reliance that users can place on the
information in the company's financial statements.
A key trade-off in the preparation of useful accounting information is between what? - ANSWER-A
key trade-off in the preparation of useful accounting information is between relevance and reliability.
Other concepts underlying the practice of accounting are comparability, conservatism, materiality, and
articulation.
Generally Accepted Accounting Principles aka GAAP, ensure what? - ANSWER-Generally Accepted
Accounting Principles aka GAAP, ensure consistency and transparency in financial reporting, with
origins dating back to the early 1900s.
NEWEST VERSION 2026 Actual Exam Questions and
Verified Answers | 100% Correct. Western Governors
University
Describe how basic cost behavior patterns change as sales volumes change. - ANSWER-Fixed costs are
fixed in total, but as sales volume increases, the per unit fixed costs decreases. Variable costs are fixed
per unit, but as sales volume increases, total variable costs increase.
Variable Costs - ANSWER-A cost that changes directly with changes in the level of sales or
production.
Fixed Costs - ANSWER-A cost that doesn't change based on changes in the level of sales or
production.
Product Costs - ANSWER-A cost incurred as part of the production process.
Period Costs - ANSWER-A cost incurred outside the factory or production facility.
These costs are reported as an expense in the period in which they are incurred.
Direct Materials - ANSWER-The cost of the primary raw materials used in production.
Indirect Materials - ANSWER-Materials that are necessary to a manufacturing or service business but
are not directly included in or are not a significant part of the actual product.
Direct Labor - ANSWER-The cost of the wages of the workers who are assembling the direct materials
into the finished product.
Indirect Labor - ANSWER-Labor that is necessary to a manufacturing or service business but is not
directly related to the actual production of the product.
Manufacturing Overhead - ANSWER-All factory costs that are not direct materials or direct labor.
Direct Costs - ANSWER-The costs that are created by a particular product or segment that is being
analyzed.
Indirect Costs - ANSWER-The costs that are assigned to a particular product or segment but that are
not actually caused by that product or segment.
,Differential Costs - ANSWER-A future cost that can be changed by a decision made now.
Sunk Costs - ANSWER-A past cost that cannot be changed by any decision made now. An example
would be last month's paid rent.
Out-of-Pocket Costs: - ANSWER-Costs that involve the outlay of cash or the use of some other asset,
like equipment.
Opportunity Costs - ANSWER-The benefits not received because of actions not taken.
Describe the three financial statements. - ANSWER-The balance sheet reports a company's assets,
liabilities, and owners' equity. The income statement reports the amount of net income earned by a
company during a period. The statement of cash flows reports the amount of cash collected and paid
out by a company.
Company Management - ANSWER-Managers use financial accounting data to formulate company
goals, to compute bonuses for employees, and to illuminate company weaknesses.
Suppliers and Customers - ANSWER-Suppliers, customers, and employees use financial statements to
tell them about the long-run prospects of a company.
Competitors - ANSWER-Competitors use financial accounting information to reveal strategic
opportunities within their industry.
Government Agencies - ANSWER-Government agencies use financial statement data to bolster
political and regulatory positions for and against companies.
Politicians - ANSWER-Politicians use financial statement data to bolster political and regulatory
positions for and against companies.
Public Company Accounting Oversight Board aka PCAOB - ANSWER-The PCAOB determines who
can audit public companies regardless of whether the audit firm is accredited by a state Board of
Accountancy.
Materiality - ANSWER-The question of whether an item is large enough to make any difference to
anyone.
Describe the purpose of net income on an income statement. - ANSWER-The accountant's attempt to
summarize in one number the overall economic performance of a company for a given period.
Describe the purpose of the statement of cash flows. - ANSWER-The statement of cash flows explains
how a company's cash was generated during the period and how that cash was used.
Accounting is what? - ANSWER-Accounting is the recording of the day-to-day financial activities of a
company and the organization of that information into summary reports used to evaluate the company's
financial status.
Financial accounting utilizes what? - ANSWER-Financial accounting utilizes three primary financial
statements: the balance sheet, the income statement, and the statement of cash flows.
, Users of Financial Statements - ANSWER-Users of financial statements, such as investors, creditors,
and management, rely on information to make informed decisions about the entity's financial health.
The practice of accounting involves what? - ANSWER-Adherence to the established accounting rules
as well as the use of judgment. U.S. accounting rules are established by the FASB.
In addition to the FASB, what other important accounting-related organizations exist? - ANSWER-The
SEC, the AICPA, the PCAOB, the IRS, and the IASB.
What 3 factors has made right now a time of significant change in accounting? - ANSWER-The rapid
advance in information technology, the international integration of worldwide business, and the
increased scrutiny associated with the large corporate accounting scandals.
What does increased financial information about a company make easier to attract? -
ANSWERInvestors, lenders, and other parties interested in the company's financial status.
What does the balance sheet report? - ANSWER-The balance sheet reports a company's financial
position at a specified point in time and lists the company's resources aka assets, obligations aka
liabilities, and net ownership interest aka owners' equity.
The income statement describes what? - ANSWER-The income statement describes a company's
financial performance for a period of time. A company's expenses are subtracted from its revenues in
computing net income.
The statement of cash flows details what? - ANSWER-The statement of cash flows details how a
company obtained and spent cash during a certain period of time. All of a company's cash transactions
are categorized as either operating, investing, or financing activities.
The notes to financial statements provide what? - ANSWER-The notes to financial statements provide
information on the accounting assumptions used in preparing the statements and also provide
supplemental information not included in the statements themselves. Notes are an integral part of
financial statements.
An audit performed by accountants from outside a company increases what? - ANSWER-An audit
performed by accountants from outside a company increases the reliance that users can place on the
information in the company's financial statements.
A key trade-off in the preparation of useful accounting information is between what? - ANSWER-A
key trade-off in the preparation of useful accounting information is between relevance and reliability.
Other concepts underlying the practice of accounting are comparability, conservatism, materiality, and
articulation.
Generally Accepted Accounting Principles aka GAAP, ensure what? - ANSWER-Generally Accepted
Accounting Principles aka GAAP, ensure consistency and transparency in financial reporting, with
origins dating back to the early 1900s.
