WGU D196 UNIT TEST G QUESTIONS AND CORRECT
ANSWERS
One activity most businesses have in common is the acquisition of resources. Which
example is an external transaction where a business is acquiring a resource? - Answers
- Purchasing new equipment from a manufacturer
Which account is an example of an asset? - Answers - accounts receivable
Which statement describes the role of ethics in accounting? - Answers - Accountants
have a moral incentive to conduct themselves ethically.
Which statement below describes why you should study accounting? - Answers - At
some point in my career, I will need to use accounting information to make business
decisions.
How do revenues and expenses fit into the accounting equation? - Answers - Revenues
minus expenses equals net income, which is part of owners' equity.
What is the name of the account that shows the distribution of net income (earnings) to
the owners of a business? - Answers - dividends
A transaction involving the payment of dividends to the owners reduces which part of
the accounting equation? - Answers - Owners' equity
Which event is an example of an internal transaction? - Answers - A company hires a
new employee.
Your company purchases new equipment for cash. Which accounts are increased and
decreased as a result of this transaction? - Answers - Equipment increases and cash
decreases.
What is the one simple rule that always applies to the accounting equation? - Answers -
The accounting equation must always remain in balance after recording a transaction.
Which account is an example of a liability? - Answers - accounts payable
Which of the primary financial statements reports the amount of cash collected and paid
out by a company? - Answers - statement of cash flows
What is the name for the authoritative set of accounting standards in the United States?
- Answers - GAAP (Generally Accepted Accounting Principles)
, Which statement is a correct description of the IASB? - Answers - It establishes
international accounting standards.
Which action is part of the financial accounting cycle? - Answers - Summarizing
financial information in financial statements
What is owners' equity? - Answers - The remaining claim to the assets of a business
after liabilities have been deducted
Most businesses have a systematic method for analyzing transactions and collecting
and recording transaction-related information. This transformation process is which part
of accounting? - Answers - accounting cycle
Which event is an example of collecting, analyzing, and summarizing accounting
information? - Answers - Gathering checkbook information
Which accounting transaction should be recorded in the books and the records of a
company? - Answers - Purchasing new equipment for the company
Which event is a transaction? - Answers - Purchasing an item on the internet from an
online store
How is each amount calculated in a common-size income statement? - Answers - Each
amount is expressed as a percentage of sales for the year.
What is a liability? - Answers - An obligation to pay cash, transfer other assets, or
provide services to someone else
What is the definition of revenue? - Answers - The amount of assets created through
the sale of goods and services.
What type of activities are reported as operating activities? - Answers - Those activities
that are part of the day-to-day business of a company
Which statement below best characterizes the purpose of the balance sheet? - Answers
- A balance sheet is a report of the assets, liabilities, and equity of a company as of a
point in time.
Which statement below best characterizes the purpose of the statement of cash flows? -
Answers - A statement of cash flows portrays the operating, financing, and investing
cash flows of a company over a period of time.
When is vertical financial statement analysis most valuable? - Answers - When
comparing companies in similar industries
ANSWERS
One activity most businesses have in common is the acquisition of resources. Which
example is an external transaction where a business is acquiring a resource? - Answers
- Purchasing new equipment from a manufacturer
Which account is an example of an asset? - Answers - accounts receivable
Which statement describes the role of ethics in accounting? - Answers - Accountants
have a moral incentive to conduct themselves ethically.
Which statement below describes why you should study accounting? - Answers - At
some point in my career, I will need to use accounting information to make business
decisions.
How do revenues and expenses fit into the accounting equation? - Answers - Revenues
minus expenses equals net income, which is part of owners' equity.
What is the name of the account that shows the distribution of net income (earnings) to
the owners of a business? - Answers - dividends
A transaction involving the payment of dividends to the owners reduces which part of
the accounting equation? - Answers - Owners' equity
Which event is an example of an internal transaction? - Answers - A company hires a
new employee.
Your company purchases new equipment for cash. Which accounts are increased and
decreased as a result of this transaction? - Answers - Equipment increases and cash
decreases.
What is the one simple rule that always applies to the accounting equation? - Answers -
The accounting equation must always remain in balance after recording a transaction.
Which account is an example of a liability? - Answers - accounts payable
Which of the primary financial statements reports the amount of cash collected and paid
out by a company? - Answers - statement of cash flows
What is the name for the authoritative set of accounting standards in the United States?
- Answers - GAAP (Generally Accepted Accounting Principles)
, Which statement is a correct description of the IASB? - Answers - It establishes
international accounting standards.
Which action is part of the financial accounting cycle? - Answers - Summarizing
financial information in financial statements
What is owners' equity? - Answers - The remaining claim to the assets of a business
after liabilities have been deducted
Most businesses have a systematic method for analyzing transactions and collecting
and recording transaction-related information. This transformation process is which part
of accounting? - Answers - accounting cycle
Which event is an example of collecting, analyzing, and summarizing accounting
information? - Answers - Gathering checkbook information
Which accounting transaction should be recorded in the books and the records of a
company? - Answers - Purchasing new equipment for the company
Which event is a transaction? - Answers - Purchasing an item on the internet from an
online store
How is each amount calculated in a common-size income statement? - Answers - Each
amount is expressed as a percentage of sales for the year.
What is a liability? - Answers - An obligation to pay cash, transfer other assets, or
provide services to someone else
What is the definition of revenue? - Answers - The amount of assets created through
the sale of goods and services.
What type of activities are reported as operating activities? - Answers - Those activities
that are part of the day-to-day business of a company
Which statement below best characterizes the purpose of the balance sheet? - Answers
- A balance sheet is a report of the assets, liabilities, and equity of a company as of a
point in time.
Which statement below best characterizes the purpose of the statement of cash flows? -
Answers - A statement of cash flows portrays the operating, financing, and investing
cash flows of a company over a period of time.
When is vertical financial statement analysis most valuable? - Answers - When
comparing companies in similar industries
