WGU C213 ACCOUNTING FOR
DECISION MAKERS COMPREHENSIVE
EXAM
1. Under the accrual basis of accounting, when is revenue generally recognized?
A. When cash is received from the customer
B. When the invoice is sent to the customer
C. At the end of the fiscal year
D. When the performance obligation is satisfied
Answer: D
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned
(performance obligation satisfied), regardless of when cash is exchanged.
2. Which of the following would be classified as a financing activity on the Statement of Cash
Flows?
A. Payment of interest on a loan
B. Purchase of equipment for cash
C. Payment of dividends to stockholders
,D. Collection of accounts receivable
Answer: C
Conceptual Explanation: Financing activities involve transactions with owners and
creditors, such as issuing stock, borrowing money, and paying dividends.
3. In a period of rising prices, which inventory valuation method results in the highest Net
Income?
A. FIFO (First-In, First-Out)
B. LIFO (Last-In, First-Out)
C. Weighted Average Cost
D. Specific Identification
Answer: A
Conceptual Explanation: FIFO assigns the oldest, lower costs to COGS during inflation,
resulting in a higher net income compared to LIFO.
4. Which financial statement reports the financial position of a company at a specific point in
time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
, Answer: C
Conceptual Explanation: The Balance Sheet provides a snapshot of assets, liabilities, and
equity at a specific date, unlike other statements that cover a period of time.
5. What is the impact on the accounting equation when a company purchases supplies on
account?
A. Assets increase and Equity increases
B. Assets increase and Liabilities increase
C. Assets decrease and Liabilities increase
D. Liabilities increase and Equity decreases
Answer: B
Conceptual Explanation: Supplies (Asset) increase and Accounts Payable (Liability)
increase, keeping the equation in balance.
6. Which of the following is considered a product cost in a manufacturing environment?
A. Sales commissions
B. Depreciation on delivery trucks
C. Indirect labor in the factory
D. Advertising expenses
Answer: C
DECISION MAKERS COMPREHENSIVE
EXAM
1. Under the accrual basis of accounting, when is revenue generally recognized?
A. When cash is received from the customer
B. When the invoice is sent to the customer
C. At the end of the fiscal year
D. When the performance obligation is satisfied
Answer: D
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned
(performance obligation satisfied), regardless of when cash is exchanged.
2. Which of the following would be classified as a financing activity on the Statement of Cash
Flows?
A. Payment of interest on a loan
B. Purchase of equipment for cash
C. Payment of dividends to stockholders
,D. Collection of accounts receivable
Answer: C
Conceptual Explanation: Financing activities involve transactions with owners and
creditors, such as issuing stock, borrowing money, and paying dividends.
3. In a period of rising prices, which inventory valuation method results in the highest Net
Income?
A. FIFO (First-In, First-Out)
B. LIFO (Last-In, First-Out)
C. Weighted Average Cost
D. Specific Identification
Answer: A
Conceptual Explanation: FIFO assigns the oldest, lower costs to COGS during inflation,
resulting in a higher net income compared to LIFO.
4. Which financial statement reports the financial position of a company at a specific point in
time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
, Answer: C
Conceptual Explanation: The Balance Sheet provides a snapshot of assets, liabilities, and
equity at a specific date, unlike other statements that cover a period of time.
5. What is the impact on the accounting equation when a company purchases supplies on
account?
A. Assets increase and Equity increases
B. Assets increase and Liabilities increase
C. Assets decrease and Liabilities increase
D. Liabilities increase and Equity decreases
Answer: B
Conceptual Explanation: Supplies (Asset) increase and Accounts Payable (Liability)
increase, keeping the equation in balance.
6. Which of the following is considered a product cost in a manufacturing environment?
A. Sales commissions
B. Depreciation on delivery trucks
C. Indirect labor in the factory
D. Advertising expenses
Answer: C
