WGU C213 ACCOUNTING FOR
DECISION MAKERS FINAL EXAM
QUESTIONS AND ANSWERS
1. Which financial statement provides information about a company’s financial position at a
specific point in time?
A. Income Statement
B. Statement of Cash Flows
C. Statement of Retained Earnings
D. Balance Sheet
Answer: D
Conceptual Explanation: The Balance Sheet lists assets, liabilities, and equity at a specific
point in time, unlike other statements that cover a period.
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When cash is received
B. When the performance obligation is satisfied
C. At the end of the fiscal year
,D. When the invoice is sent
Answer: B
Conceptual Explanation: Accrual accounting recognizes revenue when earned
(performance obligation satisfied), regardless of when cash is received.
3. Which inventory method results in the highest net income during a period of rising prices?
A. LIFO
B. FIFO
C. Weighted Average Cost
D. Specific Identification
Answer: B
Conceptual Explanation: FIFO assigns the oldest (cheaper) costs to COGS, resulting in
higher net income during inflation.
4. What is the impact on the accounting equation when a company purchases equipment
using a bank loan?
A. Assets increase and Liabilities increase
B. Assets decrease and Liabilities increase
C. Assets increase and Liabilities decrease
D. Assets increase and Equity increases
, Answer: A
Conceptual Explanation: Equipment is an asset (increase) and a bank loan is a liability
(increase).
5. A company has a Current Ratio of 0.8. What does this indicate?
A. The company is highly profitable
B. The company has more current assets than current liabilities
C. The company is using too much equity financing
D. The company may have difficulty meeting short-term obligations
Answer: D
Conceptual Explanation: A current ratio below 1.0 indicates that current liabilities exceed
current assets, signaling potential liquidity issues.
6. Which of the following is considered a product cost rather than a period cost?
A. Marketing expenses
B. CEO’s salary
C. Factory insurance
D. Office depreciation
Answer: C
DECISION MAKERS FINAL EXAM
QUESTIONS AND ANSWERS
1. Which financial statement provides information about a company’s financial position at a
specific point in time?
A. Income Statement
B. Statement of Cash Flows
C. Statement of Retained Earnings
D. Balance Sheet
Answer: D
Conceptual Explanation: The Balance Sheet lists assets, liabilities, and equity at a specific
point in time, unlike other statements that cover a period.
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When cash is received
B. When the performance obligation is satisfied
C. At the end of the fiscal year
,D. When the invoice is sent
Answer: B
Conceptual Explanation: Accrual accounting recognizes revenue when earned
(performance obligation satisfied), regardless of when cash is received.
3. Which inventory method results in the highest net income during a period of rising prices?
A. LIFO
B. FIFO
C. Weighted Average Cost
D. Specific Identification
Answer: B
Conceptual Explanation: FIFO assigns the oldest (cheaper) costs to COGS, resulting in
higher net income during inflation.
4. What is the impact on the accounting equation when a company purchases equipment
using a bank loan?
A. Assets increase and Liabilities increase
B. Assets decrease and Liabilities increase
C. Assets increase and Liabilities decrease
D. Assets increase and Equity increases
, Answer: A
Conceptual Explanation: Equipment is an asset (increase) and a bank loan is a liability
(increase).
5. A company has a Current Ratio of 0.8. What does this indicate?
A. The company is highly profitable
B. The company has more current assets than current liabilities
C. The company is using too much equity financing
D. The company may have difficulty meeting short-term obligations
Answer: D
Conceptual Explanation: A current ratio below 1.0 indicates that current liabilities exceed
current assets, signaling potential liquidity issues.
6. Which of the following is considered a product cost rather than a period cost?
A. Marketing expenses
B. CEO’s salary
C. Factory insurance
D. Office depreciation
Answer: C
