WGU C213 ACCOUNTING FOR
DECISION MAKERS COMPREHENSIVE
EXAM QUESTIONS AND ANSWERS
1. If a company’s total assets increase by $50,000 and its total liabilities decrease by $10,000,
what is the change in stockholders’ equity?
A. Increase of $60,000
B. Increase of $40,000
C. Decrease of $40,000
D. Decrease of $60,000
Answer: A
Conceptual Explanation: Using the accounting equation Assets = Liabilities + Equity, a
$50,000 increase in assets equals a -$10,000 change in liabilities plus X. Solving for X gives
an increase of $60,000.
2. In an inflationary environment, which inventory costing method typically 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 (cheaper) costs to COGS, resulting in a
lower expense and higher net income when prices are rising.
3. Which of the following would be classified as an operating activity on the Statement of
Cash Flows?
A. Cash received from customers for services rendered
B. Sale of equipment for cash
C. Payment of dividends to shareholders
D. Issuance of common stock
Answer: A
Conceptual Explanation: Operating activities relate to the primary revenue-generating
activities of the business, such as receiving cash from customers.
4. Under accrual accounting, when is revenue generally recognized?
A. When cash is received from the customer
B. When the performance obligation is satisfied
, C. When the contract is signed
D. At the end of the fiscal year
Answer: B
Conceptual Explanation: The revenue recognition principle states that revenue is
recognized when it is earned, regardless of when cash is received.
5. 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. Statement of Cash Flows
D. Balance Sheet
Answer: D
Conceptual Explanation: The Balance Sheet is a ‘snapshot’ of a company’s assets,
liabilities, and equity at a specific date.
6. A company purchases a machine for $100,000 with a salvage value of $10,000 and a useful
life of 5 years. Using the double-declining balance method, what is the depreciation expense
for Year 1?
A. $40,000
B. $20,000
DECISION MAKERS COMPREHENSIVE
EXAM QUESTIONS AND ANSWERS
1. If a company’s total assets increase by $50,000 and its total liabilities decrease by $10,000,
what is the change in stockholders’ equity?
A. Increase of $60,000
B. Increase of $40,000
C. Decrease of $40,000
D. Decrease of $60,000
Answer: A
Conceptual Explanation: Using the accounting equation Assets = Liabilities + Equity, a
$50,000 increase in assets equals a -$10,000 change in liabilities plus X. Solving for X gives
an increase of $60,000.
2. In an inflationary environment, which inventory costing method typically 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 (cheaper) costs to COGS, resulting in a
lower expense and higher net income when prices are rising.
3. Which of the following would be classified as an operating activity on the Statement of
Cash Flows?
A. Cash received from customers for services rendered
B. Sale of equipment for cash
C. Payment of dividends to shareholders
D. Issuance of common stock
Answer: A
Conceptual Explanation: Operating activities relate to the primary revenue-generating
activities of the business, such as receiving cash from customers.
4. Under accrual accounting, when is revenue generally recognized?
A. When cash is received from the customer
B. When the performance obligation is satisfied
, C. When the contract is signed
D. At the end of the fiscal year
Answer: B
Conceptual Explanation: The revenue recognition principle states that revenue is
recognized when it is earned, regardless of when cash is received.
5. 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. Statement of Cash Flows
D. Balance Sheet
Answer: D
Conceptual Explanation: The Balance Sheet is a ‘snapshot’ of a company’s assets,
liabilities, and equity at a specific date.
6. A company purchases a machine for $100,000 with a salvage value of $10,000 and a useful
life of 5 years. Using the double-declining balance method, what is the depreciation expense
for Year 1?
A. $40,000
B. $20,000
