WGU C213 ACCOUNTING FOR
DECISION MAKERS - ADVANCED EXAM
PRACTICE
1. Which organization is primarily responsible for establishing Generally Accepted Accounting
Principles (GAAP) in the United States?
A. Financial Accounting Standards Board (FASB)
B. International Accounting Standards Board (IASB)
C. Securities and Exchange Commission (SEC)
D. American Institute of Certified Public Accountants (AICPA)
Answer: A
Conceptual Explanation: The FASB is the private, non-profit body delegated the
responsibility by the SEC to establish and improve GAAP in the United States.
2. Under the accrual basis of accounting, when is revenue recognized?
A. When cash is received from the customer
B. At the end of the fiscal year
C. When the performance obligation is satisfied
,D. When the invoice is sent to the customer
Answer: C
Conceptual Explanation: The revenue recognition principle states that revenue should be
recognized in the period in which the performance obligation is satisfied, regardless of
when cash is received.
3. Which financial statement provides a snapshot of a company’s financial position at a
specific point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Answer: C
Conceptual Explanation: The Balance Sheet reports assets, liabilities, and stockholders’
equity as of a specific date, whereas the other statements report activity over a period of
time.
4. A company purchased equipment for $50,000 with a residual value of $5,000 and an
estimated useful life of 5 years. Using the straight-line method, what is the annual
depreciation expense?
A. $10,000
, B. $9,000
C. $11,000
D. $5,000
Answer: B
Conceptual Explanation: Straight-line depreciation = (Cost - Residual Value) / Useful Life.
($50,000 - $5,000) / 5 = $9,000 per year.
5. Which of the following accounts is increased by a debit entry?
A. Accounts Payable
B. Service Revenue
C. Common Stock
D. Dividends
Answer: D
Conceptual Explanation: Dividends, Assets, and Expenses are increased by debits (DEA),
while Liabilities, Equity, and Revenue are increased by credits (LER).
6. What is the primary purpose of the closing process in the accounting cycle?
A. To verify that the trial balance is in balance
B. To transfer temporary account balances to Retained Earnings
C. To record adjusting entries for the period
DECISION MAKERS - ADVANCED EXAM
PRACTICE
1. Which organization is primarily responsible for establishing Generally Accepted Accounting
Principles (GAAP) in the United States?
A. Financial Accounting Standards Board (FASB)
B. International Accounting Standards Board (IASB)
C. Securities and Exchange Commission (SEC)
D. American Institute of Certified Public Accountants (AICPA)
Answer: A
Conceptual Explanation: The FASB is the private, non-profit body delegated the
responsibility by the SEC to establish and improve GAAP in the United States.
2. Under the accrual basis of accounting, when is revenue recognized?
A. When cash is received from the customer
B. At the end of the fiscal year
C. When the performance obligation is satisfied
,D. When the invoice is sent to the customer
Answer: C
Conceptual Explanation: The revenue recognition principle states that revenue should be
recognized in the period in which the performance obligation is satisfied, regardless of
when cash is received.
3. Which financial statement provides a snapshot of a company’s financial position at a
specific point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Answer: C
Conceptual Explanation: The Balance Sheet reports assets, liabilities, and stockholders’
equity as of a specific date, whereas the other statements report activity over a period of
time.
4. A company purchased equipment for $50,000 with a residual value of $5,000 and an
estimated useful life of 5 years. Using the straight-line method, what is the annual
depreciation expense?
A. $10,000
, B. $9,000
C. $11,000
D. $5,000
Answer: B
Conceptual Explanation: Straight-line depreciation = (Cost - Residual Value) / Useful Life.
($50,000 - $5,000) / 5 = $9,000 per year.
5. Which of the following accounts is increased by a debit entry?
A. Accounts Payable
B. Service Revenue
C. Common Stock
D. Dividends
Answer: D
Conceptual Explanation: Dividends, Assets, and Expenses are increased by debits (DEA),
while Liabilities, Equity, and Revenue are increased by credits (LER).
6. What is the primary purpose of the closing process in the accounting cycle?
A. To verify that the trial balance is in balance
B. To transfer temporary account balances to Retained Earnings
C. To record adjusting entries for the period
