WGU C213 ACCOUNTING FOR DECISION MAKERS
— FINAL EXAM (100 QUESTIONS)
Instructions: Choose the best answer for each of the following questions. This practice
exam covers the key competencies tested on the WGU C213 Objective Assessment,
including financial accounting, managerial accounting, financial statement analysis, cost
systems, budgeting, and profit planning.
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Question 1:
What is the fundamental purpose of the balance sheet in financial reporting?
A) To show revenues and expenses over a period of time
B) To report the company's financial position at a specific point in time
C) To detail cash inflows and outflows
D) To allocate costs to products
Answer: B)
Explanation: The balance sheet presents assets, liabilities, and equity at a specific point
in time, reflecting the accounting equation (Assets = Liabilities + Equity).
Question 2:
Under accrual accounting, when are revenues recognized?
A) When cash is received from the customer
B) When the revenue is earned and realizable
C) At the end of the fiscal year
D) When the product is shipped
,Answer: B)
Explanation: The revenue recognition principle states that revenue is recognized when it
is earned, regardless of when cash is received.
Question 3:
The matching principle requires that expenses be matched with:
A) The period in which they are paid
B) The revenues they help generate
C) Fixed assets only
D) Inventory costs only
Answer: B)
Explanation: The matching principle requires expenses to be recorded in the same period
as the revenues they helped generate, ensuring accurate profitability measurement.
Question 4:
Which accounting concept assumes a business will continue operating indefinitely?
A) Monetary unit assumption
B) Economic entity assumption
C) Going concern assumption
D) Periodicity assumption
Answer: C)
Explanation: The going concern assumption presumes that a business will continue to
operate in the foreseeable future and will not liquidate.
,Question 5:
The idea that transactions are recorded at their exchange prices at the transaction date is
referred to as the:
A) Matching principle
B) Revenue recognition principle
C) Cost principle
D) Full disclosure principle
Answer: C)
Explanation: The cost principle (historical cost) requires that assets be recorded at their
original exchange price at the transaction date.
Question 6:
Which financial statement reports assets, liabilities, and equity at a point in time?
A) Income statement
B) Statement of cash flows
C) Balance sheet
D) Statement of retained earnings
Answer: C)
Explanation: The balance sheet is a "snapshot" of a company's financial position at a
specific date, showing assets, liabilities, and equity.
Question 7:
Retained earnings on the balance sheet represents:
A) Cash available for dividends
B) Cumulative net income not distributed as dividends
, C) Total contributed capital
D) Market value of the company
Answer: B)
Explanation: Retained earnings equal beginning retained earnings plus net income minus
dividends declared. It represents cumulative earnings not distributed to shareholders.
Question 8:
The income statement describes a company's:
A) Financial position at a point in time
B) Financial performance for a specified period of time
C) Cash inflows and outflows
D) Changes in owners' equity
Answer: B)
Explanation: The income statement reports revenues, expenses, and net income over a
period of time, typically one year or a quarter.
Question 9:
What is the role of adjusting entries in the accounting cycle?
A) To record daily transactions
B) To update accounts for accruals, deferrals, and estimates at period-end
C) To close temporary accounts
D) To prepare financial statements
Answer: B)
— FINAL EXAM (100 QUESTIONS)
Instructions: Choose the best answer for each of the following questions. This practice
exam covers the key competencies tested on the WGU C213 Objective Assessment,
including financial accounting, managerial accounting, financial statement analysis, cost
systems, budgeting, and profit planning.
---
Question 1:
What is the fundamental purpose of the balance sheet in financial reporting?
A) To show revenues and expenses over a period of time
B) To report the company's financial position at a specific point in time
C) To detail cash inflows and outflows
D) To allocate costs to products
Answer: B)
Explanation: The balance sheet presents assets, liabilities, and equity at a specific point
in time, reflecting the accounting equation (Assets = Liabilities + Equity).
Question 2:
Under accrual accounting, when are revenues recognized?
A) When cash is received from the customer
B) When the revenue is earned and realizable
C) At the end of the fiscal year
D) When the product is shipped
,Answer: B)
Explanation: The revenue recognition principle states that revenue is recognized when it
is earned, regardless of when cash is received.
Question 3:
The matching principle requires that expenses be matched with:
A) The period in which they are paid
B) The revenues they help generate
C) Fixed assets only
D) Inventory costs only
Answer: B)
Explanation: The matching principle requires expenses to be recorded in the same period
as the revenues they helped generate, ensuring accurate profitability measurement.
Question 4:
Which accounting concept assumes a business will continue operating indefinitely?
A) Monetary unit assumption
B) Economic entity assumption
C) Going concern assumption
D) Periodicity assumption
Answer: C)
Explanation: The going concern assumption presumes that a business will continue to
operate in the foreseeable future and will not liquidate.
,Question 5:
The idea that transactions are recorded at their exchange prices at the transaction date is
referred to as the:
A) Matching principle
B) Revenue recognition principle
C) Cost principle
D) Full disclosure principle
Answer: C)
Explanation: The cost principle (historical cost) requires that assets be recorded at their
original exchange price at the transaction date.
Question 6:
Which financial statement reports assets, liabilities, and equity at a point in time?
A) Income statement
B) Statement of cash flows
C) Balance sheet
D) Statement of retained earnings
Answer: C)
Explanation: The balance sheet is a "snapshot" of a company's financial position at a
specific date, showing assets, liabilities, and equity.
Question 7:
Retained earnings on the balance sheet represents:
A) Cash available for dividends
B) Cumulative net income not distributed as dividends
, C) Total contributed capital
D) Market value of the company
Answer: B)
Explanation: Retained earnings equal beginning retained earnings plus net income minus
dividends declared. It represents cumulative earnings not distributed to shareholders.
Question 8:
The income statement describes a company's:
A) Financial position at a point in time
B) Financial performance for a specified period of time
C) Cash inflows and outflows
D) Changes in owners' equity
Answer: B)
Explanation: The income statement reports revenues, expenses, and net income over a
period of time, typically one year or a quarter.
Question 9:
What is the role of adjusting entries in the accounting cycle?
A) To record daily transactions
B) To update accounts for accruals, deferrals, and estimates at period-end
C) To close temporary accounts
D) To prepare financial statements
Answer: B)
