WGU C213 ACCOUNTING FOR
DECISION MAKERS FINAL
ASSESSMENT PREP QUESTIONS AND
VERIFIED ANSWERS | 100% CORRECT |
GRADE A+
1. Under the accrual basis of accounting, when should revenue be recognized?
A. When the performance obligation is satisfied
B. When cash is received from the customer
C. At the end of the fiscal year
D. When the contract is signed
Answer: A
Conceptual Explanation: Accrual accounting requires revenue to be recognized when it is
earned, which occurs when the performance obligation (providing goods or services) is
met.
,2. Which financial statement provides a snapshot of a company’s financial position 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 reports assets, liabilities, and equity at a
specific date, unlike other statements which cover a period of time.
3. If a company has a Current Ratio of 2.5, what does this indicate about its liquidity?
A. The company has 2.5 months of cash on hand.
B. The company is unable to meet its short-term obligations.
C. The company’s long-term debt is 2.5 times its equity.
D. The company has $2.50 in current assets for every $1.00 in current liabilities.
Answer: D
Conceptual Explanation: The current ratio is calculated as Current Assets divided by
Current Liabilities. A ratio of 2.5 means assets exceed liabilities by that factor.
, 4. Which inventory method results in the highest Net Income during a period of rising prices
(inflation)?
A. LIFO (Last-In, First-Out)
B. Weighted Average Cost
C. FIFO (First-In, First-Out)
D. Specific Identification
Answer: C
Conceptual Explanation: In a period of rising prices, FIFO assigns older, lower costs to
Cost of Goods Sold, resulting in a lower expense and higher net income.
5. What is the primary purpose of the Statement of Cash Flows?
A. To show the profitability of the company
B. To provide information about cash receipts and cash payments during a period
C. To reconcile the bank statement with the general ledger
D. To list all the assets owned by the company
Answer: B
Conceptual Explanation: The Statement of Cash Flows tracks how a company generates
and spends cash across operating, investing, and financing activities.
DECISION MAKERS FINAL
ASSESSMENT PREP QUESTIONS AND
VERIFIED ANSWERS | 100% CORRECT |
GRADE A+
1. Under the accrual basis of accounting, when should revenue be recognized?
A. When the performance obligation is satisfied
B. When cash is received from the customer
C. At the end of the fiscal year
D. When the contract is signed
Answer: A
Conceptual Explanation: Accrual accounting requires revenue to be recognized when it is
earned, which occurs when the performance obligation (providing goods or services) is
met.
,2. Which financial statement provides a snapshot of a company’s financial position 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 reports assets, liabilities, and equity at a
specific date, unlike other statements which cover a period of time.
3. If a company has a Current Ratio of 2.5, what does this indicate about its liquidity?
A. The company has 2.5 months of cash on hand.
B. The company is unable to meet its short-term obligations.
C. The company’s long-term debt is 2.5 times its equity.
D. The company has $2.50 in current assets for every $1.00 in current liabilities.
Answer: D
Conceptual Explanation: The current ratio is calculated as Current Assets divided by
Current Liabilities. A ratio of 2.5 means assets exceed liabilities by that factor.
, 4. Which inventory method results in the highest Net Income during a period of rising prices
(inflation)?
A. LIFO (Last-In, First-Out)
B. Weighted Average Cost
C. FIFO (First-In, First-Out)
D. Specific Identification
Answer: C
Conceptual Explanation: In a period of rising prices, FIFO assigns older, lower costs to
Cost of Goods Sold, resulting in a lower expense and higher net income.
5. What is the primary purpose of the Statement of Cash Flows?
A. To show the profitability of the company
B. To provide information about cash receipts and cash payments during a period
C. To reconcile the bank statement with the general ledger
D. To list all the assets owned by the company
Answer: B
Conceptual Explanation: The Statement of Cash Flows tracks how a company generates
and spends cash across operating, investing, and financing activities.
