WGU C213 ACCOUNTING FOR
DECISION MAKERS FINAL EXAM
STUDY GUIDE QUESTIONS AND
VERIFIED ANSWERS | 100% CORRECT |
GRADE A+
1. Which of the following describes the fundamental accounting equation?
A. Assets = Liabilities + Stockholders’ Equity
B. Assets + Liabilities = Stockholders’ Equity
C. Assets = Liabilities - Stockholders’ Equity
D. Assets + Stockholders’ Equity = Liabilities
Answer: A
Conceptual Explanation: The fundamental accounting equation states that a company’s
total assets are financed by either creditors (liabilities) or owners (equity).
2. Under the accrual basis of accounting, when should revenue be recognized?
A. When the cash is received from the customer
B. At the end of the fiscal year
C. When the service is performed or the goods are delivered
D. When the contract is signed by both parties
,Answer: C
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned,
regardless of when the cash is actually received.
3. What is the primary purpose of the Sarbanes-Oxley Act (SOX)?
A. To reduce unethical corporate behavior and protect investors
B. To standardize international tax rates
C. To eliminate the need for independent auditors
D. To provide a framework for managerial cost accounting
Answer: A
Conceptual Explanation: SOX was passed to enhance corporate responsibility, financial
disclosures, and combat corporate and accounting fraud.
4. A company has a Current Ratio of 2.5 and a Quick Ratio of 0.8. What does this likely
indicate?
A. The company has very low levels of inventory
B. The company is highly profitable
C. The company is at risk of immediate bankruptcy
D. The company has a large portion of its current assets tied up in inventory
Answer: D
, Conceptual Explanation: The Quick Ratio excludes inventory; a large gap between the
Current Ratio and Quick Ratio suggests inventory is a major component of current assets.
5. Which inventory costing method results in the highest Net Income during a period of rising
prices?
A. LIFO (Last-In, First-Out)
B. Specific Identification
C. Weighted Average Cost
D. FIFO (First-In, First-Out)
Answer: D
Conceptual Explanation: FIFO assigns the older, lower costs to COGS during inflation,
resulting in lower expenses and higher net income compared to LIFO.
6. What is the formula for calculating the Break-Even Point in Units?
A. Total Variable Costs / Sales Price per Unit
B. Total Fixed Costs / Contribution Margin per Unit
C. Total Fixed Costs / Sales Price per Unit
D. Sales Revenue - Total Variable Costs
Answer: B
Conceptual Explanation: The break-even point is reached when total contribution margin
equals total fixed costs.
DECISION MAKERS FINAL EXAM
STUDY GUIDE QUESTIONS AND
VERIFIED ANSWERS | 100% CORRECT |
GRADE A+
1. Which of the following describes the fundamental accounting equation?
A. Assets = Liabilities + Stockholders’ Equity
B. Assets + Liabilities = Stockholders’ Equity
C. Assets = Liabilities - Stockholders’ Equity
D. Assets + Stockholders’ Equity = Liabilities
Answer: A
Conceptual Explanation: The fundamental accounting equation states that a company’s
total assets are financed by either creditors (liabilities) or owners (equity).
2. Under the accrual basis of accounting, when should revenue be recognized?
A. When the cash is received from the customer
B. At the end of the fiscal year
C. When the service is performed or the goods are delivered
D. When the contract is signed by both parties
,Answer: C
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned,
regardless of when the cash is actually received.
3. What is the primary purpose of the Sarbanes-Oxley Act (SOX)?
A. To reduce unethical corporate behavior and protect investors
B. To standardize international tax rates
C. To eliminate the need for independent auditors
D. To provide a framework for managerial cost accounting
Answer: A
Conceptual Explanation: SOX was passed to enhance corporate responsibility, financial
disclosures, and combat corporate and accounting fraud.
4. A company has a Current Ratio of 2.5 and a Quick Ratio of 0.8. What does this likely
indicate?
A. The company has very low levels of inventory
B. The company is highly profitable
C. The company is at risk of immediate bankruptcy
D. The company has a large portion of its current assets tied up in inventory
Answer: D
, Conceptual Explanation: The Quick Ratio excludes inventory; a large gap between the
Current Ratio and Quick Ratio suggests inventory is a major component of current assets.
5. Which inventory costing method results in the highest Net Income during a period of rising
prices?
A. LIFO (Last-In, First-Out)
B. Specific Identification
C. Weighted Average Cost
D. FIFO (First-In, First-Out)
Answer: D
Conceptual Explanation: FIFO assigns the older, lower costs to COGS during inflation,
resulting in lower expenses and higher net income compared to LIFO.
6. What is the formula for calculating the Break-Even Point in Units?
A. Total Variable Costs / Sales Price per Unit
B. Total Fixed Costs / Contribution Margin per Unit
C. Total Fixed Costs / Sales Price per Unit
D. Sales Revenue - Total Variable Costs
Answer: B
Conceptual Explanation: The break-even point is reached when total contribution margin
equals total fixed costs.
