Wgu C213 Accounting For Decision Makers Final Exam Study Guide | Latest Update 2026/2027 | Verified Questions & Rationales | Exam Review

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WGU C213 ACCOUNTING FOR DECISION
MAKERS FINAL EXAM STUDY GUIDE |
LATEST UPDATE 2026/2027 | VERIFIED
QUESTIONS & RATIONALES | EXAM REVIEW.




TABLE OF CONTENTS

1. Nature and Purpose of Accounting
2. Financial Statements and the Accounting Cycle
3. Accrual Accounting and Adjusting Entries
4. Internal Controls and Regulatory Environment
5. Financial Statement Analysis
6. Managerial Accounting and Cost Concepts
7. Cost-Volume-Profit (CVP) Analysis
8. Budgeting and Performance Evaluation
9. Capital Investment Decisions and Time Value of Money
10. Ethics in Accounting

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Question 1: What is the primary purpose of accounting?

A) To track only cash transactions
B) To provide quantitative financial information to support economic decision-making
C) To focus only on tax compliance
D) To replace management judgment

Correct Answer: B) To provide quantitative financial information to support economic
decision-making

Accounting is a system that identifies, measures, and communicates financial information to
permit informed judgments and decisions by users of the information. It informs investing,
lending, and operating decisions. Option A is too narrow, as accounting includes non-cash
transactions. Option C describes only tax accounting. Option D is incorrect because
accounting informs, not replaces, management judgment.

Question 2: Which of the following is an external user of accounting information?

A) Production supervisor
B) Potential investor
C) Department manager
D) Internal auditor

Correct Answer: B) Potential investor

External users of accounting information include investors, creditors, regulators, and the
general public. They rely on financial statements for decisions about investing and lending.
Production supervisors, department managers, and internal auditors are internal users who
use accounting information for planning, control, and decision-making within the
organization.

Question 3: Financial accounting primarily serves:

A) Internal planning and control
B) External users such as investors and creditors
C) Only tax authorities
D) Only internal management

Correct Answer: B) External users such as investors and creditors

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Financial accounting produces general-purpose external reports that follow GAAP and are
used by investors, creditors, and regulators. Managerial accounting, by contrast, serves
internal managers for planning, control, and decision-making and is not governed by GAAP.

Question 4: Managerial accounting primarily serves:

A) External regulators
B) Internal managers for planning, control, and decision-making
C) Only shareholders
D) Only creditors

Correct Answer: B) Internal managers for planning, control, and decision-making

Managerial accounting supports internal decisions through detailed, forward-looking, and
flexible reports such as budgets, variance analyses, and segment reports. It is not bound by
GAAP and serves internal management rather than external stakeholders.

Question 5: The primary standard-setting body for U.S. GAAP is the:

A) SEC
B) FASB (Financial Accounting Standards Board)
C) IRS
D) PCAOB

Correct Answer: B) FASB (Financial Accounting Standards Board)

The Financial Accounting Standards Board (FASB) is the primary private-sector body that
establishes U.S. Generally Accepted Accounting Principles (GAAP). The SEC has statutory
authority to set accounting standards but historically has delegated that responsibility to
FASB. The IRS administers tax law, and the PCAOB oversees audits of public companies.

Question 6: The SEC's primary role in financial reporting is to:

A) Set GAAP standards
B) Regulate public companies and enforce reporting requirements
C) Audit financial statements
D) Prepare tax returns

Correct Answer: B) Regulate public companies and enforce reporting requirements

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The Securities and Exchange Commission (SEC) is a federal agency that regulates public
companies and enforces securities laws and reporting requirements. While the SEC has the
legal authority to set accounting standards, it has delegated that function to FASB. The SEC
does not audit financial statements or prepare tax returns.

Question 7: International accounting standards (IFRS) are issued by the:

A) FASB
B) IASB (International Accounting Standards Board)
C) AICPA
D) PCAOB

Correct Answer: B) IASB (International Accounting Standards Board)

The International Accounting Standards Board (IASB) issues International Financial
Reporting Standards (IFRS). FASB issues U.S. GAAP. The AICPA is a professional
organization for CPAs, and the PCAOB oversees audits of public companies. IFRS is used in
many countries outside the United States.

Question 8: The primary purpose of an external audit is to:

A) Guarantee future performance
B) Provide an independent opinion on whether financial statements are fairly presented
C) Prepare the financial statements
D) Ensure no fraud exists

Correct Answer: B) Provide an independent opinion on whether financial statements
are fairly presented

An external audit provides an independent opinion on whether financial statements are fairly
presented in accordance with GAAP. Audits provide reasonable assurance, not guarantees,
and do not ensure that no fraud exists. Auditors do not prepare the financial statements;
management does.

Question 9: Which of the following best describes the primary purpose of the accounting
equation?

A) To measure the profitability of a company over a period of time
B) To ensure that every economic transaction is recorded in at least two accounts