WGU C213 OA Prep Comprehensive Practice Exam
Study Guide | Complete Exam Questions with
Verified Answers and Rationales | Latest Update
2026/2027 | Already Graded A+
Question 1
If a corporation has total assets of $350,000, total liabilities of $150,000, and
retained earnings of $100,000, what is the amount of capital stock?
A. $50,000
B. $100,000
C. $150,000
D. $250,000
Answer: B
Rationale: Assets = Liabilities + Equity ($350,000 = $150,000 + $200,000).
Equity = Capital Stock + Retained Earnings ($200,000 = Capital Stock +
$100,000). Capital Stock = $100,000.
Question 2
A measure of a company's performance that is intended to summarize in one
number the overall economic performance of a company in a given period is:
A. Operating Income
B. Net Income
C. Comprehensive Income
D. Income from Continuing Operations
Answer: B
Rationale: Net income is the single measure that summarizes overall economic
performance for a period.
pg. 1
,Question 3
Which of the following items is not considered to be an expense of doing business?
A. Wages
B. Cash dividends
C. Buying Landscaping Supplies
D. None are considered to be an expense
Answer: B
Rationale: Cash dividends are a distribution of profits to owners, not an expense
of doing business.
Question 4
Which of the following is NOT one of the four general types of financial statement
notes?
A. Summary of significant accounting policies
B. Supplementary information required by the Internal Revenue Service
C. Additional information about the summary totals
D. Disclosure of information not recognized in statements
Answer: B
Rationale: Notes to financial statements do not include supplementary information
required by the IRS.
Question 5
In a manufacturing company, indirect labor is usually classified as a(n):
A. Period cost
B. Selling cost
C. Product cost
D. Opportunity cost
Answer: C
pg. 2
,Rationale: Indirect labor is part of manufacturing overhead, which is a product
cost.
Question 6
In completing an audit of a company's financial statements, auditors:
A. Examine every transaction underlying the statements
B. Guarantee that the financial statements are accurate
C. Provide some assurance that the statements are not misleading
D. Assume responsibility for the accuracy of the statements
Answer: C
Rationale: Auditors provide reasonable assurance, not a guarantee, that the
statements are free from material misstatement.
Question 7
If the total amount for Rent Expense is inadvertently posted to Prepaid Rent at the
end of the year, what will be the effect on the year-end financial statements?
A. Expenses will be overstated
B. Assets will be overstated
C. Revenues will be understated
D. Owner's equity will be understated
Answer: B
Rationale: Posting an expense to an asset account overstates assets and understates
expenses.
Question 8
What is the first step a business professional should take when confronted with a
situation that may involve an ethical conflict?
A. Resign from the organization
B. Refrain from discussing the problem with anyone
pg. 3
, C. Discuss the problem with the immediate supervisor
D. Use an objective advisor to help clarify issues
Answer: C
Rationale: The first step in resolving an ethical conflict is usually to discuss it with
the immediate supervisor.
Question 9
Standards established by the International Accounting Standards Board are referred
to as:
A. International Auditing Standards
B. International Financial Reporting Standards
C. Generally Accepted Accounting Standards
D. International Financial Accounting Standards
Answer: B
Rationale: The IASB issues International Financial Reporting Standards (IFRS).
Question 10
Most forecasting exercises begin with a forecast of:
A. Sales
B. Cash
C. Net income
D. Total assets
Answer: A
Rationale: The sales forecast is the foundation of most financial forecasting
exercises.
pg. 4
Study Guide | Complete Exam Questions with
Verified Answers and Rationales | Latest Update
2026/2027 | Already Graded A+
Question 1
If a corporation has total assets of $350,000, total liabilities of $150,000, and
retained earnings of $100,000, what is the amount of capital stock?
A. $50,000
B. $100,000
C. $150,000
D. $250,000
Answer: B
Rationale: Assets = Liabilities + Equity ($350,000 = $150,000 + $200,000).
Equity = Capital Stock + Retained Earnings ($200,000 = Capital Stock +
$100,000). Capital Stock = $100,000.
Question 2
A measure of a company's performance that is intended to summarize in one
number the overall economic performance of a company in a given period is:
A. Operating Income
B. Net Income
C. Comprehensive Income
D. Income from Continuing Operations
Answer: B
Rationale: Net income is the single measure that summarizes overall economic
performance for a period.
pg. 1
,Question 3
Which of the following items is not considered to be an expense of doing business?
A. Wages
B. Cash dividends
C. Buying Landscaping Supplies
D. None are considered to be an expense
Answer: B
Rationale: Cash dividends are a distribution of profits to owners, not an expense
of doing business.
Question 4
Which of the following is NOT one of the four general types of financial statement
notes?
A. Summary of significant accounting policies
B. Supplementary information required by the Internal Revenue Service
C. Additional information about the summary totals
D. Disclosure of information not recognized in statements
Answer: B
Rationale: Notes to financial statements do not include supplementary information
required by the IRS.
Question 5
In a manufacturing company, indirect labor is usually classified as a(n):
A. Period cost
B. Selling cost
C. Product cost
D. Opportunity cost
Answer: C
pg. 2
,Rationale: Indirect labor is part of manufacturing overhead, which is a product
cost.
Question 6
In completing an audit of a company's financial statements, auditors:
A. Examine every transaction underlying the statements
B. Guarantee that the financial statements are accurate
C. Provide some assurance that the statements are not misleading
D. Assume responsibility for the accuracy of the statements
Answer: C
Rationale: Auditors provide reasonable assurance, not a guarantee, that the
statements are free from material misstatement.
Question 7
If the total amount for Rent Expense is inadvertently posted to Prepaid Rent at the
end of the year, what will be the effect on the year-end financial statements?
A. Expenses will be overstated
B. Assets will be overstated
C. Revenues will be understated
D. Owner's equity will be understated
Answer: B
Rationale: Posting an expense to an asset account overstates assets and understates
expenses.
Question 8
What is the first step a business professional should take when confronted with a
situation that may involve an ethical conflict?
A. Resign from the organization
B. Refrain from discussing the problem with anyone
pg. 3
, C. Discuss the problem with the immediate supervisor
D. Use an objective advisor to help clarify issues
Answer: C
Rationale: The first step in resolving an ethical conflict is usually to discuss it with
the immediate supervisor.
Question 9
Standards established by the International Accounting Standards Board are referred
to as:
A. International Auditing Standards
B. International Financial Reporting Standards
C. Generally Accepted Accounting Standards
D. International Financial Accounting Standards
Answer: B
Rationale: The IASB issues International Financial Reporting Standards (IFRS).
Question 10
Most forecasting exercises begin with a forecast of:
A. Sales
B. Cash
C. Net income
D. Total assets
Answer: A
Rationale: The sales forecast is the foundation of most financial forecasting
exercises.
pg. 4
