WGU C213 Study Guide Questions With All
Correct & Verified Answers
purpose of accounting Correct answer-Accounting is the recording of the day-to-day financial
activities of a company and the organization of that information into summary reports used to
evaluate the company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording transactions into
various accounts, which is the first step in accounting. The next step is to analyze the accounts and
organize them into financial statements and other useful reports. (Reference topic 1.1)
The balance sheet Correct answer-reports a company's assets, liabilities, and owners' equity. It
reports the financial position of a firm at a point in time.
income statement Correct answer-reports the amount of net income earned by a company during
a period. Net income is the excess of a company's revenues over its expenses. It reports the financial
performance of a firm over a period of time.
statement of cash flows Correct answer-reports the amount of cash collected and paid out by a
company in the following three types of activities: operating, investing, and financing over a period
of time. (Reference topic 1.2)
Fin Statement Users: Lenders Correct answer-Banks use companies' financial statements in making
decisions about commercial loans. The financial statements are useful because they help the lender
predict the future ability of the borrower to repay the loan.
Fin Statement Users: Investors Correct answer-Investors want information to help them estimate
how much cash they can expect to directly receive from the business in the future if they invest in it
now.
Fin Statement Users: Company Management Correct answer-Managers use financial accounting
data to formulate company goals, to compute bonuses for employees, and to illuminate company
weaknesses.
Fin Statement Users: Suppliers and Customers Correct answer-Suppliers, customers, and
employees use financial statements to tell them about the long-run prospects of a company.
Fin Statement Users: Employees Correct answer-Financial statement data, as mentioned earlier,
are used in determining employee bonuses. In addition, financial accounting information can help an
employee evaluate the employer's ability to fulfill its long-run promises, such as for pensions and
retiree health care benefits. Financial statements are also important in contract negotiations
between labor and management.
Fin Statement Users: Competitors Correct answer-Competitors use financial accounting
information to reveal strategic opportunities within their industry.
Government Agencies Correct answer-Government agencies use financial statement data to
bolster political and regulatory positions for and against companies.
, Fin Statement Users: The Press Correct answer-Reporters use financial accounting data as
background information and to indicate which companies are undergoing significant changes in
financial status. (Reference Topic 1.3)
Fin Statement Users: Politicians Correct answer-Politicians use financial statement data to bolster
political and regulatory positions for and against companies.
Acct Rules: Financial Accountings Standards Board (FASB) Correct answer-sets accounting rules for
the private section in the U.S.. It is a private, non-profit body established and supported by the joint
efforts of the U.S. business community, financial analysts, and practicing accountants.
The FASB has no legal power to enforce the accounting standards it sets but maintains its influence
by carefully protecting its prestige and reputation. The standards it sets are called Generally
Accepted Accounting Standards (GAAP). These are a common set of accounting principles, standards,
and procedures that companies must follow when they compile their financial statements.
(Reference Topic 1.4)
Acct Rules: Securities and Exchange Commission (SEC) Correct answer-has the legal authority to
set accounting rules, but has deferred that responsibility to the FASB in most cases. The SEC regulates
U.S. stock exchanges and seeks to create a fair information environment in which investors can buy
and sell stocks without fear that companies who sell stocks to the general public are hiding or
manipulating financial data. (Reference topic 1.5)
Acct Org: CPA Accreditation Correct answer-The American Institute of Certified Public Accountants
(AICPA) is the professional organization of certified public accountants (CPAs) in the United States. A
CPA is someone who has taken a minimum number of college-level accounting classes, has passed
the CPA exam, and has met other requirements set by his or her state. A CPA firm is a company that
provides freelance business advice, particularly in connection with accounting issues and executes
the vast majority of external audits in the US.
The AICPA sets ethical standards for CPAs, provides continuing education for them, writes and grades
the CPA exam, lobbies for legislation favored by CPAs, and provides other support to CPAs. Its
oversight of the CPA exam is its main role in accreditation. However, to be accredited as a CPA you
must meet the requirements of the state in which you plan to practice. The requirements for each
state are set by that state's legislature and overseen by that state's Board of Accountancy, which is a
state agency. (Reference Topic 1.5)
Acct Org: Public Company Accounting Oversight Board (PCAOB) Correct answer-determines who
can audit public companies regardless of whether the audit firm is accredited by a state Board of
Accountancy. Thus, they accredit firms that can audit public companies.
Current Trends changing Accounting: Globalization Correct answer-As more and more business do
business globally, capital flows more freely across national boundaries. This means investors can
choose to invest in firms all over the planet. To help them make investment decisions, the global
accounting and regulatory communities are working to bring accounting standards around the world
into agreement the IASB was one step in that direction, but nations still control the accounting
standards used within their borders and so much of the standardization is being done through
voluntary cooperation
Current Trends changing Accounting: Technology Correct answer-Information technology has
speeded up the pace with which accounting data and reports are produced and dramatically
increased the volume of accounting information that firms can provide to investors. (Reference Topic
1.6)
Correct & Verified Answers
purpose of accounting Correct answer-Accounting is the recording of the day-to-day financial
activities of a company and the organization of that information into summary reports used to
evaluate the company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording transactions into
various accounts, which is the first step in accounting. The next step is to analyze the accounts and
organize them into financial statements and other useful reports. (Reference topic 1.1)
The balance sheet Correct answer-reports a company's assets, liabilities, and owners' equity. It
reports the financial position of a firm at a point in time.
income statement Correct answer-reports the amount of net income earned by a company during
a period. Net income is the excess of a company's revenues over its expenses. It reports the financial
performance of a firm over a period of time.
statement of cash flows Correct answer-reports the amount of cash collected and paid out by a
company in the following three types of activities: operating, investing, and financing over a period
of time. (Reference topic 1.2)
Fin Statement Users: Lenders Correct answer-Banks use companies' financial statements in making
decisions about commercial loans. The financial statements are useful because they help the lender
predict the future ability of the borrower to repay the loan.
Fin Statement Users: Investors Correct answer-Investors want information to help them estimate
how much cash they can expect to directly receive from the business in the future if they invest in it
now.
Fin Statement Users: Company Management Correct answer-Managers use financial accounting
data to formulate company goals, to compute bonuses for employees, and to illuminate company
weaknesses.
Fin Statement Users: Suppliers and Customers Correct answer-Suppliers, customers, and
employees use financial statements to tell them about the long-run prospects of a company.
Fin Statement Users: Employees Correct answer-Financial statement data, as mentioned earlier,
are used in determining employee bonuses. In addition, financial accounting information can help an
employee evaluate the employer's ability to fulfill its long-run promises, such as for pensions and
retiree health care benefits. Financial statements are also important in contract negotiations
between labor and management.
Fin Statement Users: Competitors Correct answer-Competitors use financial accounting
information to reveal strategic opportunities within their industry.
Government Agencies Correct answer-Government agencies use financial statement data to
bolster political and regulatory positions for and against companies.
, Fin Statement Users: The Press Correct answer-Reporters use financial accounting data as
background information and to indicate which companies are undergoing significant changes in
financial status. (Reference Topic 1.3)
Fin Statement Users: Politicians Correct answer-Politicians use financial statement data to bolster
political and regulatory positions for and against companies.
Acct Rules: Financial Accountings Standards Board (FASB) Correct answer-sets accounting rules for
the private section in the U.S.. It is a private, non-profit body established and supported by the joint
efforts of the U.S. business community, financial analysts, and practicing accountants.
The FASB has no legal power to enforce the accounting standards it sets but maintains its influence
by carefully protecting its prestige and reputation. The standards it sets are called Generally
Accepted Accounting Standards (GAAP). These are a common set of accounting principles, standards,
and procedures that companies must follow when they compile their financial statements.
(Reference Topic 1.4)
Acct Rules: Securities and Exchange Commission (SEC) Correct answer-has the legal authority to
set accounting rules, but has deferred that responsibility to the FASB in most cases. The SEC regulates
U.S. stock exchanges and seeks to create a fair information environment in which investors can buy
and sell stocks without fear that companies who sell stocks to the general public are hiding or
manipulating financial data. (Reference topic 1.5)
Acct Org: CPA Accreditation Correct answer-The American Institute of Certified Public Accountants
(AICPA) is the professional organization of certified public accountants (CPAs) in the United States. A
CPA is someone who has taken a minimum number of college-level accounting classes, has passed
the CPA exam, and has met other requirements set by his or her state. A CPA firm is a company that
provides freelance business advice, particularly in connection with accounting issues and executes
the vast majority of external audits in the US.
The AICPA sets ethical standards for CPAs, provides continuing education for them, writes and grades
the CPA exam, lobbies for legislation favored by CPAs, and provides other support to CPAs. Its
oversight of the CPA exam is its main role in accreditation. However, to be accredited as a CPA you
must meet the requirements of the state in which you plan to practice. The requirements for each
state are set by that state's legislature and overseen by that state's Board of Accountancy, which is a
state agency. (Reference Topic 1.5)
Acct Org: Public Company Accounting Oversight Board (PCAOB) Correct answer-determines who
can audit public companies regardless of whether the audit firm is accredited by a state Board of
Accountancy. Thus, they accredit firms that can audit public companies.
Current Trends changing Accounting: Globalization Correct answer-As more and more business do
business globally, capital flows more freely across national boundaries. This means investors can
choose to invest in firms all over the planet. To help them make investment decisions, the global
accounting and regulatory communities are working to bring accounting standards around the world
into agreement the IASB was one step in that direction, but nations still control the accounting
standards used within their borders and so much of the standardization is being done through
voluntary cooperation
Current Trends changing Accounting: Technology Correct answer-Information technology has
speeded up the pace with which accounting data and reports are produced and dramatically
increased the volume of accounting information that firms can provide to investors. (Reference Topic
1.6)
