WGU C213 Accounting Questions with
Correct Answers
Common-size Financial Statements All amounts for a given year being shown as a
percentage of that denominator for the year.
Comparability Tnformation that becomes much more useful when it can be related to a
benchmark or standard
Comprehensive Income The number used to reflect an overall measure of the change in a
company's wealth during the period
Conservatism a pervasive factor in accounting, can be summarized as follows: When in
doubt, recognize all losses but don't recognize any gains.
Consistency Principle What principle states that once you adopt an accounting principle
or method, continue to follow it consistently in future accounting periods?
,Contribution Margin The difference between total sales and variable costs; the portion of
sales revenue available to cover fixed costs and provide a profit.
Contribution Margin Ratio The percentage of net sales revenue left after variable costs are
deducted; the contribution margin divided by net sales revenue.
Control Activities Policies and procedures used by management to meet their objectives.
Control Environment The actions, policies, and procedures that reflect the overall
attitudes of top management about control and its importance to the entity.
Control Procedures Policies and procedures used by management to meet their objectives.
Controlling Implementing management plans and identifying how plans compare with
actual performance.
Cost Behavior The way a cost is affected by changes in activity levels.
,Cost Drivers Numerical measure used to reflect the amount of a specific cost that is
associated with a particular activity.
Cost of Goods Sold When a business sells goods to customers, the cost of the goods sold
is recorded as an expense
Cost Pool Total cost being generated by a specific overhead cost activity.
Cost-volume-profit (C-V-P) Analysis Techniques for determining how changes in
revenues, costs, and level of activity affect the profitability of an organization.
Current Assets Cash, accounts receivable, and inventory.
Current Liabilities Those obligations expected to be paid within one year, the most
common being accounts payable.
Current Portion of Long-term Debt Some liabilities, such as mortgages, are payable in
equal monthly installments over a specified number of years. The portion of these liabilities that
is payable within 12 months from the balance sheet date.
, Current Ratio A comparison of current assets (cash, receivables, and inventory) with
current liabilities. It is computed by dividing total current assets by total current liabilities.
Debt Ratio A frequently used measure of leverage, computed as total liabilities divided by
total assets.
Debt-to-equity Ratio Total liabilities divided by total equity and is interpreted as the
number of dollars of borrowing for each dollar of equity investment
Deferred Income Tax Liability The income tax expected to be paid in future years on
income that has already been reported in the income statement but which, because of the tax law,
has not yet been taxed.
Derivative A financial instrument, such as an option or a future, that derives its value from
the movement of a price, an exchange rate, or an interest rate associated with some other item.
Detective Controls Internal control activities that are designed to detect the occurrence of
errors and fraud.
Correct Answers
Common-size Financial Statements All amounts for a given year being shown as a
percentage of that denominator for the year.
Comparability Tnformation that becomes much more useful when it can be related to a
benchmark or standard
Comprehensive Income The number used to reflect an overall measure of the change in a
company's wealth during the period
Conservatism a pervasive factor in accounting, can be summarized as follows: When in
doubt, recognize all losses but don't recognize any gains.
Consistency Principle What principle states that once you adopt an accounting principle
or method, continue to follow it consistently in future accounting periods?
,Contribution Margin The difference between total sales and variable costs; the portion of
sales revenue available to cover fixed costs and provide a profit.
Contribution Margin Ratio The percentage of net sales revenue left after variable costs are
deducted; the contribution margin divided by net sales revenue.
Control Activities Policies and procedures used by management to meet their objectives.
Control Environment The actions, policies, and procedures that reflect the overall
attitudes of top management about control and its importance to the entity.
Control Procedures Policies and procedures used by management to meet their objectives.
Controlling Implementing management plans and identifying how plans compare with
actual performance.
Cost Behavior The way a cost is affected by changes in activity levels.
,Cost Drivers Numerical measure used to reflect the amount of a specific cost that is
associated with a particular activity.
Cost of Goods Sold When a business sells goods to customers, the cost of the goods sold
is recorded as an expense
Cost Pool Total cost being generated by a specific overhead cost activity.
Cost-volume-profit (C-V-P) Analysis Techniques for determining how changes in
revenues, costs, and level of activity affect the profitability of an organization.
Current Assets Cash, accounts receivable, and inventory.
Current Liabilities Those obligations expected to be paid within one year, the most
common being accounts payable.
Current Portion of Long-term Debt Some liabilities, such as mortgages, are payable in
equal monthly installments over a specified number of years. The portion of these liabilities that
is payable within 12 months from the balance sheet date.
, Current Ratio A comparison of current assets (cash, receivables, and inventory) with
current liabilities. It is computed by dividing total current assets by total current liabilities.
Debt Ratio A frequently used measure of leverage, computed as total liabilities divided by
total assets.
Debt-to-equity Ratio Total liabilities divided by total equity and is interpreted as the
number of dollars of borrowing for each dollar of equity investment
Deferred Income Tax Liability The income tax expected to be paid in future years on
income that has already been reported in the income statement but which, because of the tax law,
has not yet been taxed.
Derivative A financial instrument, such as an option or a future, that derives its value from
the movement of a price, an exchange rate, or an interest rate associated with some other item.
Detective Controls Internal control activities that are designed to detect the occurrence of
errors and fraud.
