WGU C213 PRE ASSESSMENT STUDY GUIDE ()
(VERIFIED ANSWERS)
1. What does accounting focus on? ANS The impact a business's activities
have on its overall financial performance
2. Which report summarizes cash collections and cash expenditures from
operating, investing, and financing activities over a period of time? ANS
Statement of cash flows
3. Which users would have a primary concern with an organization's ability to
provide healthcare benefits? ANS Employees
4. Which body regulates a certified public accounting firm's audit practices
when the firm is auditing a large publicly traded company? ANS The Public
Com- pany Accounting Oversight Board (PCAOB)
5. What has had the most significant impact on accounting practices? ANS
Infor- mation technology
6. What two items of information are revealed on the balance sheet?
Choose 2 answers ANS
Ownership. Debt
7. Which term is defined as the residual interest in the net assets of a compa-
ny? ANS Owners' equity
8. A corporation has total liabilities of $300 million, total owners' equity of $100
,million, and current assets of $50 million.
What is the value of the firm's long-term assets? ANS $350 million
9. Which situation should result in revenue recognition on the income state-
ment for the year ending 12/31/14 if the firm is using accrual-basis account-
ing? ANS In 2014, a company provides services to a customer for which cash
will be collected the next year (2015).
10. Which category on the statement of cash flows summarizes cash receipts
and payments to owners and creditors of the company? ANS Cash flows from
financing activities
11. Where would an investor find a summary of a company's significant ac-
counting policies? ANS In the notes to financial statements
12. Which assurance does an external audit report provide for its readers? AN
-
The company's financial statements fairly reflect its financial position
13. Reliable ANS Information that can be verified
14. Relevant ANS Information having to do with the matter at hand
15. Material ANS Information that is important enough to make a difference
16. Conservatism ANS Information related to recognizing losses as they occur
17. What are steps in the decision cycle? ANS 1 Prepare financial
statements. 2 Analyze financial statements.
, 3 Gather information.
4 Make decision.
5 Implement decision.
18. Partial financial information for a company is as follows ANS
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
Total liabilities $48,561
Stockholders' equity $10,158
Sales $46,997
Net Income $ 3,761
Market value of shares $41,316
What is the price-earnings (PE) ratio for this company? ANS 11.0
19. What is consistent with a continual decline in gross profit if the firm's cost
of goods sold remains the same? ANS Continual decrease in sales
20. Which two cash flow adequacy ratios represent a cash cow? ANS -
$6,991/$5,486. $5,220/$1,875.
21. Which formula yields a cash times interest earned ratio of 11? ANS Cash
before interest and taxes of $11,000 / cash paid for interest of $1,000
22. Which form of debt should be reported in the long-term liability category?-
ANS Notes payable expected to be paid in 18 months
23. In January of year 1, a company began doing business as a corporation
in order to sell technology-related accessories and services. During its first
month of operations, the following events occurred ANS
January 1
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(VERIFIED ANSWERS)
1. What does accounting focus on? ANS The impact a business's activities
have on its overall financial performance
2. Which report summarizes cash collections and cash expenditures from
operating, investing, and financing activities over a period of time? ANS
Statement of cash flows
3. Which users would have a primary concern with an organization's ability to
provide healthcare benefits? ANS Employees
4. Which body regulates a certified public accounting firm's audit practices
when the firm is auditing a large publicly traded company? ANS The Public
Com- pany Accounting Oversight Board (PCAOB)
5. What has had the most significant impact on accounting practices? ANS
Infor- mation technology
6. What two items of information are revealed on the balance sheet?
Choose 2 answers ANS
Ownership. Debt
7. Which term is defined as the residual interest in the net assets of a compa-
ny? ANS Owners' equity
8. A corporation has total liabilities of $300 million, total owners' equity of $100
,million, and current assets of $50 million.
What is the value of the firm's long-term assets? ANS $350 million
9. Which situation should result in revenue recognition on the income state-
ment for the year ending 12/31/14 if the firm is using accrual-basis account-
ing? ANS In 2014, a company provides services to a customer for which cash
will be collected the next year (2015).
10. Which category on the statement of cash flows summarizes cash receipts
and payments to owners and creditors of the company? ANS Cash flows from
financing activities
11. Where would an investor find a summary of a company's significant ac-
counting policies? ANS In the notes to financial statements
12. Which assurance does an external audit report provide for its readers? AN
-
The company's financial statements fairly reflect its financial position
13. Reliable ANS Information that can be verified
14. Relevant ANS Information having to do with the matter at hand
15. Material ANS Information that is important enough to make a difference
16. Conservatism ANS Information related to recognizing losses as they occur
17. What are steps in the decision cycle? ANS 1 Prepare financial
statements. 2 Analyze financial statements.
, 3 Gather information.
4 Make decision.
5 Implement decision.
18. Partial financial information for a company is as follows ANS
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
Total liabilities $48,561
Stockholders' equity $10,158
Sales $46,997
Net Income $ 3,761
Market value of shares $41,316
What is the price-earnings (PE) ratio for this company? ANS 11.0
19. What is consistent with a continual decline in gross profit if the firm's cost
of goods sold remains the same? ANS Continual decrease in sales
20. Which two cash flow adequacy ratios represent a cash cow? ANS -
$6,991/$5,486. $5,220/$1,875.
21. Which formula yields a cash times interest earned ratio of 11? ANS Cash
before interest and taxes of $11,000 / cash paid for interest of $1,000
22. Which form of debt should be reported in the long-term liability category?-
ANS Notes payable expected to be paid in 18 months
23. In January of year 1, a company began doing business as a corporation
in order to sell technology-related accessories and services. During its first
month of operations, the following events occurred ANS
January 1
3 v/ v30
