WGU C213 Accounting for Decision Makers 2024/2025 Updated
Exam Version – Verified Questions with Accurate, Correct
Answers | Actual A Grade Guarantee
1. What is the primary objective of financial accounting for decision-making?
A) To track employee performance metrics
B) To provide financial information for economic decisions
C) To manage operational workflows
D) To ensure compliance with tax regulations
Correct Answer: B
Rationale: Financial accounting provides quantitative data about a company’s financial
position and performance, enabling stakeholders to make informed economic decisions.
2. Which financial statement reports a company’s cash inflows and outflows?
A) Income Statement
B) Balance Sheet
C) Statement of Cash Flows
D) Statement of Retained Earnings
Correct Answer: C
Rationale: The Statement of Cash Flows details cash movements from operating, invest-
ing, and financing activities, reflecting liquidity.
3. Which organization sets accounting standards for U.S. public companies?
A) Securities and Exchange Commission (SEC)
B) Financial Accounting Standards Board (FASB)
C) International Accounting Standards Board (IASB)
D) Internal Revenue Service (IRS)
Correct Answer: B
Rationale: The FASB establishes Generally Accepted Accounting Principles (GAAP) for
U.S. public companies, ensuring standardized financial reporting.
1
,4. Why are global accounting standards important?
A) To reduce financial reporting complexity
B) To ensure theoretical consistency
C) To limit investor access to financial data
D) To increase tax compliance
Correct Answer: A
Rationale: Global standards, like IFRS, reduce complexity by promoting consistency and
comparability across international financial reports.
5. What does the accrual basis of accounting prioritize?
A) Recording cash-based transactions only
B) Matching revenues with related expenses
C) Recognizing expenses when paid
D) Reporting revenues when cash is received
Correct Answer: B
Rationale: Accrual accounting recognizes revenues and expenses when earned or incurred,
aligning them to reflect true financial performance.
6. If a company fails to record accrued utilities expense, what is the impact?
A) Overstates liabilities and understates equity
B) Understates liabilities and overstates equity
C) Overstates assets and understates net income
D) Understates revenues and overstates expenses
Correct Answer: B
Rationale: Not recording accrued expenses understates liabilities (utilities payable) and
overstates equity by understating expenses, inflating net income.
7. Where is the depreciation method disclosed in financial statements?
A) Statement of Cash Flows
B) Summary of significant accounting policies
C) Supplementary tax information
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, D) Contingent liability disclosures
Correct Answer: B
Rationale: The summary of significant accounting policies in the notes to financial state-
ments discloses methods like depreciation to ensure transparency.
8. Who is primarily responsible for the accuracy of financial statements?
A) External auditors
B) Company management
C) Financial Accounting Standards Board
D) Public Company Accounting Oversight Board
Correct Answer: B
Rationale: Management prepares financial statements and is responsible for their accu-
racy, while auditors verify their fairness.
9. Which task is NOT typically performed by internal auditors?
A) Assessing internal controls
B) Detecting financial fraud
C) Preparing financial statements
D) Evaluating operational efficiency
Correct Answer: C
Rationale: Internal auditors focus on controls, fraud, and efficiency, not preparing finan-
cial statements, which is management’s responsibility.
10. What is the correct sequence of the accounting decision-making cycle?
A) Prepare, Analyze, Gather, Make, Implement
B) Gather, Analyze, Make, Implement, Prepare
C) Analyze, Prepare, Implement, Make, Gather
D) Make, Gather, Analyze, Prepare, Implement
Correct Answer: B
Rationale: The cycle follows: gather data, analyze financials, make decisions, implement
actions, and prepare statements (PAGMI).
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Exam Version – Verified Questions with Accurate, Correct
Answers | Actual A Grade Guarantee
1. What is the primary objective of financial accounting for decision-making?
A) To track employee performance metrics
B) To provide financial information for economic decisions
C) To manage operational workflows
D) To ensure compliance with tax regulations
Correct Answer: B
Rationale: Financial accounting provides quantitative data about a company’s financial
position and performance, enabling stakeholders to make informed economic decisions.
2. Which financial statement reports a company’s cash inflows and outflows?
A) Income Statement
B) Balance Sheet
C) Statement of Cash Flows
D) Statement of Retained Earnings
Correct Answer: C
Rationale: The Statement of Cash Flows details cash movements from operating, invest-
ing, and financing activities, reflecting liquidity.
3. Which organization sets accounting standards for U.S. public companies?
A) Securities and Exchange Commission (SEC)
B) Financial Accounting Standards Board (FASB)
C) International Accounting Standards Board (IASB)
D) Internal Revenue Service (IRS)
Correct Answer: B
Rationale: The FASB establishes Generally Accepted Accounting Principles (GAAP) for
U.S. public companies, ensuring standardized financial reporting.
1
,4. Why are global accounting standards important?
A) To reduce financial reporting complexity
B) To ensure theoretical consistency
C) To limit investor access to financial data
D) To increase tax compliance
Correct Answer: A
Rationale: Global standards, like IFRS, reduce complexity by promoting consistency and
comparability across international financial reports.
5. What does the accrual basis of accounting prioritize?
A) Recording cash-based transactions only
B) Matching revenues with related expenses
C) Recognizing expenses when paid
D) Reporting revenues when cash is received
Correct Answer: B
Rationale: Accrual accounting recognizes revenues and expenses when earned or incurred,
aligning them to reflect true financial performance.
6. If a company fails to record accrued utilities expense, what is the impact?
A) Overstates liabilities and understates equity
B) Understates liabilities and overstates equity
C) Overstates assets and understates net income
D) Understates revenues and overstates expenses
Correct Answer: B
Rationale: Not recording accrued expenses understates liabilities (utilities payable) and
overstates equity by understating expenses, inflating net income.
7. Where is the depreciation method disclosed in financial statements?
A) Statement of Cash Flows
B) Summary of significant accounting policies
C) Supplementary tax information
2
, D) Contingent liability disclosures
Correct Answer: B
Rationale: The summary of significant accounting policies in the notes to financial state-
ments discloses methods like depreciation to ensure transparency.
8. Who is primarily responsible for the accuracy of financial statements?
A) External auditors
B) Company management
C) Financial Accounting Standards Board
D) Public Company Accounting Oversight Board
Correct Answer: B
Rationale: Management prepares financial statements and is responsible for their accu-
racy, while auditors verify their fairness.
9. Which task is NOT typically performed by internal auditors?
A) Assessing internal controls
B) Detecting financial fraud
C) Preparing financial statements
D) Evaluating operational efficiency
Correct Answer: C
Rationale: Internal auditors focus on controls, fraud, and efficiency, not preparing finan-
cial statements, which is management’s responsibility.
10. What is the correct sequence of the accounting decision-making cycle?
A) Prepare, Analyze, Gather, Make, Implement
B) Gather, Analyze, Make, Implement, Prepare
C) Analyze, Prepare, Implement, Make, Gather
D) Make, Gather, Analyze, Prepare, Implement
Correct Answer: B
Rationale: The cycle follows: gather data, analyze financials, make decisions, implement
actions, and prepare statements (PAGMI).
3
