WGU C213 Object Assessment 2024/2025 – Actual Questions
and Verified Answers
1. Which of the following is the most correct definition of accounting?
. A system for providing qualitative information about economic entities
. A system for providing quantitative information, primarily financial in nature, about eco-
nomic entities
. A system for tracking non-financial performance metrics
. A system for auditing internal controls only
Correct Answer: B
Rationale: Accounting is defined as a system that provides quantitative, primarily financial infor-
mation to aid in economic decision-making.
2. What is the primary purpose of financial statements?
. To provide tax information to the IRS
. To communicate financial information to stakeholders
. To track employee performance
. To calculate market share
Correct Answer: B
Rationale: Financial statements are prepared to provide relevant financial information to stake-
holders such as investors, creditors, and management.
3. Which of the following is NOT a reason for the integration of worldwide accounting stan-
dards?
. Increased globalization of businesses
. The theoretical necessity of a common set of accounting standards
. Improved comparability of financial statements
. Reduced costs for multinational corporations
Correct Answer: B
Rationale: While globalization, comparability, and cost reduction drive the need for integrated
standards, theoretical necessity is not a primary reason.
4. Which organization has specific legal authority to establish accounting standards for pub-
licly held companies in the U.S.?
. Financial Accounting Standards Board (FASB)
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, . Securities and Exchange Commission (SEC)
. International Accounting Standards Board (IASB)
. American Institute of Certified Public Accountants (AICPA)
Correct Answer: B
Rationale: The SEC has legal authority to set accounting standards for public companies, though
it delegates much of this to the FASB.
5. What is the accounting equation?
. Assets = Liabilities + Revenue
. Assets = Liabilities + Owner’s Equity
. Liabilities = Assets + Owner’s Equity
. Revenue = Assets – Liabilities
Correct Answer: B
Rationale: The accounting equation is Assets = Liabilities + Owner’s Equity, representing the
balance of a company’s financial position.
6. If a company does NOT record accrued wages expense at the end of the year, how does
this affect the year-end financial statements?
. Understates liabilities and understates expenses
. Overstates liabilities and overstates expenses
. Understates liabilities and overstates owner’s equity
. Overstates liabilities and understates owner’s equity
Correct Answer: C
Rationale: Failing to record accrued wages understates liabilities and expenses, leading to an
overstatement of owner’s equity.
7. Which financial statement reports a company’s financial position at a specific point in
time?
. Income Statement
. Statement of Cash Flows
. Balance Sheet
. Statement of Retained Earnings
Correct Answer: C
Rationale: The Balance Sheet provides a snapshot of a company’s assets, liabilities, and equity at
a specific date.
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, 8. What is the order of assets listed on the balance sheet?
. In alphabetical order
. In order of liquidity
. In order of acquisition date
. In order of dollar amount
Correct Answer: B
Rationale: Assets are listed on the balance sheet in order of liquidity, starting with cash and
followed by assets that can be converted to cash more quickly.
9. Which of the following is an example of a significant accounting policy explained in the
notes to the financial statements?
. The company’s marketing strategy
. The method used to estimate depreciation on equipment
. The CEO’s compensation package
. The company’s sales targets
Correct Answer: B
Rationale: Significant accounting policies, such as depreciation methods, are disclosed in the
notes to provide transparency.
10. Which of the following is an example of a disclosure of information NOT recognized in
the financial statements?
. The cost of inventory sold
. The uncertain outcome of a pending lawsuit
. The balance of accounts receivable
. The depreciation expense for the year
Correct Answer: B
Rationale: Disclosures of unrecognized information, like potential lawsuit outcomes, are included
in the notes but not in the financial statement totals.
11. What is the primary responsibility for the accuracy of financial statements?
. The external auditor
. The company’s management
. The SEC
. The FASB
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and Verified Answers
1. Which of the following is the most correct definition of accounting?
. A system for providing qualitative information about economic entities
. A system for providing quantitative information, primarily financial in nature, about eco-
nomic entities
. A system for tracking non-financial performance metrics
. A system for auditing internal controls only
Correct Answer: B
Rationale: Accounting is defined as a system that provides quantitative, primarily financial infor-
mation to aid in economic decision-making.
2. What is the primary purpose of financial statements?
. To provide tax information to the IRS
. To communicate financial information to stakeholders
. To track employee performance
. To calculate market share
Correct Answer: B
Rationale: Financial statements are prepared to provide relevant financial information to stake-
holders such as investors, creditors, and management.
3. Which of the following is NOT a reason for the integration of worldwide accounting stan-
dards?
. Increased globalization of businesses
. The theoretical necessity of a common set of accounting standards
. Improved comparability of financial statements
. Reduced costs for multinational corporations
Correct Answer: B
Rationale: While globalization, comparability, and cost reduction drive the need for integrated
standards, theoretical necessity is not a primary reason.
4. Which organization has specific legal authority to establish accounting standards for pub-
licly held companies in the U.S.?
. Financial Accounting Standards Board (FASB)
1
, . Securities and Exchange Commission (SEC)
. International Accounting Standards Board (IASB)
. American Institute of Certified Public Accountants (AICPA)
Correct Answer: B
Rationale: The SEC has legal authority to set accounting standards for public companies, though
it delegates much of this to the FASB.
5. What is the accounting equation?
. Assets = Liabilities + Revenue
. Assets = Liabilities + Owner’s Equity
. Liabilities = Assets + Owner’s Equity
. Revenue = Assets – Liabilities
Correct Answer: B
Rationale: The accounting equation is Assets = Liabilities + Owner’s Equity, representing the
balance of a company’s financial position.
6. If a company does NOT record accrued wages expense at the end of the year, how does
this affect the year-end financial statements?
. Understates liabilities and understates expenses
. Overstates liabilities and overstates expenses
. Understates liabilities and overstates owner’s equity
. Overstates liabilities and understates owner’s equity
Correct Answer: C
Rationale: Failing to record accrued wages understates liabilities and expenses, leading to an
overstatement of owner’s equity.
7. Which financial statement reports a company’s financial position at a specific point in
time?
. Income Statement
. Statement of Cash Flows
. Balance Sheet
. Statement of Retained Earnings
Correct Answer: C
Rationale: The Balance Sheet provides a snapshot of a company’s assets, liabilities, and equity at
a specific date.
2
, 8. What is the order of assets listed on the balance sheet?
. In alphabetical order
. In order of liquidity
. In order of acquisition date
. In order of dollar amount
Correct Answer: B
Rationale: Assets are listed on the balance sheet in order of liquidity, starting with cash and
followed by assets that can be converted to cash more quickly.
9. Which of the following is an example of a significant accounting policy explained in the
notes to the financial statements?
. The company’s marketing strategy
. The method used to estimate depreciation on equipment
. The CEO’s compensation package
. The company’s sales targets
Correct Answer: B
Rationale: Significant accounting policies, such as depreciation methods, are disclosed in the
notes to provide transparency.
10. Which of the following is an example of a disclosure of information NOT recognized in
the financial statements?
. The cost of inventory sold
. The uncertain outcome of a pending lawsuit
. The balance of accounts receivable
. The depreciation expense for the year
Correct Answer: B
Rationale: Disclosures of unrecognized information, like potential lawsuit outcomes, are included
in the notes but not in the financial statement totals.
11. What is the primary responsibility for the accuracy of financial statements?
. The external auditor
. The company’s management
. The SEC
. The FASB
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