D196 WGU UPDATED ACTUAL Exam
Questions and CORRECT Answers
What is the role and purpose of accounting ? - CORRECT ANSWER Role: To help track
income and expenditures, and to provide investors, management, and government with financial
information.
Purpose: To accumulate, measure, and communicate financial information about businesses and
other organizations.
· Who uses accounting information and why? - CORRECT ANSWER Potential investors and
creditors use accounting information, but basically everyone uses accounting information. They
use it to make internal and external business decisions.
· What are the important influences on accounting? - CORRECT ANSWER Important
influences on accounting is the development of the "generally accepted accounting
principles"(GAAP), international business and ethical consideration.
· What is the role of ethics in accounting? - CORRECT ANSWER Being an accountant
requires honesty and integrity, as well as professional judgement. So having ethics in accounting
is very important.
What are the three main functions of accounting? - CORRECT ANSWER The 3 main
functions of accounting are: Analyzing, Bookkeeping, and Evaluating(ABE).
The Financial Accounting Standards Board(FASB) - CORRECT ANSWER An organization
responsible for studying accounting issues and establishing standards
a) Private group
b) Public process
c) Establishes GAAP
,The Governmental Accounting Standards Board(GASB) - CORRECT ANSWER A private,
non governmental organization who sets accounting and financial reporting standards for state
and local governments
Securities and Exchange Commission(SEC) - CORRECT ANSWER Regulates stock
exchanges
a) Has legal authority to regulate financial markets and accounting
b) Usually defers to the FASB on accounting matters
The Public Company Accounting Oversight Board(PCAOB) - CORRECT
ANSWER Oversees all accounting firms.
Internal Revenue Service(IRS) - CORRECT ANSWER Collects and regulates income taxes
International Accounting Standards Board(IASB) - CORRECT ANSWER The FASB of the
world(except the USA)
Assets - CORRECT ANSWER assets are what we OWN.
Common Assets:
-) Cash
-) Accounts receivable
-) Inventory
-) Buildings
-) Prepaid
Liabilities - CORRECT ANSWER An obligation to pay cash, transfer other assets, or provide
services to someone.
A) Liabilities are what we OWE.
B) Common Liabilities:
-) Accounts Payable
, -) Taxes Payable
-) Mortgage Payable
-) Unearned Revenue
Owners Equity - CORRECT ANSWER The owners share of earnings.
A) Sources of equity:
-) Capital/Common Stock
-) Retained Earnings
What is the Accounting Cycle and how does it work? - CORRECT ANSWER The accounting
cycle is the procedure for analyzing, recording, summarizing, and preparing the transactions of a
business. The accounting cycle works by turning transactions into financial statements through
these steps:
Step 1: Analyze Transactions
Step 2: Record the effects of transactions
Step 3: Summarize the effects
Step 4: Prepare reports
· What is the Accounting Equation? - CORRECT ANSWER Assets=Liability+Equity(ALE)
Can you explain the 'expanded' accounting equation? - CORRECT
ANSWER Assets=Liabilities+(Capital Stock+Cumulative Net Income-Cumulative
Dividends)
What are the four financial statements covered in this module? - CORRECT
ANSWER Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Retained
Earnings
Can you define and explain the purpose of the Balance Sheet and its components? - CORRECT
ANSWER A balance sheet is the statement of the company's financial position at a certain
period, and records the company's assets, liabilities, and owners' equity. The purpose of a
Questions and CORRECT Answers
What is the role and purpose of accounting ? - CORRECT ANSWER Role: To help track
income and expenditures, and to provide investors, management, and government with financial
information.
Purpose: To accumulate, measure, and communicate financial information about businesses and
other organizations.
· Who uses accounting information and why? - CORRECT ANSWER Potential investors and
creditors use accounting information, but basically everyone uses accounting information. They
use it to make internal and external business decisions.
· What are the important influences on accounting? - CORRECT ANSWER Important
influences on accounting is the development of the "generally accepted accounting
principles"(GAAP), international business and ethical consideration.
· What is the role of ethics in accounting? - CORRECT ANSWER Being an accountant
requires honesty and integrity, as well as professional judgement. So having ethics in accounting
is very important.
What are the three main functions of accounting? - CORRECT ANSWER The 3 main
functions of accounting are: Analyzing, Bookkeeping, and Evaluating(ABE).
The Financial Accounting Standards Board(FASB) - CORRECT ANSWER An organization
responsible for studying accounting issues and establishing standards
a) Private group
b) Public process
c) Establishes GAAP
,The Governmental Accounting Standards Board(GASB) - CORRECT ANSWER A private,
non governmental organization who sets accounting and financial reporting standards for state
and local governments
Securities and Exchange Commission(SEC) - CORRECT ANSWER Regulates stock
exchanges
a) Has legal authority to regulate financial markets and accounting
b) Usually defers to the FASB on accounting matters
The Public Company Accounting Oversight Board(PCAOB) - CORRECT
ANSWER Oversees all accounting firms.
Internal Revenue Service(IRS) - CORRECT ANSWER Collects and regulates income taxes
International Accounting Standards Board(IASB) - CORRECT ANSWER The FASB of the
world(except the USA)
Assets - CORRECT ANSWER assets are what we OWN.
Common Assets:
-) Cash
-) Accounts receivable
-) Inventory
-) Buildings
-) Prepaid
Liabilities - CORRECT ANSWER An obligation to pay cash, transfer other assets, or provide
services to someone.
A) Liabilities are what we OWE.
B) Common Liabilities:
-) Accounts Payable
, -) Taxes Payable
-) Mortgage Payable
-) Unearned Revenue
Owners Equity - CORRECT ANSWER The owners share of earnings.
A) Sources of equity:
-) Capital/Common Stock
-) Retained Earnings
What is the Accounting Cycle and how does it work? - CORRECT ANSWER The accounting
cycle is the procedure for analyzing, recording, summarizing, and preparing the transactions of a
business. The accounting cycle works by turning transactions into financial statements through
these steps:
Step 1: Analyze Transactions
Step 2: Record the effects of transactions
Step 3: Summarize the effects
Step 4: Prepare reports
· What is the Accounting Equation? - CORRECT ANSWER Assets=Liability+Equity(ALE)
Can you explain the 'expanded' accounting equation? - CORRECT
ANSWER Assets=Liabilities+(Capital Stock+Cumulative Net Income-Cumulative
Dividends)
What are the four financial statements covered in this module? - CORRECT
ANSWER Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Retained
Earnings
Can you define and explain the purpose of the Balance Sheet and its components? - CORRECT
ANSWER A balance sheet is the statement of the company's financial position at a certain
period, and records the company's assets, liabilities, and owners' equity. The purpose of a
