WGU C213 Accounting for Decision Makers –
PVAC (2025/2026 Latest Update) | Exam Q&A
PDF | Verified Study Guide
What does accounting focus on? - correct answerThe impact a business's activities
have on it's overall financial performance
Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time? - correct answerStatement of
cash flows
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - correct answerEmployees
Which benefit does a corporation gain by following Generally Accepted Accounting
Principals (GAAP)? - correct answerAn increase in its comparability to other companies
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - correct answerThe FASB
What has had the most significant impact on accounting practices? - correct
answerInformation Technology
What two items of information are revealed on the balance sheet? - correct answerDebt,
Ownership
Which term is defined as the residual interest in the net assets of a company? - correct
answerOwner's equity
A corporation has total liabilities of $300 million, total owner's equity of $100 million, and
current assets of $50 million. What is the value of the firm's long-term assets? - correct
answer$350 million
Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual-basis accounting? - correct answerIn
2014, a company provides services to a customer for which cash will be collected the
next year (2015)
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company? - correct answerCash flows from
financing activities
,Where would an investor find a summary of a company's significant accounting
policies? - correct answerIn the notes to the financial statements
What does it mean if a company has a debt ratio of 101.5%? - correct answerThe
company has 1.5% more total liabilities that total assets
Which assurances does an external audit report provide for its readers? - correct
answerThe company's financial statements fairly reflects its financial position
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - correct answerContinual decrease in sales
Which formula yields a cash time interest earned ratio of 11? - correct answerCash
before interest and taxes of $11,000/cash paid for interest of $1,000
Which form of debt should be reported in the long-term liability category? - correct
answerNotes payable expected to be paid in 18 months
Which two values affect the measurement of net income? - correct answerDividend
paid, operating expenses
Which two items subtotals are included in a multi-step income statement? - correct
answergross profit, income from operations
A furniture company using accrual accounting purchased 20 sofas in November 2011,
In December 2011, 8 of the sofas were sold to customers. The customers all signed
contracts agreeing to pay half the amount owed in February 2012 and the remaining
half in March 2012. At the time of sale, the company was reasonably sure the
customers would pay the amount owed.
In which month should advertising costs be expended? - correct answerNovember 2011
On May 1, 2011, a company using accural accounting purchased equipment costing
$500,000. It expects the equipment to have a useful life of five years. At the time of
purchase, the company also purchased a one-year insurance policy on this equipment,
which cost $6,000.
How much insurance expense should the company have recognized of the year ending
in 2011? - correct answer$4,000
What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000 was
based on a 22% increase? - correct answer$153,279
What is a common category in a statement of cash flows? - correct answerCash from
investing activities
, Which cash flow category would include cash received from investors? - correct
answerCash from financing activites
Which item is an investing activity? - correct answerCash payments for purchase of
plant assests
What impact does the sale of equipment have on the statement of cash flows? - correct
answerIncrease in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash
flow? - correct answerThe indirect method is more popular among large US companies
Which two examples represent financial statement errors? - correct answerThe
accounting dept. miscalculates the payroll tax due at year-end, resulting in an
inaccurate liability.
The accountant unintentionally records amounts as revenue that were prepaid by
customers but not yet earned.
Which internal control is intended to ensure that a company does not mistakenly pay a
supplier for an invoice that includes more items than were actually received? - correct
answerThe inventory department counts and inspects items as received and forwards
the receiving record to accounts payable
What are two common reasons for managers to manipulate reported earnings? - correct
answerThey are preparing to qualify for a bank loan.
They are feeling pressured to meet internal sales goals.
Which two requirements must accounting firms that audit public companies meet under
the Sarbanes-Oxley Act? - correct answerFirms must report to and be retained by the
audit committee rather than the CFO or other company management.
Firms must help to develop and enforce a code of ethics on audit clients.
Which two requirements must management of public companies under the Sarbanes-
Oxley Act? - correct answerThey must provide an assessment of the effectiveness of
internal controls with each annual report.
They must support a stronger board and audit committee.
Which two actions do internal auditors perform to assist in maintaining the integrity of
financial statements? - correct answerThey review financial records and internal
controls.
They search for and investigate fraud.
What is a significant role of the US Securities and Exchange Commission (SEC) in
financial reporting? - correct answerThey ensure that financial users are provided with
reliable information to use in decision making
PVAC (2025/2026 Latest Update) | Exam Q&A
PDF | Verified Study Guide
What does accounting focus on? - correct answerThe impact a business's activities
have on it's overall financial performance
Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time? - correct answerStatement of
cash flows
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - correct answerEmployees
Which benefit does a corporation gain by following Generally Accepted Accounting
Principals (GAAP)? - correct answerAn increase in its comparability to other companies
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - correct answerThe FASB
What has had the most significant impact on accounting practices? - correct
answerInformation Technology
What two items of information are revealed on the balance sheet? - correct answerDebt,
Ownership
Which term is defined as the residual interest in the net assets of a company? - correct
answerOwner's equity
A corporation has total liabilities of $300 million, total owner's equity of $100 million, and
current assets of $50 million. What is the value of the firm's long-term assets? - correct
answer$350 million
Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual-basis accounting? - correct answerIn
2014, a company provides services to a customer for which cash will be collected the
next year (2015)
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company? - correct answerCash flows from
financing activities
,Where would an investor find a summary of a company's significant accounting
policies? - correct answerIn the notes to the financial statements
What does it mean if a company has a debt ratio of 101.5%? - correct answerThe
company has 1.5% more total liabilities that total assets
Which assurances does an external audit report provide for its readers? - correct
answerThe company's financial statements fairly reflects its financial position
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - correct answerContinual decrease in sales
Which formula yields a cash time interest earned ratio of 11? - correct answerCash
before interest and taxes of $11,000/cash paid for interest of $1,000
Which form of debt should be reported in the long-term liability category? - correct
answerNotes payable expected to be paid in 18 months
Which two values affect the measurement of net income? - correct answerDividend
paid, operating expenses
Which two items subtotals are included in a multi-step income statement? - correct
answergross profit, income from operations
A furniture company using accrual accounting purchased 20 sofas in November 2011,
In December 2011, 8 of the sofas were sold to customers. The customers all signed
contracts agreeing to pay half the amount owed in February 2012 and the remaining
half in March 2012. At the time of sale, the company was reasonably sure the
customers would pay the amount owed.
In which month should advertising costs be expended? - correct answerNovember 2011
On May 1, 2011, a company using accural accounting purchased equipment costing
$500,000. It expects the equipment to have a useful life of five years. At the time of
purchase, the company also purchased a one-year insurance policy on this equipment,
which cost $6,000.
How much insurance expense should the company have recognized of the year ending
in 2011? - correct answer$4,000
What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000 was
based on a 22% increase? - correct answer$153,279
What is a common category in a statement of cash flows? - correct answerCash from
investing activities
, Which cash flow category would include cash received from investors? - correct
answerCash from financing activites
Which item is an investing activity? - correct answerCash payments for purchase of
plant assests
What impact does the sale of equipment have on the statement of cash flows? - correct
answerIncrease in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash
flow? - correct answerThe indirect method is more popular among large US companies
Which two examples represent financial statement errors? - correct answerThe
accounting dept. miscalculates the payroll tax due at year-end, resulting in an
inaccurate liability.
The accountant unintentionally records amounts as revenue that were prepaid by
customers but not yet earned.
Which internal control is intended to ensure that a company does not mistakenly pay a
supplier for an invoice that includes more items than were actually received? - correct
answerThe inventory department counts and inspects items as received and forwards
the receiving record to accounts payable
What are two common reasons for managers to manipulate reported earnings? - correct
answerThey are preparing to qualify for a bank loan.
They are feeling pressured to meet internal sales goals.
Which two requirements must accounting firms that audit public companies meet under
the Sarbanes-Oxley Act? - correct answerFirms must report to and be retained by the
audit committee rather than the CFO or other company management.
Firms must help to develop and enforce a code of ethics on audit clients.
Which two requirements must management of public companies under the Sarbanes-
Oxley Act? - correct answerThey must provide an assessment of the effectiveness of
internal controls with each annual report.
They must support a stronger board and audit committee.
Which two actions do internal auditors perform to assist in maintaining the integrity of
financial statements? - correct answerThey review financial records and internal
controls.
They search for and investigate fraud.
What is a significant role of the US Securities and Exchange Commission (SEC) in
financial reporting? - correct answerThey ensure that financial users are provided with
reliable information to use in decision making
