WGU C213 ACCOUNTING FOR DECISION
MAKERS EXAM: (LATEST 2026/2027
UPDATE), WITH CORRECT/ACCURATE
ANSWERS
WGU C213 ACCOUNTING FOR DECISION
MAKERS
WGU C213 – Accounting for Decision Makers
Exam Questions & Answers
1. Businesses use accounting systems to:
A. Analyze transactions
B. Handle routine bookkeeping tasks
C. Evaluate the performance and financial health of the business
D. All of the above
✅ Correct Answer: D. All of the above
Rationale:
Accounting systems are designed to record, classify, summarize, and interpret
financial data. They help process routine transactions such as sales and expenses
while also enabling analysis of financial performance. Managers and stakeholders rely
on accounting information to assess profitability, liquidity, and overall financial health.
Therefore, all listed functions are core purposes of accounting.
2. Which of the following is NOT a function of accounting?
A. Recording financial transactions
B. Communicating financial information
,C. Analyzing business performance
D. Executing sales transactions for organizations
✅ Correct Answer: D. Executing sales transactions for organizations
Rationale:
Accounting focuses on recording and reporting financial information after transactions
occur. Executing sales transactions is an operational function handled by sales or
operations departments. Accountants record the results of those transactions but do
not perform them. This distinction separates accounting from day-to-day business
operations.
3. Which of the following is NOT typically true of accounting
information?
A. It relates to past transactions
B. It is measurable in monetary terms
C. It is useful for decision making
D. It relates to future time periods
✅ Correct Answer: D. It relates to future time periods
Rationale:
Accounting information is primarily historical, meaning it reports on transactions that
have already occurred. While managers may use accounting data to help predict
future outcomes, the data itself reflects past performance. Forecasting future events is
more closely related to budgeting and managerial planning rather than financial
accounting.
4. Which of the following is NOT one of the three primary financial
statements?
A. Balance sheet
B. Income statement
,C. Statement of cash flows
D. Statement of retained earnings
✅ Correct Answer: D. Statement of retained earnings
Rationale:
The three primary financial statements are the balance sheet, income statement, and
statement of cash flows. The statement of retained earnings is considered a
supporting statement. While it provides important information, it is not classified as
one of the primary financial statements.
5. Which financial statement reports a company’s resources,
obligations, and ownership?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
✅ Correct Answer: C. Balance sheet
Rationale:
The balance sheet presents a snapshot of a company’s financial position at a specific
point in time. It shows assets (resources), liabilities (obligations), and equity
(ownership). This statement is based on the accounting equation: Assets = Liabilities
+ Equity.
6. Which financial statement reports the excess of revenues over
expenses?
A. Balance sheet
B. Income statement
C. Statement of cash flows
D. Statement of retained earnings
, ✅ Correct Answer: B. Income statement
Rationale:
The income statement measures a company’s financial performance over a period of
time. It reports revenues earned and expenses incurred, with the difference
representing net income or net loss. This statement is crucial for evaluating
profitability.
7. Which financial statement reports cash collected and cash paid
out?
A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of retained earnings
✅ Correct Answer: C. Statement of cash flows
Rationale:
The statement of cash flows focuses exclusively on cash inflows and outflows. It
categorizes cash activity into operating, investing, and financing activities. This
statement helps users assess a company’s liquidity and ability to generate cash.
8. Which of the following is NOT an external user of accounting
information?
A. Investors
B. Creditors
C. Government agencies
D. Management
✅ Correct Answer: D. Management
MAKERS EXAM: (LATEST 2026/2027
UPDATE), WITH CORRECT/ACCURATE
ANSWERS
WGU C213 ACCOUNTING FOR DECISION
MAKERS
WGU C213 – Accounting for Decision Makers
Exam Questions & Answers
1. Businesses use accounting systems to:
A. Analyze transactions
B. Handle routine bookkeeping tasks
C. Evaluate the performance and financial health of the business
D. All of the above
✅ Correct Answer: D. All of the above
Rationale:
Accounting systems are designed to record, classify, summarize, and interpret
financial data. They help process routine transactions such as sales and expenses
while also enabling analysis of financial performance. Managers and stakeholders rely
on accounting information to assess profitability, liquidity, and overall financial health.
Therefore, all listed functions are core purposes of accounting.
2. Which of the following is NOT a function of accounting?
A. Recording financial transactions
B. Communicating financial information
,C. Analyzing business performance
D. Executing sales transactions for organizations
✅ Correct Answer: D. Executing sales transactions for organizations
Rationale:
Accounting focuses on recording and reporting financial information after transactions
occur. Executing sales transactions is an operational function handled by sales or
operations departments. Accountants record the results of those transactions but do
not perform them. This distinction separates accounting from day-to-day business
operations.
3. Which of the following is NOT typically true of accounting
information?
A. It relates to past transactions
B. It is measurable in monetary terms
C. It is useful for decision making
D. It relates to future time periods
✅ Correct Answer: D. It relates to future time periods
Rationale:
Accounting information is primarily historical, meaning it reports on transactions that
have already occurred. While managers may use accounting data to help predict
future outcomes, the data itself reflects past performance. Forecasting future events is
more closely related to budgeting and managerial planning rather than financial
accounting.
4. Which of the following is NOT one of the three primary financial
statements?
A. Balance sheet
B. Income statement
,C. Statement of cash flows
D. Statement of retained earnings
✅ Correct Answer: D. Statement of retained earnings
Rationale:
The three primary financial statements are the balance sheet, income statement, and
statement of cash flows. The statement of retained earnings is considered a
supporting statement. While it provides important information, it is not classified as
one of the primary financial statements.
5. Which financial statement reports a company’s resources,
obligations, and ownership?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
✅ Correct Answer: C. Balance sheet
Rationale:
The balance sheet presents a snapshot of a company’s financial position at a specific
point in time. It shows assets (resources), liabilities (obligations), and equity
(ownership). This statement is based on the accounting equation: Assets = Liabilities
+ Equity.
6. Which financial statement reports the excess of revenues over
expenses?
A. Balance sheet
B. Income statement
C. Statement of cash flows
D. Statement of retained earnings
, ✅ Correct Answer: B. Income statement
Rationale:
The income statement measures a company’s financial performance over a period of
time. It reports revenues earned and expenses incurred, with the difference
representing net income or net loss. This statement is crucial for evaluating
profitability.
7. Which financial statement reports cash collected and cash paid
out?
A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of retained earnings
✅ Correct Answer: C. Statement of cash flows
Rationale:
The statement of cash flows focuses exclusively on cash inflows and outflows. It
categorizes cash activity into operating, investing, and financing activities. This
statement helps users assess a company’s liquidity and ability to generate cash.
8. Which of the following is NOT an external user of accounting
information?
A. Investors
B. Creditors
C. Government agencies
D. Management
✅ Correct Answer: D. Management
