WGU c213 study guide questions and
answers 2026\2027A+ Grade
purpose of accounting
- correct answer Accounting is the recording of the day-to-day financial activities of a
company and the organization of that information into summary reports used to evaluate the
company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording
transactions into various accounts, which is the first step in accounting. The next step is to
analyze the accounts and organize them into financial statements and other useful reports.
(Reference topic 1.1)
The balance sheet
- correct answer reports a company's assets, liabilities, and owners' equity. It reports the
financial position of a firm at a point in time.
income statement
- correct answer reports the amount of net income earned by a company during a period. Net
income is the excess of a company's revenues over its expenses. It reports the financial
performance of a firm over a period of time.
statement of cash flows
- correct answer reports the amount of cash collected and paid out by a company in the
following three types of activities: operating, investing, and financing over a period of time.
(Reference topic 1.2)
Fin Statement Users: Lenders
- correct answer Banks use companies' financial statements in making decisions about
commercial loans. The financial statements are useful because they help the lender predict the
future ability of the borrower to repay the loan.
Fin Statement Users: Investors
- correct answer Investors want information to help them estimate how much cash they can
expect to directly receive from the business in the future if they invest in it now.
,Fin Statement Users: Company Management
- correct answer Managers use financial accounting data to formulate company goals, to
compute bonuses for employees, and to illuminate company weaknesses.
Fin Statement Users: Suppliers and Customers
- correct answer Suppliers, customers, and employees use financial statements to tell them
about the long-run prospects of a company.
Fin Statement Users: Employees
- correct answer Financial statement data, as mentioned earlier, are used in determining
employee bonuses. In addition, financial accounting information can help an employee
evaluate the employer's ability to fulfill its long-run promises, such as for pensions and
retiree health care benefits. Financial statements are also important in contract negotiations
between labor and management.
Fin Statement Users: Competitors
- correct answer Competitors use financial accounting information to reveal strategic
opportunities within their industry.
Government Agencies
- correct answer Government agencies use financial statement data to bolster political and
regulatory positions for and against companies.
Fin Statement Users: The Press
- correct answer Reporters use financial accounting data as background information and to
indicate which companies are undergoing significant changes in financial status.
(Reference Topic 1.3)
Fin Statement Users: Politicians
- correct answer Politicians use financial statement data to bolster political and regulatory
positions for and against companies.
Acct Rules: Financial Accountings Standards Board (FASB)
- correct answer sets accounting rules for the private section in the U.S.. It is a private, non-
profit body established and supported by the joint efforts of the U.S. business community,
,financial analysts, and practicing accountants.
, The FASB has no legal power to enforce the accounting standards it sets but maintains its
influence by carefully protecting its prestige and reputation. The standards it sets are called
Generally Accepted Accounting Standards (GAAP). These are a common set of accounting
principles, standards, and procedures that companies must follow when they compile their
financial statements. (Reference Topic 1.4)
Acct Rules: Securities and Exchange Commission (SEC)
- correct answer has the legal authority to set accounting rules, but has deferred that
responsibility to the FASB in most cases. The SEC regulates U.S. stock exchanges and seeks to
create a fair information environment in which investors can buy and sell stocks without fear
that companies who sell stocks to the general public are hiding or manipulating financial
data. (Reference topic 1.5)
Acct Org: CPA Accreditation
- correct answer The American Institute of Certified Public Accountants (AICPA) is the
professional organization of certified public accountants (CPAs) in the United States. A CPA
is someone who has taken a minimum number of college-level accounting classes, has
passed the CPA exam, and has met other requirements set by his or her state. A CPA firm is
a company that provides freelance business advice, particularly in connection with
accounting issues and executes the vast majority of external audits in the US.
The AICPA sets ethical standards for CPAs, provides continuing education for them, writes
and grades the CPA exam, lobbies for legislation favored by CPAs, and provides other support
to CPAs. Its oversight of the CPA exam is its main role in accreditation. However, to be
accredited as a CPA you must meet the requirements of the state in which you plan to practice.
The requirements for each state are set by that state's legislature and overseen by that state's
Board of Accountancy, which is a state agency. (Reference Topic 1.5)
Acct Org: Public Company Accounting Oversight Board (PCAOB)
- correct answer determines who can audit public companies regardless of whether the audit
firm is accredited by a state Board of Accountancy. Thus, they accredit firms that can audit
public companies.
Current Trends changing Accounting: Globalization
- correct answer As more and more business do business globally, capital flows more freely
across national boundaries. This means investors can choose to invest in firms all over the
planet. To help them make investment decisions, the global accounting and regulatory
communities are working to bring accounting standards around the world into agreement the
IASB was one step in that direction, but nations still control the accounting standards used
within their borders and so much of the standardization is being done through voluntary
answers 2026\2027A+ Grade
purpose of accounting
- correct answer Accounting is the recording of the day-to-day financial activities of a
company and the organization of that information into summary reports used to evaluate the
company's financial status.
Bookkeeping is a part of accounting. Bookkeeping refers to the process of recording
transactions into various accounts, which is the first step in accounting. The next step is to
analyze the accounts and organize them into financial statements and other useful reports.
(Reference topic 1.1)
The balance sheet
- correct answer reports a company's assets, liabilities, and owners' equity. It reports the
financial position of a firm at a point in time.
income statement
- correct answer reports the amount of net income earned by a company during a period. Net
income is the excess of a company's revenues over its expenses. It reports the financial
performance of a firm over a period of time.
statement of cash flows
- correct answer reports the amount of cash collected and paid out by a company in the
following three types of activities: operating, investing, and financing over a period of time.
(Reference topic 1.2)
Fin Statement Users: Lenders
- correct answer Banks use companies' financial statements in making decisions about
commercial loans. The financial statements are useful because they help the lender predict the
future ability of the borrower to repay the loan.
Fin Statement Users: Investors
- correct answer Investors want information to help them estimate how much cash they can
expect to directly receive from the business in the future if they invest in it now.
,Fin Statement Users: Company Management
- correct answer Managers use financial accounting data to formulate company goals, to
compute bonuses for employees, and to illuminate company weaknesses.
Fin Statement Users: Suppliers and Customers
- correct answer Suppliers, customers, and employees use financial statements to tell them
about the long-run prospects of a company.
Fin Statement Users: Employees
- correct answer Financial statement data, as mentioned earlier, are used in determining
employee bonuses. In addition, financial accounting information can help an employee
evaluate the employer's ability to fulfill its long-run promises, such as for pensions and
retiree health care benefits. Financial statements are also important in contract negotiations
between labor and management.
Fin Statement Users: Competitors
- correct answer Competitors use financial accounting information to reveal strategic
opportunities within their industry.
Government Agencies
- correct answer Government agencies use financial statement data to bolster political and
regulatory positions for and against companies.
Fin Statement Users: The Press
- correct answer Reporters use financial accounting data as background information and to
indicate which companies are undergoing significant changes in financial status.
(Reference Topic 1.3)
Fin Statement Users: Politicians
- correct answer Politicians use financial statement data to bolster political and regulatory
positions for and against companies.
Acct Rules: Financial Accountings Standards Board (FASB)
- correct answer sets accounting rules for the private section in the U.S.. It is a private, non-
profit body established and supported by the joint efforts of the U.S. business community,
,financial analysts, and practicing accountants.
, The FASB has no legal power to enforce the accounting standards it sets but maintains its
influence by carefully protecting its prestige and reputation. The standards it sets are called
Generally Accepted Accounting Standards (GAAP). These are a common set of accounting
principles, standards, and procedures that companies must follow when they compile their
financial statements. (Reference Topic 1.4)
Acct Rules: Securities and Exchange Commission (SEC)
- correct answer has the legal authority to set accounting rules, but has deferred that
responsibility to the FASB in most cases. The SEC regulates U.S. stock exchanges and seeks to
create a fair information environment in which investors can buy and sell stocks without fear
that companies who sell stocks to the general public are hiding or manipulating financial
data. (Reference topic 1.5)
Acct Org: CPA Accreditation
- correct answer The American Institute of Certified Public Accountants (AICPA) is the
professional organization of certified public accountants (CPAs) in the United States. A CPA
is someone who has taken a minimum number of college-level accounting classes, has
passed the CPA exam, and has met other requirements set by his or her state. A CPA firm is
a company that provides freelance business advice, particularly in connection with
accounting issues and executes the vast majority of external audits in the US.
The AICPA sets ethical standards for CPAs, provides continuing education for them, writes
and grades the CPA exam, lobbies for legislation favored by CPAs, and provides other support
to CPAs. Its oversight of the CPA exam is its main role in accreditation. However, to be
accredited as a CPA you must meet the requirements of the state in which you plan to practice.
The requirements for each state are set by that state's legislature and overseen by that state's
Board of Accountancy, which is a state agency. (Reference Topic 1.5)
Acct Org: Public Company Accounting Oversight Board (PCAOB)
- correct answer determines who can audit public companies regardless of whether the audit
firm is accredited by a state Board of Accountancy. Thus, they accredit firms that can audit
public companies.
Current Trends changing Accounting: Globalization
- correct answer As more and more business do business globally, capital flows more freely
across national boundaries. This means investors can choose to invest in firms all over the
planet. To help them make investment decisions, the global accounting and regulatory
communities are working to bring accounting standards around the world into agreement the
IASB was one step in that direction, but nations still control the accounting standards used
within their borders and so much of the standardization is being done through voluntary
