C213 WGU OA Prep
1. The ability a company has to pay its debts in the short run is its: Liquidity
2. Which of the following is a measure of the liquid position of a corporation?-
: Debt ratio
3. Which of the following ratios is used to measure a firm's leverage?: Debt
Ratio
4. Which of the following ratios is used to measure the profit earned on each
dollar invested in a firm?: Return on Equity
5. The emphasis in financial accounting is on which of the following external
user groups?: Investors and creditors
6. The primary internal group that uses accounting information is: Manage-
ment
7. Internal reports are generally used by: Management
8. Which of the following is NOT an external user of financial information?: -
Management
9. Which of the following is NOT true of the Financial Accounting Standards
Board (FASB)?: It is a government agency
10. Generally accepted accounting principles are: Developed by accounting rule
makers
11. The initials GAAP stand for: Generally Accepted Accounting Principles
12. The current standard-setting board for accounting in the private sector is
the: Financial Accounting Standards Board (FASB)
13. The organization that develops worldwide accounting standards is the: In-
ternational Accounting Standards Board (IASB)
14. The initials CPA stand for: Certified Public Accountant
15. Which of the following is NOT a service typically provided by large public
accounting firms?: Making management decisions
16. Standards established by the International Accounting Standards Board
are referred to as: International Financial Reporting Standards
17. Which of the following is the government agency that stipulates the rules
and regulations that govern the collection of taxes in the United States?: In-
ternal Revenue Service
18. Which of the following is NOT a reason for the integration of worldwide
accounting standards?: the theoretical necessity of a common set of accounting
standards
19. The International Accounting Standards Board (IASB) is charged with
developing worldwide accounting practices?: True
20. With the current state of information technology, investors outside a com-
pany are now allowed access to a company's internal database of financial
, C213 WGU OA Prep
information and do their own customized analysis of a firm's performance.: -
False
21. Increased federal oversight of the audit process resulted from the passage
of the following act of Congress -: Sarbanes-Oxley Act
22. A borrower benefits from providing financial information regarding income
and expenses in the form of a lower interest rate on the loan because of
reduced uncertainty for the lender with regard to repayment.: True
23. Which of the following is NOT one of the three primary financial state-
ments?: The Statement of Retained Earnings
24. One reason for a company's preparing and providing financial statements
is to reduce uncertainty for an investor regarding the firm's future financial
performance.: True
25. Which of the following accounts is considered to be the most liquid?: Cash
26. Which of the following types of accounts are NOT found on the balance
sheet?: Revenues
27. The financial statement that reports resources owned, the obligations
to transfer resources to other organizations, and the claims by the entity's
owners is known as the: Balance sheet
28. The idea that the activities of the entity are to be separated from those of
the individual owner is the: Separate entity concept
29. The basic accounting equation is: Assets = Liabilities + Owners' Equity
30. Which of the following would be included on an income statement?: Rent
expense
31. Costs that are incurred during the normal operations of a business to
generate revenues are called: Expenses
32. Another name for the income statement is: Statement of earnings
33. Revenues cause: An increase in net assets
34. The financial statement that presents a summary of the revenues and
expenses of a business for a specific period of time, such as a month or a
year, is called a(n): Income Statement
35. Which of the following activities would NOT be classified as an investing
activity?: Purchase of inventory
36. A major source of cash from operating activities is: Receipts from sale of
goods
37. Which of the following classifications refers to those activities associated
with buying and selling long-term assets?: Investing
38. Which of the following classifications does NOT appear on the Statement
of Cash Flows?: Borrowing
1. The ability a company has to pay its debts in the short run is its: Liquidity
2. Which of the following is a measure of the liquid position of a corporation?-
: Debt ratio
3. Which of the following ratios is used to measure a firm's leverage?: Debt
Ratio
4. Which of the following ratios is used to measure the profit earned on each
dollar invested in a firm?: Return on Equity
5. The emphasis in financial accounting is on which of the following external
user groups?: Investors and creditors
6. The primary internal group that uses accounting information is: Manage-
ment
7. Internal reports are generally used by: Management
8. Which of the following is NOT an external user of financial information?: -
Management
9. Which of the following is NOT true of the Financial Accounting Standards
Board (FASB)?: It is a government agency
10. Generally accepted accounting principles are: Developed by accounting rule
makers
11. The initials GAAP stand for: Generally Accepted Accounting Principles
12. The current standard-setting board for accounting in the private sector is
the: Financial Accounting Standards Board (FASB)
13. The organization that develops worldwide accounting standards is the: In-
ternational Accounting Standards Board (IASB)
14. The initials CPA stand for: Certified Public Accountant
15. Which of the following is NOT a service typically provided by large public
accounting firms?: Making management decisions
16. Standards established by the International Accounting Standards Board
are referred to as: International Financial Reporting Standards
17. Which of the following is the government agency that stipulates the rules
and regulations that govern the collection of taxes in the United States?: In-
ternal Revenue Service
18. Which of the following is NOT a reason for the integration of worldwide
accounting standards?: the theoretical necessity of a common set of accounting
standards
19. The International Accounting Standards Board (IASB) is charged with
developing worldwide accounting practices?: True
20. With the current state of information technology, investors outside a com-
pany are now allowed access to a company's internal database of financial
, C213 WGU OA Prep
information and do their own customized analysis of a firm's performance.: -
False
21. Increased federal oversight of the audit process resulted from the passage
of the following act of Congress -: Sarbanes-Oxley Act
22. A borrower benefits from providing financial information regarding income
and expenses in the form of a lower interest rate on the loan because of
reduced uncertainty for the lender with regard to repayment.: True
23. Which of the following is NOT one of the three primary financial state-
ments?: The Statement of Retained Earnings
24. One reason for a company's preparing and providing financial statements
is to reduce uncertainty for an investor regarding the firm's future financial
performance.: True
25. Which of the following accounts is considered to be the most liquid?: Cash
26. Which of the following types of accounts are NOT found on the balance
sheet?: Revenues
27. The financial statement that reports resources owned, the obligations
to transfer resources to other organizations, and the claims by the entity's
owners is known as the: Balance sheet
28. The idea that the activities of the entity are to be separated from those of
the individual owner is the: Separate entity concept
29. The basic accounting equation is: Assets = Liabilities + Owners' Equity
30. Which of the following would be included on an income statement?: Rent
expense
31. Costs that are incurred during the normal operations of a business to
generate revenues are called: Expenses
32. Another name for the income statement is: Statement of earnings
33. Revenues cause: An increase in net assets
34. The financial statement that presents a summary of the revenues and
expenses of a business for a specific period of time, such as a month or a
year, is called a(n): Income Statement
35. Which of the following activities would NOT be classified as an investing
activity?: Purchase of inventory
36. A major source of cash from operating activities is: Receipts from sale of
goods
37. Which of the following classifications refers to those activities associated
with buying and selling long-term assets?: Investing
38. Which of the following classifications does NOT appear on the Statement
of Cash Flows?: Borrowing
