WGU D774 – PA QUESTIONS WITH VERIFIED
ACCURATE ANSWERS
Which ancient civilization dates to the early development of accounting? - Answers -
Ancient Mesopotamia (c. 3000 BCE)
Which year is associated with the stock market crash that had a profound economic
impact? - Answers - 1929
What was the regulatory outcome of accounting scandals such as Enron, WorldCom,
and Tyco? - Answers - The Sarbanes-Oxley Act was introduced, requiring stricter
financial controls and oversight.
A business owner is trying to better understand their company's financial performance
and operations. The owner recently learned that two types of accounting—financial
accounting and managerial accounting—serve different purposes. What is one
difference between them? - Answers - Financial accounting focuses on external
reporting, while managerial accounting focuses on internal decision-making.
Which statement describes the focus of managerial accounting? - Answers - Improving
future results based on an analysis of past performance
A company is preparing annual financial statements to share with investors. Which
characteristic of financial accounting reports applies in this situation? - Answers - They
include monetary and nonmonetary information.
A publicly traded company is preparing to issue stock to its investors. As part of the
process, the company must submit financial disclosures and filings to the regulatory
agency overseeing securities markets. Which federal agency is responsible for this
regulation? - Answers - Securities and Exchange Commission (SEC)
Which organization is an independent, nonprofit entity responsible for setting financial
accounting and reporting standards for public and private sector businesses in the
United States that use generally accepted accounting principles (GAAP)? - Answers -
Financial Accounting Standards Board (FASB)
What is the purpose of the Public Company Accounting Oversight Board (PCAOB)? -
Answers - It oversees the audits of public companies to protect investors.
A multinational corporation wants to hire an audit firm with extensive experience in
financial statement auditing for publicly traded companies. Which type of firm would be
the most suitable choice? - Answers - Big Four
, Which accounting formula does the income statement represent? - Answers - Revenues
- expenses
What does a company's operating expense on the income statement represent? -
Answers - The day-to-day operational costs not associated with the direct selling of
products or services
A business pays rent for its office space, which is reported as an expense on its income
statement.Which category includes this expense? - Answers - General and
administrative expenses
Which financial statement reports the profit or loss using the accrual basis of
accounting? - Answers - Income statement
How do the income statement categories allow for different income streams when a
company earns money from multiple sources? - Answers - It categorizes revenue based
on operating and non-operating activities.
A shopkeeper receives $500 from selling products in their store. Where should this be
reported on the income statement? - Answers - Revenues
The investors of Kretsmart are interested in whether Kretsmart has been profitable for
the last year. The investors received the complete financial statements for the company.
Which report should they review to see if the company was profitable? - Answers -
Income statement
A bakery sells $10,000 worth of cakes in one month, but after subtracting the cost of
ingredients, rent, and wages, the business is left with $3,500. Where should the user of
the income statement expect to see the $10,000? - Answers - Revenue
A retailer reports an increase in revenue but a decrease in income from the previous
year. Why can income decrease while revenue increases? - Answers - Higher expenses
offset the revenue increase.
A company reports high revenue but low net income.Which financial insight does the
income statement provide in this scenario? - Answers - It highlights the impact of
expenses on overall profitability.
Which type of income statement should report gross margin in the income statement? -
Answers - Multiple step
Which financial statement report would a manager use to determine how much the firm
owed its suppliers? - Answers - Balance sheet
A company has the following items:
ACCURATE ANSWERS
Which ancient civilization dates to the early development of accounting? - Answers -
Ancient Mesopotamia (c. 3000 BCE)
Which year is associated with the stock market crash that had a profound economic
impact? - Answers - 1929
What was the regulatory outcome of accounting scandals such as Enron, WorldCom,
and Tyco? - Answers - The Sarbanes-Oxley Act was introduced, requiring stricter
financial controls and oversight.
A business owner is trying to better understand their company's financial performance
and operations. The owner recently learned that two types of accounting—financial
accounting and managerial accounting—serve different purposes. What is one
difference between them? - Answers - Financial accounting focuses on external
reporting, while managerial accounting focuses on internal decision-making.
Which statement describes the focus of managerial accounting? - Answers - Improving
future results based on an analysis of past performance
A company is preparing annual financial statements to share with investors. Which
characteristic of financial accounting reports applies in this situation? - Answers - They
include monetary and nonmonetary information.
A publicly traded company is preparing to issue stock to its investors. As part of the
process, the company must submit financial disclosures and filings to the regulatory
agency overseeing securities markets. Which federal agency is responsible for this
regulation? - Answers - Securities and Exchange Commission (SEC)
Which organization is an independent, nonprofit entity responsible for setting financial
accounting and reporting standards for public and private sector businesses in the
United States that use generally accepted accounting principles (GAAP)? - Answers -
Financial Accounting Standards Board (FASB)
What is the purpose of the Public Company Accounting Oversight Board (PCAOB)? -
Answers - It oversees the audits of public companies to protect investors.
A multinational corporation wants to hire an audit firm with extensive experience in
financial statement auditing for publicly traded companies. Which type of firm would be
the most suitable choice? - Answers - Big Four
, Which accounting formula does the income statement represent? - Answers - Revenues
- expenses
What does a company's operating expense on the income statement represent? -
Answers - The day-to-day operational costs not associated with the direct selling of
products or services
A business pays rent for its office space, which is reported as an expense on its income
statement.Which category includes this expense? - Answers - General and
administrative expenses
Which financial statement reports the profit or loss using the accrual basis of
accounting? - Answers - Income statement
How do the income statement categories allow for different income streams when a
company earns money from multiple sources? - Answers - It categorizes revenue based
on operating and non-operating activities.
A shopkeeper receives $500 from selling products in their store. Where should this be
reported on the income statement? - Answers - Revenues
The investors of Kretsmart are interested in whether Kretsmart has been profitable for
the last year. The investors received the complete financial statements for the company.
Which report should they review to see if the company was profitable? - Answers -
Income statement
A bakery sells $10,000 worth of cakes in one month, but after subtracting the cost of
ingredients, rent, and wages, the business is left with $3,500. Where should the user of
the income statement expect to see the $10,000? - Answers - Revenue
A retailer reports an increase in revenue but a decrease in income from the previous
year. Why can income decrease while revenue increases? - Answers - Higher expenses
offset the revenue increase.
A company reports high revenue but low net income.Which financial insight does the
income statement provide in this scenario? - Answers - It highlights the impact of
expenses on overall profitability.
Which type of income statement should report gross margin in the income statement? -
Answers - Multiple step
Which financial statement report would a manager use to determine how much the firm
owed its suppliers? - Answers - Balance sheet
A company has the following items:
