WGU C213 Final Exam | Actual Exam Study Questions
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Definition
The three main sections of the Balance Sheet are Assets, Liabilities, and Equity.
Both assets and liabilities are further separated into current and long term
based on whether the asset is expected to be consumed or the liability paid
within a year. Assets expected to be consumed and liabilities expected to be
paid within a year are current and those that will be consumed or paid after a
year are long-term.
Equity is separated into paid in capital (also referred to as capital stock) and
retained earnings. Paid in capital is created when an owner buys stock from the
firm. Retained earnings are the accumulated earnings of the firm (i.e., net
income over time) that have not been paid back in dividends. Paid in capital
, also is referred to as contributed capital while retained earnings is earned
capital.
The Balance Sheet equation - Assets = Liabilities + Equity. Whenever any
transaction is recorded in the firm's accounting records, the recording must
always maintain this balance. However, some transactions only affect one side of
the equal sign with two offsetting entries. For example, selling an asset for cash
would only affect the asset side of the equation but would create a net zero
effect on Assets since one asset is being converted to another.
Liquidity or the speed with which it can be turned into cash. Current assets come
before long-term assets because they are expected to be liquidated in one year.
Within current assets, cash comes first because it is already cash. Accounts
receivable usually comes next because all the firm has to do is collect the
receivable to receive the cash. Inventory usually follows accounts receivable
because it has to be sold and then the money has to be collected to convert it
into cash.
Give this one a try later!
Identify the order of assets, liabilities, and stockholders' Identify components of the cash
flow equity accounts on a balance statement. sheet.
Identify components of the income Differentiate between management statement. and financial
accounting.
Don't know?
,
, The statement of cash flows 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.
Audit conducted by external (independent) qualified accountant(s). These accountants are
usually CPAs, but they may not be. Each state determines who can be a CPA in that state and
states have slightly different requirements.
The independent accounting firm conducts tests to determine whether the financial
statements fairly reflect the financial status of the company issuing them and whether the
financial statements were prepared using Generally Accepted Accounting Principles (GAAP).
The tests include an examination of the original documents underlying key transactions, a
spot check to verify that reported inventory actually does exist, and contact with a sample of
customers and suppliers to confirm the sales and purchases reported by the company. The
external auditor would also carefully review the system of procedures and controls within
the company to determine whether the accounting records are maintained in a reliable
fashion.
Firms hire independent external auditors for a variety of reasons. In some cases, laws and
regulations mandate that they do so. Aside for regulations, firms benefit when raising funds
through stock sales or by borrowing by being able to show the potential investor or creditor
that their financial statements have been audited because that increases the credibility of
those financial statements.
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.
Don't know?
3 of 66
and Answers complete Solutions | 2026 Updates |
100% correct
Next steps
Your answers
1 of 66
Definition
The three main sections of the Balance Sheet are Assets, Liabilities, and Equity.
Both assets and liabilities are further separated into current and long term
based on whether the asset is expected to be consumed or the liability paid
within a year. Assets expected to be consumed and liabilities expected to be
paid within a year are current and those that will be consumed or paid after a
year are long-term.
Equity is separated into paid in capital (also referred to as capital stock) and
retained earnings. Paid in capital is created when an owner buys stock from the
firm. Retained earnings are the accumulated earnings of the firm (i.e., net
income over time) that have not been paid back in dividends. Paid in capital
, also is referred to as contributed capital while retained earnings is earned
capital.
The Balance Sheet equation - Assets = Liabilities + Equity. Whenever any
transaction is recorded in the firm's accounting records, the recording must
always maintain this balance. However, some transactions only affect one side of
the equal sign with two offsetting entries. For example, selling an asset for cash
would only affect the asset side of the equation but would create a net zero
effect on Assets since one asset is being converted to another.
Liquidity or the speed with which it can be turned into cash. Current assets come
before long-term assets because they are expected to be liquidated in one year.
Within current assets, cash comes first because it is already cash. Accounts
receivable usually comes next because all the firm has to do is collect the
receivable to receive the cash. Inventory usually follows accounts receivable
because it has to be sold and then the money has to be collected to convert it
into cash.
Give this one a try later!
Identify the order of assets, liabilities, and stockholders' Identify components of the cash
flow equity accounts on a balance statement. sheet.
Identify components of the income Differentiate between management statement. and financial
accounting.
Don't know?
,
, The statement of cash flows 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.
Audit conducted by external (independent) qualified accountant(s). These accountants are
usually CPAs, but they may not be. Each state determines who can be a CPA in that state and
states have slightly different requirements.
The independent accounting firm conducts tests to determine whether the financial
statements fairly reflect the financial status of the company issuing them and whether the
financial statements were prepared using Generally Accepted Accounting Principles (GAAP).
The tests include an examination of the original documents underlying key transactions, a
spot check to verify that reported inventory actually does exist, and contact with a sample of
customers and suppliers to confirm the sales and purchases reported by the company. The
external auditor would also carefully review the system of procedures and controls within
the company to determine whether the accounting records are maintained in a reliable
fashion.
Firms hire independent external auditors for a variety of reasons. In some cases, laws and
regulations mandate that they do so. Aside for regulations, firms benefit when raising funds
through stock sales or by borrowing by being able to show the potential investor or creditor
that their financial statements have been audited because that increases the credibility of
those financial statements.
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.
Don't know?
3 of 66
