WGU D196 Study Set – 157 Verified Questions & Answers
| Principles of Financial & Managerial Accounting | Latest
Update 2026
1. Choose one correct statement:
Managerial accounting uses information from accounting records
for internal management purposes
Managerial accounting reports financial information to stockholders
Managerial accounting is strongly regulated
Managerial accounting reports the financial transactions between a
company and its environment
2. What is the initial step in the accounting decision-making process?
Making a decision
Evaluating alternatives
Gathering data
Identifying the problem
3. If a company experiences a significant increase in accounts receivable, how
would this affect its statement of cash flows?
It would show an increase in cash flow from investing activities.
It would have no effect on the statement of cash flows.
It would show a decrease in cash flow from operating activities.
It would show an increase in cash flow from financing activities.
4. Which of the following processes best defines accounting?
Preventing fraud
, Communicating results to interested parties
Measuring economic activities
Both measuring economic activities and communicating results to
interested parties
5. Who are the primary members of the Financial Accounting Standards Board
(FASB)?
Corporate executives and managers
Accounting professionals and financial experts
Government officials and regulators
Academic scholars and researchers
6. Which financial statement reports the economic resources owned by a
company?
Balance Sheet
Statement of Cash Flows
Income Statement
Statement of Stockholders' Equity
7. Describe how the cash flow statement aids investors in assessing a company's
financial health.
The cash flow statement summarizes revenues and expenses,
indicating profitability over a specific period.
The cash flow statement lists all assets and liabilities, providing a
snapshot of the company's financial position.
The cash flow statement outlines changes in equity, reflecting how
profits are distributed among shareholders.
, The cash flow statement shows the inflows and outflows of cash,
helping investors evaluate the company's liquidity and cash
management.
8. Describe why the balance sheet may not accurately represent a company's
current market value.
The balance sheet includes only cash transactions and ignores non-
cash items.
The balance sheet reflects future projections of income and expenses.
The balance sheet is based on historical cost and does not account
for current market conditions or intangible assets.
The balance sheet is updated daily to reflect current market values.
9. Main problem in using a balance sheet to provide an accurate assessment of
the value of a company's equity
Valuable assets (reputation, quality, strength) are not captured on
the balance sheet
Equity shown on the balance sheet does not reflect market cap
Balance sheet doesn't accurately represent the book value
Knowing at a single point in time does not give any indication of the
future
10. What is the primary role of accountants in relation to business activities?
Only communicate results
Measure and communicate results
Only measure results
Prepare tax returns
, 11. Who is primarily responsible for overseeing public accounting data to ensure
transparency for investors?
American Institute of CPAs (AICPA)
Internal Revenue Service (IRS)
Financial Accounting Standards Board (FASB)
Securities and Exchange Commission (SEC)
12. What is the term used to describe the process of collecting, analyzing, and
summarizing accounting information?
Financial statement
Capital budgeting
Transaction analysis
Accounting cycle
13. What is an example of a transaction in accounting?
A meeting to discuss financial strategies
A decision to hire a new employee
A sale of goods for cash
An increase in market share
14. If an accountant fails to gather relevant data before starting the master
budget, what potential impact could this have on the budgeting process?
The budget will only affect the sales department.
The budget will be perfectly accurate regardless of data gathering.
The budget will not require any adjustments in the future.
| Principles of Financial & Managerial Accounting | Latest
Update 2026
1. Choose one correct statement:
Managerial accounting uses information from accounting records
for internal management purposes
Managerial accounting reports financial information to stockholders
Managerial accounting is strongly regulated
Managerial accounting reports the financial transactions between a
company and its environment
2. What is the initial step in the accounting decision-making process?
Making a decision
Evaluating alternatives
Gathering data
Identifying the problem
3. If a company experiences a significant increase in accounts receivable, how
would this affect its statement of cash flows?
It would show an increase in cash flow from investing activities.
It would have no effect on the statement of cash flows.
It would show a decrease in cash flow from operating activities.
It would show an increase in cash flow from financing activities.
4. Which of the following processes best defines accounting?
Preventing fraud
, Communicating results to interested parties
Measuring economic activities
Both measuring economic activities and communicating results to
interested parties
5. Who are the primary members of the Financial Accounting Standards Board
(FASB)?
Corporate executives and managers
Accounting professionals and financial experts
Government officials and regulators
Academic scholars and researchers
6. Which financial statement reports the economic resources owned by a
company?
Balance Sheet
Statement of Cash Flows
Income Statement
Statement of Stockholders' Equity
7. Describe how the cash flow statement aids investors in assessing a company's
financial health.
The cash flow statement summarizes revenues and expenses,
indicating profitability over a specific period.
The cash flow statement lists all assets and liabilities, providing a
snapshot of the company's financial position.
The cash flow statement outlines changes in equity, reflecting how
profits are distributed among shareholders.
, The cash flow statement shows the inflows and outflows of cash,
helping investors evaluate the company's liquidity and cash
management.
8. Describe why the balance sheet may not accurately represent a company's
current market value.
The balance sheet includes only cash transactions and ignores non-
cash items.
The balance sheet reflects future projections of income and expenses.
The balance sheet is based on historical cost and does not account
for current market conditions or intangible assets.
The balance sheet is updated daily to reflect current market values.
9. Main problem in using a balance sheet to provide an accurate assessment of
the value of a company's equity
Valuable assets (reputation, quality, strength) are not captured on
the balance sheet
Equity shown on the balance sheet does not reflect market cap
Balance sheet doesn't accurately represent the book value
Knowing at a single point in time does not give any indication of the
future
10. What is the primary role of accountants in relation to business activities?
Only communicate results
Measure and communicate results
Only measure results
Prepare tax returns
, 11. Who is primarily responsible for overseeing public accounting data to ensure
transparency for investors?
American Institute of CPAs (AICPA)
Internal Revenue Service (IRS)
Financial Accounting Standards Board (FASB)
Securities and Exchange Commission (SEC)
12. What is the term used to describe the process of collecting, analyzing, and
summarizing accounting information?
Financial statement
Capital budgeting
Transaction analysis
Accounting cycle
13. What is an example of a transaction in accounting?
A meeting to discuss financial strategies
A decision to hire a new employee
A sale of goods for cash
An increase in market share
14. If an accountant fails to gather relevant data before starting the master
budget, what potential impact could this have on the budgeting process?
The budget will only affect the sales department.
The budget will be perfectly accurate regardless of data gathering.
The budget will not require any adjustments in the future.
