WGU C213 Accounting for Decision
Makers Exam Questions with
Complete Solutions
Financial ratios - Answer-relationships between two financial statement numbers and
are often used in analyzing and describing a company's performance
Financial docs that allow comparison of financial statements across years and between
companies and are prepared by dividing all financial statement numbers by sales for the
year - Answer-Common-size financial statements
Return on sales is computed as net income divided by sales - Answer-In terms of ROE,
define profitability.
Asset turnover is computed as sales divided by assets and is interpreted as the number
of dollars in sales generated by each dollar of assets - Answer-In terms of ROE, define
efficiency.
Assets-to-equity ratio is computed as assets divided by equity and is interpreted as the
number of dollars of assets a company is able to acquire using each dollar invested by
stockholders - Answer-In terms of ROE, define leverage.
the profitability of each dollar in sales and turnover is the degree to which assets are
used to generate sales - Answer-Margin
NOTE: Companies with a low margin can still earn an acceptable level of return on
assets if they have a high turnover.
current asset - Answer-an asset that is expected to be used within one year of the
balance sheet date
cash, accounts receivable, and inventory - Answer-What are the most common current
assets?
Property, plant, and equipment (PPE) - Answer-What are the primary long-term assets?
companies report the intangibles that they have purchased from other companies but
not the intangibles that they have developed themselves - Answer-Which intangible
assets are reported on the balance sheet?
, current liability - Answer-those obligations that are expected to be paid or otherwise
satisfied within one year
long-term bank loans, mortgages, and bonds - Answer-What are 3 common sources of
long-term debt?
Common stockholders are the true owners of a business; Preferred stockholders give
up some of the rights of ownership enjoyed by common stockholders in exchange for
some of the safety promised to creditors - Answer-What is the difference between a
common stockholder and a preferred stockholder?
Retained Earnings - Answer-the cumulative amount of corporate profits that have been
retained within the business rather than being paid out to stockholders as dividends
treasury stock - Answer-the amount the corporation has spent to buy back its own
shares from stockholders
2 years, Comparative side-by-side format - Answer-How many years worth of balance
sheets does a company usually provide and how are they typically formatted?
Cash - Answer-What is the first item that is usually listed on a U.S. balance sheet?
Long-term assets - Answer-What is the first item that is usually listed on a non-U.S.
balance sheet?
working capital - Answer-The difference of current assets-current liabilities
Recognition (In terms of accounting) - Answer-the process of condensing all estimates
and judgments into one number and reporting that one number in the formal financial
statements
disclosure - Answer-An alternative way to report information, describing details in a
narrative note
Transaction Analysis - Answer-is the process of determining how an economic event
impacts financial statements
Asset Mix - Answer-the proportion of total assets in each asset category that is largely
determined by the industry in which the company operates
Income from Continuing Operations - Answer-What is the best measure of sustainable
profitability?
Gross Profit - Answer-the difference between the selling price of a product and the cost
of the product
Makers Exam Questions with
Complete Solutions
Financial ratios - Answer-relationships between two financial statement numbers and
are often used in analyzing and describing a company's performance
Financial docs that allow comparison of financial statements across years and between
companies and are prepared by dividing all financial statement numbers by sales for the
year - Answer-Common-size financial statements
Return on sales is computed as net income divided by sales - Answer-In terms of ROE,
define profitability.
Asset turnover is computed as sales divided by assets and is interpreted as the number
of dollars in sales generated by each dollar of assets - Answer-In terms of ROE, define
efficiency.
Assets-to-equity ratio is computed as assets divided by equity and is interpreted as the
number of dollars of assets a company is able to acquire using each dollar invested by
stockholders - Answer-In terms of ROE, define leverage.
the profitability of each dollar in sales and turnover is the degree to which assets are
used to generate sales - Answer-Margin
NOTE: Companies with a low margin can still earn an acceptable level of return on
assets if they have a high turnover.
current asset - Answer-an asset that is expected to be used within one year of the
balance sheet date
cash, accounts receivable, and inventory - Answer-What are the most common current
assets?
Property, plant, and equipment (PPE) - Answer-What are the primary long-term assets?
companies report the intangibles that they have purchased from other companies but
not the intangibles that they have developed themselves - Answer-Which intangible
assets are reported on the balance sheet?
, current liability - Answer-those obligations that are expected to be paid or otherwise
satisfied within one year
long-term bank loans, mortgages, and bonds - Answer-What are 3 common sources of
long-term debt?
Common stockholders are the true owners of a business; Preferred stockholders give
up some of the rights of ownership enjoyed by common stockholders in exchange for
some of the safety promised to creditors - Answer-What is the difference between a
common stockholder and a preferred stockholder?
Retained Earnings - Answer-the cumulative amount of corporate profits that have been
retained within the business rather than being paid out to stockholders as dividends
treasury stock - Answer-the amount the corporation has spent to buy back its own
shares from stockholders
2 years, Comparative side-by-side format - Answer-How many years worth of balance
sheets does a company usually provide and how are they typically formatted?
Cash - Answer-What is the first item that is usually listed on a U.S. balance sheet?
Long-term assets - Answer-What is the first item that is usually listed on a non-U.S.
balance sheet?
working capital - Answer-The difference of current assets-current liabilities
Recognition (In terms of accounting) - Answer-the process of condensing all estimates
and judgments into one number and reporting that one number in the formal financial
statements
disclosure - Answer-An alternative way to report information, describing details in a
narrative note
Transaction Analysis - Answer-is the process of determining how an economic event
impacts financial statements
Asset Mix - Answer-the proportion of total assets in each asset category that is largely
determined by the industry in which the company operates
Income from Continuing Operations - Answer-What is the best measure of sustainable
profitability?
Gross Profit - Answer-the difference between the selling price of a product and the cost
of the product
