WGU C213 Accounting for Decision Makers OA Exam | Latest
Update 2026/2027 | 200 Questions and Verified Answers |
Complete Q&A Guide | A+ Graded
1. Which accounting concept assumes a business will continue operating indefinitely?
A. Monetary unit assumption
B. Economic entity assumption
C. Going concern assumption
D. Periodicity assumption
Correct Answer: C
Explanation: The going concern assumption presumes that a business will continue to operate in the
foreseeable future and will not be forced to liquidate its assets. The monetary unit assumption assumes
a stable currency; the economic entity assumption separates the owner from the business; and
periodicity divides the business's life into artificial time periods.
2. Under accrual accounting, revenue is recognized when:
A. Cash is received
B. The customer places an order
C. Earned, regardless of cash receipt
D. The invoice is printed
Correct Answer: C
,Explanation: The revenue recognition principle states that revenue should be recognized when it is
earned (i.e., when the delivery of goods or services has occurred), not when cash changes hands. This is
a fundamental distinction between accrual and cash basis accounting.
3. The matching principle requires:
A. Revenues equal expenses
B. Expenses matched to revenues in the same period
C. Cash outflows equal cash inflows
D. Assets = Liabilities + Equity
Correct Answer: B
Explanation: The matching principle requires that expenses be recognized in the same period as the
revenues they helped generate. For example, cost of goods sold is matched with the sales revenue from
those goods. The accounting equation (D) is a separate concept.
4. A company buys equipment for $50,000 cash. What is the effect on the accounting equation?
A. Assets decrease, equity decreases
B. Assets increase, assets decrease (no net change)
C. Liabilities increase, assets increase
D. Equity increases, assets increase
Correct Answer: B
,Explanation: One asset (equipment) increases by $50,000, while another asset (cash) decreases by the
same amount. Total assets remain unchanged, and there is no effect on liabilities or equity.
5. Which financial statement reports assets, liabilities, and equity at a point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Correct Answer: C
Explanation: The balance sheet provides a "snapshot" of a company's financial position at a specific
point in time, reporting assets, liabilities, and owners' equity. The income statement and statement of
cash flows cover a period of time.
6. Retained earnings on the balance sheet represents:
A. Cash available for dividends
B. Cumulative net income not distributed as dividends
C. Total contributed capital
D. Market value of the company
Correct Answer: B
, Explanation: Retained earnings represent the cumulative amount of net income that has been earned by
the company but not distributed to shareholders as dividends. It is calculated as beginning retained
earnings + net income dividends. Retained earnings are not cash; they may have been reinvested in
assets.
7. Which of the following is an example of an investing activity on the statement of cash flows?
A. Payment of dividends
B. Purchase of machinery
C. Borrowing from a bank
D. Sale of inventory
Correct Answer: B
Explanation: The purchase of longterm assets such as machinery, equipment, or property is classified as
an investing activity. Dividends and borrowing are financing activities, while the sale of inventory is an
operating activity.
8. Which private body establishes accounting rules in the United States?
A. Securities and Exchange Commission (SEC)
B. Financial Accounting Standards Board (FASB)
C. Public Company Accounting Oversight Board (PCAOB)
D. American Institute of Certified Public Accountants (AICPA)
Correct Answer: B
Update 2026/2027 | 200 Questions and Verified Answers |
Complete Q&A Guide | A+ Graded
1. Which accounting concept assumes a business will continue operating indefinitely?
A. Monetary unit assumption
B. Economic entity assumption
C. Going concern assumption
D. Periodicity assumption
Correct Answer: C
Explanation: The going concern assumption presumes that a business will continue to operate in the
foreseeable future and will not be forced to liquidate its assets. The monetary unit assumption assumes
a stable currency; the economic entity assumption separates the owner from the business; and
periodicity divides the business's life into artificial time periods.
2. Under accrual accounting, revenue is recognized when:
A. Cash is received
B. The customer places an order
C. Earned, regardless of cash receipt
D. The invoice is printed
Correct Answer: C
,Explanation: The revenue recognition principle states that revenue should be recognized when it is
earned (i.e., when the delivery of goods or services has occurred), not when cash changes hands. This is
a fundamental distinction between accrual and cash basis accounting.
3. The matching principle requires:
A. Revenues equal expenses
B. Expenses matched to revenues in the same period
C. Cash outflows equal cash inflows
D. Assets = Liabilities + Equity
Correct Answer: B
Explanation: The matching principle requires that expenses be recognized in the same period as the
revenues they helped generate. For example, cost of goods sold is matched with the sales revenue from
those goods. The accounting equation (D) is a separate concept.
4. A company buys equipment for $50,000 cash. What is the effect on the accounting equation?
A. Assets decrease, equity decreases
B. Assets increase, assets decrease (no net change)
C. Liabilities increase, assets increase
D. Equity increases, assets increase
Correct Answer: B
,Explanation: One asset (equipment) increases by $50,000, while another asset (cash) decreases by the
same amount. Total assets remain unchanged, and there is no effect on liabilities or equity.
5. Which financial statement reports assets, liabilities, and equity at a point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Correct Answer: C
Explanation: The balance sheet provides a "snapshot" of a company's financial position at a specific
point in time, reporting assets, liabilities, and owners' equity. The income statement and statement of
cash flows cover a period of time.
6. Retained earnings on the balance sheet represents:
A. Cash available for dividends
B. Cumulative net income not distributed as dividends
C. Total contributed capital
D. Market value of the company
Correct Answer: B
, Explanation: Retained earnings represent the cumulative amount of net income that has been earned by
the company but not distributed to shareholders as dividends. It is calculated as beginning retained
earnings + net income dividends. Retained earnings are not cash; they may have been reinvested in
assets.
7. Which of the following is an example of an investing activity on the statement of cash flows?
A. Payment of dividends
B. Purchase of machinery
C. Borrowing from a bank
D. Sale of inventory
Correct Answer: B
Explanation: The purchase of longterm assets such as machinery, equipment, or property is classified as
an investing activity. Dividends and borrowing are financing activities, while the sale of inventory is an
operating activity.
8. Which private body establishes accounting rules in the United States?
A. Securities and Exchange Commission (SEC)
B. Financial Accounting Standards Board (FASB)
C. Public Company Accounting Oversight Board (PCAOB)
D. American Institute of Certified Public Accountants (AICPA)
Correct Answer: B
