,WGU C213 - Accounting for Decision Makers Objective Assessment
| Questions and Answers | 2026/27 Updates
1. What is the fundamental accounting equation?
A) Assets = Liabilities + Owners' Equity
B) Assets + Liabilities = Owners' Equity
C) Revenues - Expenses = Net Income
D) Assets = Liabilities - Owners' Equity
Correct Answer: Assets = Liabilities + Owners' Equity
Rationale: This equation is the cornerstone of the double-entry accounting system, showing
that a company's resources (assets) are financed by either creditors (liabilities) or owners
(equity). It must always balance. The other equations are either reversed or represent different
accounting concepts like net income.
2. According to the course competencies, which of the following is the primary focus of the
Financial Analysis competency?
A) Using economic cost concepts and activity-based costing data
B) Analyzing financial statements to evaluate company performance and make
recommendations
C) Analyzing internal corporate controls to determine their adequacy
D) Using budgeting tools for planning and control purposes
Correct Answer: Analyzing financial statements to evaluate company performance and make
recommendations
, Rationale: Competency 3014.1.1, Financial Analysis, is explicitly defined as the graduate
analyzing financial statements to evaluate company performance and making recommendations
based on that analysis. This is a core skill for decision-makers.
3. The idea that transactions are recorded at their exchange prices at the transaction date is
referred to as which accounting principle?
A) Revenue recognition principle
B) Matching principle
C) Cost principle
D) Full disclosure principle
Correct Answer: Cost principle
Rationale: The cost principle mandates that assets and liabilities should be recorded at their
original cost at the time of the transaction. This provides a reliable, verifiable basis for
accounting records, though it may not always reflect current market values.
4. Which body establishes official accounting rules in the United States?
A) The Securities and Exchange Commission (SEC)
B) The Financial Accounting Standards Board (FASB)
C) The International Accounting Standards Board (IASB)
D) The American Institute of Certified Public Accountants (AICPA)
Correct Answer: The Financial Accounting Standards Board (FASB)
Rationale: The FASB is the private-sector body designated by the SEC to establish financial
accounting and reporting standards for public companies in the U.S.. While the SEC has
oversight, the FASB is the primary rule-making body.
, 5. What is the primary purpose of the Sarbanes-Oxley Act (SOX), which was passed in response
to major accounting scandals?
A) To establish international accounting standards
B) To increase federal government scrutiny of the production of financial statements
C) To regulate the activities of the Financial Accounting Standards Board
D) To define taxable income for corporations
Correct Answer: To increase federal government scrutiny of the production of financial
statements
Rationale: SOX was enacted to restore public confidence in financial reporting by increasing
oversight and accountability for public companies and their auditors. It aims to prevent
fraudulent accounting activities.
6. The statement of cash flows categorizes cash inflows and outflows into which three types of
activities?
A) Operating, Investing, and Financing
B) Revenue, Expense, and Profit
C) Current, Long-term, and Equity
D) Direct, Indirect, and Hybrid
Correct Answer: Operating, Investing, and Financing
Rationale: The statement of cash flows reports cash receipts and payments classified into
three sections: operating (day-to-day activities), investing (purchase/sale of long-term assets),
and financing (transactions with creditors and investors). This categorization helps users
understand the sources and uses of cash.
| Questions and Answers | 2026/27 Updates
1. What is the fundamental accounting equation?
A) Assets = Liabilities + Owners' Equity
B) Assets + Liabilities = Owners' Equity
C) Revenues - Expenses = Net Income
D) Assets = Liabilities - Owners' Equity
Correct Answer: Assets = Liabilities + Owners' Equity
Rationale: This equation is the cornerstone of the double-entry accounting system, showing
that a company's resources (assets) are financed by either creditors (liabilities) or owners
(equity). It must always balance. The other equations are either reversed or represent different
accounting concepts like net income.
2. According to the course competencies, which of the following is the primary focus of the
Financial Analysis competency?
A) Using economic cost concepts and activity-based costing data
B) Analyzing financial statements to evaluate company performance and make
recommendations
C) Analyzing internal corporate controls to determine their adequacy
D) Using budgeting tools for planning and control purposes
Correct Answer: Analyzing financial statements to evaluate company performance and make
recommendations
, Rationale: Competency 3014.1.1, Financial Analysis, is explicitly defined as the graduate
analyzing financial statements to evaluate company performance and making recommendations
based on that analysis. This is a core skill for decision-makers.
3. The idea that transactions are recorded at their exchange prices at the transaction date is
referred to as which accounting principle?
A) Revenue recognition principle
B) Matching principle
C) Cost principle
D) Full disclosure principle
Correct Answer: Cost principle
Rationale: The cost principle mandates that assets and liabilities should be recorded at their
original cost at the time of the transaction. This provides a reliable, verifiable basis for
accounting records, though it may not always reflect current market values.
4. Which body establishes official accounting rules in the United States?
A) The Securities and Exchange Commission (SEC)
B) The Financial Accounting Standards Board (FASB)
C) The International Accounting Standards Board (IASB)
D) The American Institute of Certified Public Accountants (AICPA)
Correct Answer: The Financial Accounting Standards Board (FASB)
Rationale: The FASB is the private-sector body designated by the SEC to establish financial
accounting and reporting standards for public companies in the U.S.. While the SEC has
oversight, the FASB is the primary rule-making body.
, 5. What is the primary purpose of the Sarbanes-Oxley Act (SOX), which was passed in response
to major accounting scandals?
A) To establish international accounting standards
B) To increase federal government scrutiny of the production of financial statements
C) To regulate the activities of the Financial Accounting Standards Board
D) To define taxable income for corporations
Correct Answer: To increase federal government scrutiny of the production of financial
statements
Rationale: SOX was enacted to restore public confidence in financial reporting by increasing
oversight and accountability for public companies and their auditors. It aims to prevent
fraudulent accounting activities.
6. The statement of cash flows categorizes cash inflows and outflows into which three types of
activities?
A) Operating, Investing, and Financing
B) Revenue, Expense, and Profit
C) Current, Long-term, and Equity
D) Direct, Indirect, and Hybrid
Correct Answer: Operating, Investing, and Financing
Rationale: The statement of cash flows reports cash receipts and payments classified into
three sections: operating (day-to-day activities), investing (purchase/sale of long-term assets),
and financing (transactions with creditors and investors). This categorization helps users
understand the sources and uses of cash.
