WGU C213 Topics 1-6 Quizzes – Accounting for Decision Maker Review (Latest 2026/ 2027 Update) | 100% Verified Questions & Answers | Grade A

WGU C213 Topics 1-6 Quizzes – Accounting for Decision Maker Review (Latest 2026/ 2027 Update) | 100% Verified Questions & Answers | Grade A Question: The emphasis in financial accounting is on which of the following external user groups? Answer Investors and creditors Question: The primary internal group that uses accounting information is? Answer Management Question: Internal reports are generally used by? Answer Management Question: Which of the following is NOT an external user of financial information? Answer Management Question: Which of the following is NOT true of the Financial Accounting Standards Board (FASB)? Answer It is a government agency Question: Generally accepted accounting principles are? Answer Developed by accounting rule makers Question: The initials GAAP stand for? Answer Generally Accepted Accounting Principles Question: The current standard-setting board for accounting in the private sector is the? Answer Financial Accounting Standards Board (FASB) Question: Which of the following is the government agency that stipulates the rules and regulations that govern the collection of taxes in the United States? Answer Internal Revenue Service Question: The organization that develops worldwide accounting standards is the? Answer International Accounting Standards Board (IASB) Question: Standards established by the International Accounting Standards Board are referred to as? Answer International Financial Accounting Standards Question: Which of the following is NOT a service typically provided by large public accounting firms? Answer Making management decisions Question: Which of the following organizations has specific legal authority to establish accounting standards for publicly held companies? Answer Securities and Exchange Commission (SEC) Question: Which of the following is NOT a reason for the integration of worldwide accounting standards? Answer The theoretical necessity of a common set of accounting standards Question: The International Accounting Standards Board (IASB) is charged with developing worldwide accounting practices? True or False? Answer True Question: With the current state of information technology, investors outside a company are now allowed access to a company's internal database of financial information and do their own customized analysis of a firm's performance. True or False? Answer False Question: While the technology may be available, companies are still not allowing outsiders access to their internal accounting records. True or False? Answer True Question: Increased federal oversight of the audit process resulted from the passage of the following act of Congress - Answer Sarbanes-Oxley Act Question: A borrower benefits from providing financial information regarding income and expenses in the form of a lower interest rate on the loan because of reduced uncertainty for the lender with regard to repayment. True or False? Answer True Which of the following is NOT one of the three primary financial statements? Answer The Statement of Retained Earnings One reason for a company's preparing and providing financial statements is to reduce uncertainty for an investor regarding the firm's future financial performance. True or False? Answer True Which of the following distinguishes between current and long-term assets? Answer Classified balance sheet Which of the following financial statements provides a picture of the enterprise at a particular point in time? Answer Balance sheet Which of the following is the reason that the accounting equation is true by definition? Answer Liabilities and owner's equity are the sources that fund the purchase of assets The idea that businesses must be accounted for as though they will exist at least for the forseeable future is the? Answer Going concern concept Revenues cause? Answer An increase in net assets Which of the following is an overall measure of the performance of a business entity's activities? Answer Net income (or net loss) The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or a year, is called a(n)? Answer Income Statement Which of the following would be included on an income statement? Answer Rent expense Another name for the income statement is? Answer Statement of earnings Which of the following classification does NOT appear on the Statement of Cash Flows? Answer Borrowing Which of the following classifications refers to those activities whereby cash is obtained or repaid to owners and creditors? Financing Which of the following activities would NOT be classified as an investing activity? Purchase of inventory Which of the following activities would be classified as a financing activity? Repayment of a loan Vital information that CANNOT be captured solely by dollar amounts is reported in a firm's... Notes to financial statements Which of the following is NOT one of the four general types of financial statement notes? Supplementary information required by the Internal Revenue Service Which of the following is an example of a significant accounting policy that would be explained in the notes to the financial statements? The method used to estimate depreciation on a piece of equipment Which of the following is an example of a disclosure of information NOT recognized that would be explained in the notes to the financial statements? The disclosure of the uncertain, potential outcome of a lawsuit Which of the following is an example of additional information about summary totals that would be explained in the notes to the financial statements? The description of all the individual items that comprise notes payable An independent audit report is usually issued by? A certified public accountant In completing an audit of a company's financial statements, auditors... Provide some assurance that the financial statements are not misleading The accuracy of the information contained in the financial statements is the responsibility of the? Management Which of the following are the two economic factors that enable us to trust an independent auditor despite the fact that the auditor was hired by the company being audited? Reputation of auditor and risk of lawsuits The idea that certain figures on an operating statement help to explain changes in figures on comparative balance sheets is referred to as... Articulation The idea that information becomes more useful when it can be related to a benchmark or a standard is referred to as... Comparability The notion that when doubt exists concerning two or more reporting alternatives, users should select the alternative with the least favorable impact on reported income, assets, and liabilities is referred to as... Conservatism Whether an item is big enough that proper accounting will make a difference to users of accounting information is referred to as... Materiality The notion that information will be more useful if it will impact a decision is referred to as... Relevance Which of the following would be classified as a long-term asset? Land Which of the following decreases owners' equity? Operates generate a loss Which of the following would be classified as a current asset? Accounts receivable Which of the following generally is NOT considered to be a liability? Inventory 1. The following data were taken from the records of Moss Corporation for the year ending December 31, 2012: 01/01/12 Assets =$11,250 Liabilities = $8,580 Owners' equity = ? 12/31/12 Assets = ? Liabilities = $10,365 Owners' equity = $6,465 Given the above information, assets on December 31, 2012, were: o $18,060 o $11,250 o $5,025 o $16,830 $16,830 Current assets usually are listed on a balance sheet in... Decreasing order of liquidity Which of the following accounts would NOT be considered a current asset? Equipment In non-U.S. Balance sheets, you will often see each of the following EXCEPT: The stockholders' equity section will be listed first on the balance sheet Historical cost has long been used in accounting because it is... Reliable This is sometimes done in place of recognition when the effects of an event cannot be quantified with any degree of certainty. Disclosure Reporting the details of a transaction in the notes to the financial statements is called? Disclosure The process of formally recording an item in the accounting records so that it will be reflected in the financial statements is called? Recognition The process of valuation involves computing numbers that are both? Relevant and reliable When a company borrows money from a bank to be repaid in over time, the effect on the accounting equation for the company will be to? Increase Cash and increase Bank Loan Payable When an investor pays cash into a business to become a part owner, the effect on the accounting equation for the business will be to Increase Cash and increase Paid-in Capital When a company pays for a warehouse by paying cash, the effect on the accounting equation will be to? Increase Buildings and decrease Cash When a company rents a warehouse by paying for the first six month's rent in advance, the effect on the accounting equation on the day of payment would be to? Increase Prepaid Rent and decrease Cash When a company buys a warehouse by using a mortgage with a local bank, the effect on the accounting equation for the company will be to? Increase Buildings and increase Mortgage Payable A company's asset mix is determined by? Dividing each asset item on the balance sheet by total assets A company's asset mix is strongly influence by? The company's industry Financing mix is a measure of? The degree to which a company finances assets using liabilities or owners' equity Given the following information, compute net income - Cost of Goods Sold = $2,000 Extraordinary Item = $-170 Income Taxes = $350 Interest Expense = $200 Operating Expenses = $1,500 Sales = $5,500 o $1,450 o $2,000 o $1,280 o $3,500 $1,280 (Breakdown: $5,500 - $2,000 - $1,500 - $350 - $200 - $170 = $1,280) Given the following information, compute comprehensive income - Extraordinary Loss = $-80 Income Taxes = $150 Interest Expense = $100 Operating Income = $1,500 Unrealized Gain not included in Net Income = $120 o $1,170 o $1,500 o $1,290 o $1,250 $1,290 (Breakdown: $1,500 - $150 - $100 - $80 +120 = $1,290) Operating Income is equal to - Income from Continuing Operations plus Income Tax Expense and Interest Expense plus/minus other miscellaneous revenues, expenses, gains, and losses The proper order on an income statement for the various measures of income is? Gross profit, operating income, income from continuing operations, net income, comprehensive income A measure of a company's performance that includes all items that are expected to continue into the future is - Income from Continuing Operations During the month, Meridian Company had the following cash transactions: Cash collected from customers = $12,500 Cash received from a loan = $8,000 Cash paid for wages payable = $(5,750) Cash paid for the purchase of a building = $(15,000) Cash received for the issuance of new shares of stock = $2,600 Cash received from sale of land = $6,400 Cash paid for rent = $(2,500) Cash paid for dividends = $(1,500) Given the above information, compute cash flow from operating activities. o $20,750 o $9,250 o $4,250 o $15,750 $4,250 (Breakdown: Operating activities: $12,500 - $5,750 - $2,500 = $4,250) Which of the following is a revenue generating activity? Selling a product Which of the following is the correct way to date an income statement? For the Year Ended December 31, 2012 The following information was taken from the records of Tellers Corporation for the month ended December 31, 2012: Advertising expense = $20,625 Income tax expense = $13,095 Accounts payable = $13,450 Dividends paid = $14,125 Retained earnings (12/1/12) = $57,860 Consulting fees revenue = $93,550 Rent expense = $11,728 Supplies expense = $16,917 If Tellers has 2,100 shares of stock outstanding, earnings per share is approximately a. $4.67 b. $16.81 c. $46.51 d. $14.85 $14.85 (Breakdown: Net income = $93,550 - $20,625 - $13,095 - $11,728 - $16,917 = $31,185 Earnings per share = $31,185 / 2,100 shares = $14.85) Earnings per share is equal to? Net income divided by total number of shares of stock outstanding The following information was taken from the records of McDyce Corporation for the year ended December 31, 2013: Dividends paid = $12,800 Service revenue = $90,500 Accounts payable = $139,750 Capital stock = $378,750 Total expenses = $67,000 Retained earnings (1/1/13) = $43,400 The net income at December 31, 2013 was... a. $43,400 b. $23,500 c. $72,750 d. $54,100 $23,500 (Breakdown: Net income = $90,500 - $67,000 = $23,500) With a multiple-step income statement all revenues are grouped together, all expenses are grouped together, and net income is computed as the difference between the two. True or False? False When revenue and expense items are arranged to highlight important profit relationships, the resulting income statement format is called a - multiple-step income statement With a single-step income statement all revenues are grouped together, all expenses are grouped together, and net income is computed as the difference between the two. True or False? True An example of direct matching of an expense with revenues would be? Direct labor costs incurred to produce inventory sold during a period. Which of the following is NOT an acceptable basis for the recognition of expenses? Cash disbursement Which of the following is an application of the principle of systematic and rational allocation? Depreciation expense Costs that can be reasonably associated with specific revenues but NOT with specific products should be Expensed in the period in which the related revenue is recognized. A wholesale bakery would normally recognize revenue when... Goods are delivered to the customer. Analysis of revenue and expense transactions requires the use of the: Expanded Accounting Equation Thus far, the only national government to adopt the accrual basis for its official accounting system is ______. New Zealand Which of the following statements is true regarding retained earnings? All of the statements are true ______ is/are not considered to be an expense of doing business. Cash dividends ____ is increased and ____ is decreased when cash is collected from customers who had previously purchased a product or service on account. Cash, Accounts Receivable Most forecasting exercises begin with a forecast of Sales. If a company anticipates a 40% increase in sales volume, then it is most likely that the company will need about a 40% increase in Accounts payable The statement of cash flows replaces the... - Balance sheet - Statement of financial position - Income statement - None of these None of these The statement of cash flows Summarizes all cash inflows and outflows of an entity for a given period of time Which of the following is NOT a purpose of the statement of cash flows? - It provides information about an entity's cash receipts and payments over a period of time. - It highlights changes in managerial strategy regarding investments and finances. - It provides investors with information about the investing and financing activities of an entity. - It measures the profitability of an entity. It measures the profitability of an entity. Which of the following statements is NOT true? - The statement of cash flows provides details as to how the cash account changed during a period. - The statement of cash flows includes transactions that are not already reflected in the balance sheet and income statement. - The statement of cash flows does not replace the income statement. - The statement of cash flows sheds some light on a company's ability to generate income in the future. The statement of cash flows includes transactions that are not already reflected in the balance sheet and income statement. Significant noncash financing transactions... - Are included parenthetically on a statement of cash flows - Should not be disclosed in the body of a statement of cash flows but should appear in the notes to the financial statements elsewhere - Should not be disclosed at all since they are irrelevant to actual performance - Are deducted from net income to determine cash provided by operating activities on a statement of cash flows Should not be disclosed in the body of a statement of cash flows but should appear in the notes to the financial statements elsewhere Those transactions and events that enter into the determination of net income are reported under which section of the statement of cash flows? Operating activities Which of the following would be reported as an operating activity on a statement of cash flows? - Payment of dividends - Payment of taxes - Purchase of a building - Repayment of a loan Payment of taxes Which of the following would be reported as a financing activity on a statement of cash flows? - Receipt of a dividend - Purchase of treasury stock - Proceeds from the sale of land - Payment of interest Purchase of treasury stock Which of the following would NOT be reported as an investing activity on a statement of cash flows? - Amounts borrowed - Collection of a long-term note receivable - Sale of a building - Extending loans to other entities Amounts borrowed The following financial information is available for the year 2012: Operating activities = $ 309,800 Investing activities = ($118,000) Financing activities = ($190,000) Ending cash balance = $ 5,600 Given this information, what is the beginning cash balance? $72,600 $1,800 $112,400 $3,800 $3,800 Breakdown - Beginning cash balance: x + $309,800 - $118,000 - $190,000 = $5,600 x = $3,800 Yuka Company had a beginning cash balance of $1,875. In addition, Yuka Company reported the following items from its cash flow statement: Operating activities = $6,450 Investing activities = ($4,735) Financing activities = ($1,200) Given this information, Yuka Company's ending cash balance is... $515 $2,390 $3,590 $2,480 $2,390 Breakdown - Ending cash balance: $1,875 + $6,450 - $4,735 - $1,200 = $2,390 Dahbi Corporation has the following financial information available: Operating activities = $14,250 Financing activities = $ 3,500 Beginning cash balance = $ 1,450 Ending cash balance = $5,650 Given this information, what is the amount of cash provided by (used in) Dahbi's investing activities? ($13,550) $13,550 ($24,850) $17,750 ($13,550) Breakdown - Investing activities: $1,450 + $14,250 + x + $3,500 = $5,650 x = ($13,550) Avondale Inc. had the following cash transactions during 2012: Sales receipts = $2,000,000 Inventory payments = $1,500,000 Interest payments = $20,000 Wage payments = $120,000 Dividend receipts = $10,000 Interest receipts = $6,000 Equipment purchased = $150,000 Stock of Canton Company purchased = $50,000 Stock issued = $300,000 Repaid a note (non-operating) = $100,000 What was Avondale's total net increase in cash for the year provided by (used in) financing activities? $150,000 $100,000 $200,000 $300,000 $200,000 Breakdown: Cash provided by financing activities: $300,000 - $100,000 = $200,000 Avondale Inc. had the following cash transactions during 2012: Sales receipts = $2,000,000 Inventory payments = $1,500,000 Interest payments = $20,000 Wage payments = $120,000 Dividend receipts = $10,000 Interest receipts = $6,000 Equipment purchased = $150,000 Stock of Canton Company purchased = $50,000 Stock issued = $300,000 Repaid a note (non-operating) = $100,000 What was Avondale's net increase in cash for the year? $576,000 $266,000 $306,000 $376,000 $376,000 Breakdown - Net increase in cash: $2,000,000 - $1,500,000 - $20,000 - $120,000 + $10,000 + $6,000 - $150,000 - $50,000 + $300,000 - $100,000 = $376,000 The method by which cash flows are presented on a statement of cash flows as operating cash receipts and payments is the? Direct method A loss from the sale of a building would be reported on an indirect method statement of cash flows as... An addition to net income The following information appeared on the 2012 income statement of Kane Company: Depreciation expense = $25,000 Patent depreciation expense = $10,000 Loss on sale of machinery = $6,000 Gain on sale of securities = $3,000 Net income = $120,000 Based on this information, what is Kane's net cash provided by operations? The company uses the indirect method. $164,000 $120,000 $158,000 $82,000 $158,000 Breakdown - Net cash provided by operations: $120,000 + $25,000 + $10,000 + $6,000 - $3,000 = $158,000 The direct and indirect methods will usually show different amounts of cash flows from... Operating activities Which of the following items would be reported on a statement of cash flows prepared by the indirect method but NOT by the direct method? - Cash received from issuance of stock - Cash paid for dividends - Depreciation expense - Cash received from the sale of a building Depreciation expense Financial statement analysis is greatly enhanced when financial ratios are compared with... Both past values and values for other firms in the same industry External users of financial statements use financial statement analysis for... Investing decisions Relationships between financial statement amounts are called? Financial ratios When analyzing financial statements, prognosis is... The prediction of how a business will perform in the future Which of the following statements best describes financial statement analysis? Financial statement analysis involves relationships and trends. Which of the following ratios is calculated using numbers from both the income statement and the balance sheet? - Price-earnings ratio - Return on equity - Current ratio - Return on sales Return on equity Which of the following ratios is calculated using only balance sheet numbers? Current ratio The balance sheet at the end of the first year of operations indicates the following: 2012 Total current assets = $600,000 Total investments = $85,000 Total property, plant, and equipment = $900,000 Total current liabilities = $250,000 Total long-term liabilities = $350,000 Common stock, $10 par = $600,000 Paid-in capital in excess of par-common stock = $60,000 Retained earnings = $325,000 If sales revenue for 2012 is $950,000, what is the asset turnover for 2012 (round to two decimal places)? 1.58 0.60 0.96 2.64 0.60 Breakdown - Asset turnover: $950,000 / ($600,000 + $85,000 + $900,000) = 0.60 Which of the following ratios is the fundamental measure of overall company performance? Return on equity Which of the following ratios is used to measure the profit earned on each dollar of sales in a firm? Return on sales Selected information for Alastair Company is as follows: 2012 Current assets = $450,000 Total assets = $725,000 Cost of goods sold = $700,000 Sales revenue = $915,000 Net income = $145,000 What is the percentage that would be given to current assets on a common-size balance sheet using the percent of sales method (round to the nearest percent)? 77 percent 100 percent 49 percent 20 percent. 49% Breakdown - Sales revenue: $450,000 / $915,000 = 49% In a common-size balance sheet, using the percent of sales method, each item on the balance sheet is typically expressed as a percentage of... Sales revenue Selected information for Alastair Company is as follows: 2012 Current assets = $450,000 Total assets = $725,000 Cost of goods sold = $700,000 Sales revenue = $915,000 Net income = $145,000 What is the percentage that would be given to sales revenue on a common-size income statement (round to the nearest percent)? 100 percent 20 percent. 77 percent 49 percent 100% Breakdown - Sales revenue: $915,000 / $915,000 = 100% Which of the following below generally is the most useful in analyzing companies of different sizes? Common-sized financial statements In a common-size income statement, each item on the statement is expressed as a percentage of... Revenue The following data came from the financial statements of the Cheviot Company: Revenue $1,800,000 Assets $1,200,000 Expenses 1,200,000 Liabilities 200,000 Net income 600,000 Equity 1,000,000 Compute the asset turnover (round to two decimal places). 1.40 1.60 1.25 1.50 1.50 Breakdown - 1,800,000 / 1,200,000 The ratio that indicates if a borrowing company will be able to meet its required interest payments is the... Times interest earned ratio When analyzing a company's debt ratio, if the ratio has a value that is equal to one, then the company has... No stockholders' equity The following data came from the financial statements of the Cheviot Company: Revenue $1,800,000 Assets $1,200,000 Expenses 1,200,000 Liabilities 200,000 Net income 600,000 Equity 1,000,000 Compute the asset-to-equity ratio (round to two decimal places). 1.15 1.40 1.25 1.20 1.20 Breakdown - 1,200,000 / 1,000,000 Borrowing that allows a company to purchase more assets than its stockholders are able to pay for is... Leverage The cash flow adequacy ratio is computed as... Cash from operations ÷ Cash for investing activities In general, most companies have significant noncash expenses that reduce net income and also cause the cash flow-to-net income ratio to be... Greater than 1 Which cash flow ratio reflects the extent to which accrual accounting adjustments and assumptions have been included in net income? Cash flow-to-net income Which of the following is NOT a situation when it would be important to analyze cash flow information because net income is NOT giving an accurate portrayal of the economic performance of the company? - When a company is striving to present a stellar financial record - When a company is growing rapidly - When a company has several large non-cash expenses - When a company has a negative operating cash flow When a company has a negative operating cash flow Which cash flow ratio reflects a company's ability to finance its capital expansion through cash from operations? Cash flow adequacy The particular analytical measures chosen to analyze a company may be influenced by all BUT which one of the following? - Companies are conglomerates - Diversity of business operations - Product quality or service effectiveness -Industry type Product quality or service effectiveness Which one of these is NOT one of the benchmarking problems that arises when analyzing financial statements? - Reported financial statement numbers may actually be a measurement of different things - Companies that are being compared may be conglomerates - Not all companies use the same accounting practices - All of these are benchmarking problems All of these are benchmarking problems