WGU C213 PA & OA Study Guide
Latest Updated
What does accounting focus on? - ANS-The impact a business's activities have on its
overall financial performance
Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time? - ANS-Statement of cash flows
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - ANS-Employees
Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAPP)? - ANS-An increase in its compatibility to other companies
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - ANS-The Public Company Accounting
Oversight Board (PACOB)
What has had the most significant impact on Accounting practices? - ANS-Information
technology
What two items of information are revealed on the balance sheet? - ANS-Ownership
and Debt
Which term is defined as the residual in the net assets of a company? - ANS-Owners
equity
Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual accounting? - ANS-In 2014, a company
provides services to a customer for which cash will be collected the next year (2015).
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company? - ANS-Cash from financing activities
Where would an investor find a summary of a company's significant accounting
policies? - ANS-In the notes to financial statements
Which assurance does an external audit report provide for its readers? - ANS-The
company's financial statements fairly reflect its financial position
,Information that can be verified - ANS-Reliable
Information having to do with the matter at hand - ANS-Relevant
Information that is important enough to make a difference - ANS-Material
Information related to recognizing losses as they occur - ANS-Conservatism
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - ANS-Continual decrease in sales
Which form of debt should be reported in the long-term liability category? - ANS-Notes
payable expected to be paid in 18 months
Which values affect the measurement of net income? - ANS-Operating expenses &
Ordinary gains and losses
Which items' subtotals are included in a multi-step income statement? - ANS-Gross
profit &
Income from operations
What is a common category in a statement of cash flows? - ANS-Cash from investing
activities
Which cash flow category would include "cash received from investors"? - ANS-Cash
from financing activities
Which item is an investing activity? - ANS-Cash payments for purchase of plant assets
What impact does the sale of equipment have on the statement of cash flows? - ANS-
Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash
flow? - ANS-The indirect method is more popular among large U.S. companies
Which internal control is intended to ensure that a company does not mistakenly pay a
supplier for an invoice that includes more items than were actually received? - ANS-The
inventory department counts and inspects items as received and forwards the receiving
record to accounts payable.
What are common reasons for managers to manipulate reported earnings? - ANS-
Pressure to meet internal sales goals &
Preparing to qualify for a bank loan
, Which requirements must accounting firms that audit public companies meet under the
Sarbanes-Oxley Act? - ANS-Firms must not provide certain non-audit services to audit
clients, such as management functions or legal services. &
Firms must report to and be retained by the audit committee rather than the CFO or
other company management.
Which actions do internal auditors perform to assist in maintaining the integrity of
financial statements? - ANS-They search for and investigate fraud.
&
They review financial records and internal controls.
What is a significant role of the U.S. Securities and Exchange Commission (SEC) in
financial reporting? - ANS-They ensure that financial statement users are provided with
reliable information to use in decision making
What does management accounting provide? - ANS-A better insight for management so
a business can perform more effectively
&
A competitive edge to a business by providing its managers with the detailed data
needed to make decisions
How does management accounting differ from financial accounting? - ANS-
Management accounting is used primarily for internal planning, control, and evaluation.
Which account is seen on the balance sheet of a manufacturing company but not on the
balance sheet of a service-oriented company? - ANS-Inventory
What is a cost that will change in the future based upon the decision made? - ANS-
Differential cost
Which are examples are period costs? - ANS-Administrative expenses &
Selling expenses
A company manufactures custom-built wooden bookshelves.
Which two costs would the company classify as period costs?
Answer Choices: Wood cost, Salary cost of the craftsperson, Salary cost of the
receptionist, Advertising cost - ANS-Salary cost of the receptionist
Advertising cost
What role do ethical standards have in management accounting? - ANS-To guide the
resolution to possible ethical dilemmas that the managerial accountant may encounter
Which two costs are included when calculating inventory costs? - ANS-Direct labor
costs
Overhead costs
Latest Updated
What does accounting focus on? - ANS-The impact a business's activities have on its
overall financial performance
Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time? - ANS-Statement of cash flows
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - ANS-Employees
Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAPP)? - ANS-An increase in its compatibility to other companies
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - ANS-The Public Company Accounting
Oversight Board (PACOB)
What has had the most significant impact on Accounting practices? - ANS-Information
technology
What two items of information are revealed on the balance sheet? - ANS-Ownership
and Debt
Which term is defined as the residual in the net assets of a company? - ANS-Owners
equity
Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual accounting? - ANS-In 2014, a company
provides services to a customer for which cash will be collected the next year (2015).
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company? - ANS-Cash from financing activities
Where would an investor find a summary of a company's significant accounting
policies? - ANS-In the notes to financial statements
Which assurance does an external audit report provide for its readers? - ANS-The
company's financial statements fairly reflect its financial position
,Information that can be verified - ANS-Reliable
Information having to do with the matter at hand - ANS-Relevant
Information that is important enough to make a difference - ANS-Material
Information related to recognizing losses as they occur - ANS-Conservatism
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - ANS-Continual decrease in sales
Which form of debt should be reported in the long-term liability category? - ANS-Notes
payable expected to be paid in 18 months
Which values affect the measurement of net income? - ANS-Operating expenses &
Ordinary gains and losses
Which items' subtotals are included in a multi-step income statement? - ANS-Gross
profit &
Income from operations
What is a common category in a statement of cash flows? - ANS-Cash from investing
activities
Which cash flow category would include "cash received from investors"? - ANS-Cash
from financing activities
Which item is an investing activity? - ANS-Cash payments for purchase of plant assets
What impact does the sale of equipment have on the statement of cash flows? - ANS-
Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash
flow? - ANS-The indirect method is more popular among large U.S. companies
Which internal control is intended to ensure that a company does not mistakenly pay a
supplier for an invoice that includes more items than were actually received? - ANS-The
inventory department counts and inspects items as received and forwards the receiving
record to accounts payable.
What are common reasons for managers to manipulate reported earnings? - ANS-
Pressure to meet internal sales goals &
Preparing to qualify for a bank loan
, Which requirements must accounting firms that audit public companies meet under the
Sarbanes-Oxley Act? - ANS-Firms must not provide certain non-audit services to audit
clients, such as management functions or legal services. &
Firms must report to and be retained by the audit committee rather than the CFO or
other company management.
Which actions do internal auditors perform to assist in maintaining the integrity of
financial statements? - ANS-They search for and investigate fraud.
&
They review financial records and internal controls.
What is a significant role of the U.S. Securities and Exchange Commission (SEC) in
financial reporting? - ANS-They ensure that financial statement users are provided with
reliable information to use in decision making
What does management accounting provide? - ANS-A better insight for management so
a business can perform more effectively
&
A competitive edge to a business by providing its managers with the detailed data
needed to make decisions
How does management accounting differ from financial accounting? - ANS-
Management accounting is used primarily for internal planning, control, and evaluation.
Which account is seen on the balance sheet of a manufacturing company but not on the
balance sheet of a service-oriented company? - ANS-Inventory
What is a cost that will change in the future based upon the decision made? - ANS-
Differential cost
Which are examples are period costs? - ANS-Administrative expenses &
Selling expenses
A company manufactures custom-built wooden bookshelves.
Which two costs would the company classify as period costs?
Answer Choices: Wood cost, Salary cost of the craftsperson, Salary cost of the
receptionist, Advertising cost - ANS-Salary cost of the receptionist
Advertising cost
What role do ethical standards have in management accounting? - ANS-To guide the
resolution to possible ethical dilemmas that the managerial accountant may encounter
Which two costs are included when calculating inventory costs? - ANS-Direct labor
costs
Overhead costs
