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WGU C213 Pre-Assessment V2 Accounting for
Decision Makers Complete Practice Assessment
Actual Exam 2026/2027 Complete Exam-Style
Questions with Detailed Rationales | 100%
Verified | Pass Guaranteed – A+ Graded
Part I: Foundations of Financial Accounting (Questions 1–15)
Q1: Which of the following best describes the fundamental accounting equation?
A. Assets = Liabilities + Owner's Equity + Revenue
B. Assets = Liabilities + Stockholders' Equity
C. Assets = Liabilities + Stockholders' Equity [CORRECT]
D. Assets + Expenses = Liabilities + Revenue
Correct Answer: C
Rationale: The best answer is C. This is the bedrock of double-entry accounting—everything a company
owns (assets) is financed either by borrowing (liabilities) or by owner investment and retained profits
(stockholders' equity). This equation must always stay in balance after every transaction, which is what
makes the whole system work.
Q2: A small consulting firm receives $5,000 cash from a client in December for services that will be
performed in January. Under accrual-basis accounting, how should this transaction be recorded in
December?
A. Recognize $5,000 as service revenue in December
B. Record $5,000 as unearned revenue (a liability) in December [CORRECT]
C. Record $5,000 as accounts receivable in December
D. Do not record anything until January when the service is performed
Correct Answer: B
Rationale: The best answer is B. Under accrual accounting, revenue is recognized when it is earned, not
when cash is received. Since the service hasn't been performed yet, that $5,000 is money the firm owes
the client in the form of future work—so it's a liability called unearned revenue until January rolls
around.
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Q3: Which financial statement provides a snapshot of a company's financial position at a single point in
time?
A. The income statement
B. The statement of cash flows
C. The balance sheet [CORRECT]
D. The statement of retained earnings
Correct Answer: C
Rationale: The best answer is C. The balance sheet is like a photograph taken at a specific moment—it
shows what the company owns, what it owes, and what's left for the owners as of a particular date. The
other statements cover periods of time, not a single point.
Q4: During the month, a retailer had cash sales of $12,000 and credit sales of $18,000. It collected
$10,000 from customers on account and paid $8,000 in operating expenses. Under the cash basis of
accounting, what is net income for the month?
A. $22,000
B. $14,000 [CORRECT]
C. $30,000
D. $32,000
Correct Answer: B
Rationale: The best answer is B. Cash basis accounting only counts cash that actually moves—so you
include the $12,000 cash sales plus the $10,000 collected from prior credit sales, then subtract the
$8,000 paid out. The $18,000 in new credit sales doesn't count yet because no cash was received. That
gives you $14,000.
Q5: A company purchases $4,000 of office supplies on account. Which of the following correctly shows
the journal entry for this transaction?
A. Debit Supplies Expense $4,000; Credit Cash $4,000
B. Debit Accounts Payable $4,000; Credit Supplies $4,000
C. Debit Supplies $4,000; Credit Accounts Payable $4,000 [CORRECT]
D. Debit Cash $4,000; Credit Supplies $4,000
Correct Answer: C
Rationale: The best answer is C. When you buy supplies on account, you're gaining an asset (supplies) so
you debit that account, and you're creating an obligation to pay later (accounts payable) so you credit
that liability account. The "on account" part is the key signal that cash isn't involved yet.
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Q6: At the end of the fiscal year, a company has the following account balances: Service Revenue
$85,000, Salaries Expense $42,000, Rent Expense $12,000, and Utilities Expense $6,000. What is the
company's net income for the year?
A. $25,000
B. $31,000
C. $25,000
D. $25,000 [CORRECT]
Correct Answer: D
Rationale: The best answer is D. Net income is simply revenue minus all expenses—so $85,000 in service
revenue minus $42,000 in salaries, $12,000 in rent, and $6,000 in utilities leaves you with $25,000. This
is the bottom-line profit that flows into retained earnings.
Q7: Which of the following is a primary objective of GAAP (Generally Accepted Accounting Principles)?
A. To minimize the amount of taxes a company owes
B. To ensure financial statements are consistent, comparable, and reliable across companies [CORRECT]
C. To guarantee that all companies earn a profit
D. To allow each company to develop its own unique accounting methods
Correct Answer: B
Rationale: The best answer is B. GAAP exists so that when you look at financial statements from
different companies, you're comparing apples to apples. It creates a common language and set of rules
that make reports reliable and useful for investors, lenders, and other decision-makers.
Q8: A company started the year with $45,000 in retained earnings. During the year, it earned net
income of $28,000 and paid dividends of $10,000. What is the ending balance in retained earnings?
A. $63,000 [CORRECT]
B. $73,000
C. $53,000
D. $83,000
Correct Answer: A
Rationale: The best answer is A. Retained earnings is a running total of profits kept in the business. You
start with $45,000, add the $28,000 you earned this year, then subtract the $10,000 you gave back to
shareholders as dividends. That leaves $63,000 sitting in retained earnings at year-end.
Q9: Which of the following activities would be classified as an investing activity on the statement of cash
flows?
WGU C213 Pre-Assessment V2 Accounting for
Decision Makers Complete Practice Assessment
Actual Exam 2026/2027 Complete Exam-Style
Questions with Detailed Rationales | 100%
Verified | Pass Guaranteed – A+ Graded
Part I: Foundations of Financial Accounting (Questions 1–15)
Q1: Which of the following best describes the fundamental accounting equation?
A. Assets = Liabilities + Owner's Equity + Revenue
B. Assets = Liabilities + Stockholders' Equity
C. Assets = Liabilities + Stockholders' Equity [CORRECT]
D. Assets + Expenses = Liabilities + Revenue
Correct Answer: C
Rationale: The best answer is C. This is the bedrock of double-entry accounting—everything a company
owns (assets) is financed either by borrowing (liabilities) or by owner investment and retained profits
(stockholders' equity). This equation must always stay in balance after every transaction, which is what
makes the whole system work.
Q2: A small consulting firm receives $5,000 cash from a client in December for services that will be
performed in January. Under accrual-basis accounting, how should this transaction be recorded in
December?
A. Recognize $5,000 as service revenue in December
B. Record $5,000 as unearned revenue (a liability) in December [CORRECT]
C. Record $5,000 as accounts receivable in December
D. Do not record anything until January when the service is performed
Correct Answer: B
Rationale: The best answer is B. Under accrual accounting, revenue is recognized when it is earned, not
when cash is received. Since the service hasn't been performed yet, that $5,000 is money the firm owes
the client in the form of future work—so it's a liability called unearned revenue until January rolls
around.
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Q3: Which financial statement provides a snapshot of a company's financial position at a single point in
time?
A. The income statement
B. The statement of cash flows
C. The balance sheet [CORRECT]
D. The statement of retained earnings
Correct Answer: C
Rationale: The best answer is C. The balance sheet is like a photograph taken at a specific moment—it
shows what the company owns, what it owes, and what's left for the owners as of a particular date. The
other statements cover periods of time, not a single point.
Q4: During the month, a retailer had cash sales of $12,000 and credit sales of $18,000. It collected
$10,000 from customers on account and paid $8,000 in operating expenses. Under the cash basis of
accounting, what is net income for the month?
A. $22,000
B. $14,000 [CORRECT]
C. $30,000
D. $32,000
Correct Answer: B
Rationale: The best answer is B. Cash basis accounting only counts cash that actually moves—so you
include the $12,000 cash sales plus the $10,000 collected from prior credit sales, then subtract the
$8,000 paid out. The $18,000 in new credit sales doesn't count yet because no cash was received. That
gives you $14,000.
Q5: A company purchases $4,000 of office supplies on account. Which of the following correctly shows
the journal entry for this transaction?
A. Debit Supplies Expense $4,000; Credit Cash $4,000
B. Debit Accounts Payable $4,000; Credit Supplies $4,000
C. Debit Supplies $4,000; Credit Accounts Payable $4,000 [CORRECT]
D. Debit Cash $4,000; Credit Supplies $4,000
Correct Answer: C
Rationale: The best answer is C. When you buy supplies on account, you're gaining an asset (supplies) so
you debit that account, and you're creating an obligation to pay later (accounts payable) so you credit
that liability account. The "on account" part is the key signal that cash isn't involved yet.
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Q6: At the end of the fiscal year, a company has the following account balances: Service Revenue
$85,000, Salaries Expense $42,000, Rent Expense $12,000, and Utilities Expense $6,000. What is the
company's net income for the year?
A. $25,000
B. $31,000
C. $25,000
D. $25,000 [CORRECT]
Correct Answer: D
Rationale: The best answer is D. Net income is simply revenue minus all expenses—so $85,000 in service
revenue minus $42,000 in salaries, $12,000 in rent, and $6,000 in utilities leaves you with $25,000. This
is the bottom-line profit that flows into retained earnings.
Q7: Which of the following is a primary objective of GAAP (Generally Accepted Accounting Principles)?
A. To minimize the amount of taxes a company owes
B. To ensure financial statements are consistent, comparable, and reliable across companies [CORRECT]
C. To guarantee that all companies earn a profit
D. To allow each company to develop its own unique accounting methods
Correct Answer: B
Rationale: The best answer is B. GAAP exists so that when you look at financial statements from
different companies, you're comparing apples to apples. It creates a common language and set of rules
that make reports reliable and useful for investors, lenders, and other decision-makers.
Q8: A company started the year with $45,000 in retained earnings. During the year, it earned net
income of $28,000 and paid dividends of $10,000. What is the ending balance in retained earnings?
A. $63,000 [CORRECT]
B. $73,000
C. $53,000
D. $83,000
Correct Answer: A
Rationale: The best answer is A. Retained earnings is a running total of profits kept in the business. You
start with $45,000, add the $28,000 you earned this year, then subtract the $10,000 you gave back to
shareholders as dividends. That leaves $63,000 sitting in retained earnings at year-end.
Q9: Which of the following activities would be classified as an investing activity on the statement of cash
flows?
