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WGU C213 Objective Assessment Accounting for
Decision Makers Guide 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 financial statements provides a snapshot of a company's financial position at
a single point in time?
A. The income statement summarizes profitability over a period.
B. The balance sheet captures assets, liabilities, and equity on a specific date. [CORRECT]
C. The statement of cash flows tracks operating activities only.
D. The statement of retained earnings shows dividend policy over five years.
Correct Answer: B
Rationale: The best answer is B because the balance sheet is literally designed to show what a company
owns and owes at a precise moment, making it the classic "snapshot" statement in financial accounting.
Q2: Under accrual basis accounting, when should a company recognize revenue from a sale made on
credit?
A. Only when the cash is physically collected from the customer.
B. When the company places the order with its supplier.
C. After the bank clears the customer's check.
D. When the performance obligation is satisfied, regardless of cash timing. [CORRECT]
Correct Answer: D
Rationale: This choice is correct because accrual accounting follows the revenue recognition principle,
meaning you record revenue when it is earned—not when the cash hits your account.
Q3: A company purchases $5,000 of office supplies on account. How does this transaction affect the
accounting equation?
A. Assets increase by $5,000 and liabilities increase by $5,000. [CORRECT]
B. Assets increase by $5,000 and equity increases by $5,000.
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C. Liabilities decrease by $5,000 and equity increases by $5,000.
D. Assets decrease by $5,000 and liabilities decrease by $5,000.
Correct Answer: A
Rationale: This matches the accounting principle that buying on credit gives you an asset (supplies) while
creating an obligation to pay later, so both sides of the equation move up equally.
Q4: At the end of December, a consulting firm has completed work for a client but has not yet sent the
invoice. What adjusting entry is required?
A. Debit cash and credit unearned revenue.
B. Debit accounts payable and credit service revenue.
C. Debit accounts receivable and credit service revenue. [CORRECT]
D. Debit unearned revenue and credit accounts receivable.
Correct Answer: C
Rationale: The firm has earned the revenue under accrual accounting, so it needs to recognize that
revenue now and establish a receivable since the client owes the money.
Q5: A retailer buys a delivery van for $32,000 cash. Which statement correctly describes the immediate
effect on the financial statements?
A. Total assets decrease by $32,000 and liabilities increase.
B. One asset (cash) decreases while another asset (equipment) increases by the same amount.
[CORRECT]
C. Equity decreases by $32,000 and expenses increase.
D. Net income decreases by $32,000 on the income statement.
Correct Answer: B
Rationale: This is simply an exchange of one asset for another—cash goes out, and a vehicle comes onto
the books—so total assets stay exactly the same at the moment of purchase.
Q6: Consider the following excerpt from a company's adjusted trial balance: Service Revenue $85,000;
Salaries Expense $42,000; Rent Expense $12,000; Depreciation Expense $8,000; Supplies Expense
$3,000. What is the net income?
A. $20,000
B. $32,000
C. $28,000
D. $20,000
Wait, let me recalculate: $85,000 - $42,000 - $12,000 - $8,000 - $3,000 = $20,000.
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A. $25,000
B. $22,000
C. $18,000
D. $20,000 [CORRECT]
Correct Answer: D
Rationale: You get net income by subtracting all operating expenses from the revenue, and $85,000
minus $65,000 in total expenses leaves you with $20,000.
Q7: A company reports the following current items: Cash $15,000; Accounts Receivable $22,000;
Inventory $18,000; Prepaid Insurance $5,000; Accounts Payable $12,000; Short-term Notes Payable
$8,000. What is the amount of working capital?
A. $40,000 [CORRECT]
B. $60,000
C. $32,000
D. $48,000
Correct Answer: A
Rationale: Working capital is current assets minus current liabilities, so you add up the $60,000 in
current assets and subtract the $20,000 in current obligations to arrive at $40,000.
Q8: On January 1, a business paid $18,000 for a two-year insurance policy. The entire amount was
debited to prepaid insurance. By December 31 of Year 1, what adjusting entry is needed?
A. Debit insurance expense $18,000 and credit prepaid insurance $18,000.
B. Debit prepaid insurance $9,000 and credit insurance expense $9,000.
C. Debit insurance expense $9,000 and credit prepaid insurance $9,000. [CORRECT]
D. Debit insurance expense $18,000 and credit cash $18,000.
Correct Answer: C
Rationale: Since one year has passed out of the two-year policy, half of that prepaid amount—$9,000—
has now been used up and needs to be recognized as expense.
Q9: Where should the cash proceeds from issuing long-term bonds payable be classified on the
statement of cash flows?
A. Operating activities
B. Financing activities [CORRECT]
C. Investing activities
WGU C213 Objective Assessment Accounting for
Decision Makers Guide 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 financial statements provides a snapshot of a company's financial position at
a single point in time?
A. The income statement summarizes profitability over a period.
B. The balance sheet captures assets, liabilities, and equity on a specific date. [CORRECT]
C. The statement of cash flows tracks operating activities only.
D. The statement of retained earnings shows dividend policy over five years.
Correct Answer: B
Rationale: The best answer is B because the balance sheet is literally designed to show what a company
owns and owes at a precise moment, making it the classic "snapshot" statement in financial accounting.
Q2: Under accrual basis accounting, when should a company recognize revenue from a sale made on
credit?
A. Only when the cash is physically collected from the customer.
B. When the company places the order with its supplier.
C. After the bank clears the customer's check.
D. When the performance obligation is satisfied, regardless of cash timing. [CORRECT]
Correct Answer: D
Rationale: This choice is correct because accrual accounting follows the revenue recognition principle,
meaning you record revenue when it is earned—not when the cash hits your account.
Q3: A company purchases $5,000 of office supplies on account. How does this transaction affect the
accounting equation?
A. Assets increase by $5,000 and liabilities increase by $5,000. [CORRECT]
B. Assets increase by $5,000 and equity increases by $5,000.
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C. Liabilities decrease by $5,000 and equity increases by $5,000.
D. Assets decrease by $5,000 and liabilities decrease by $5,000.
Correct Answer: A
Rationale: This matches the accounting principle that buying on credit gives you an asset (supplies) while
creating an obligation to pay later, so both sides of the equation move up equally.
Q4: At the end of December, a consulting firm has completed work for a client but has not yet sent the
invoice. What adjusting entry is required?
A. Debit cash and credit unearned revenue.
B. Debit accounts payable and credit service revenue.
C. Debit accounts receivable and credit service revenue. [CORRECT]
D. Debit unearned revenue and credit accounts receivable.
Correct Answer: C
Rationale: The firm has earned the revenue under accrual accounting, so it needs to recognize that
revenue now and establish a receivable since the client owes the money.
Q5: A retailer buys a delivery van for $32,000 cash. Which statement correctly describes the immediate
effect on the financial statements?
A. Total assets decrease by $32,000 and liabilities increase.
B. One asset (cash) decreases while another asset (equipment) increases by the same amount.
[CORRECT]
C. Equity decreases by $32,000 and expenses increase.
D. Net income decreases by $32,000 on the income statement.
Correct Answer: B
Rationale: This is simply an exchange of one asset for another—cash goes out, and a vehicle comes onto
the books—so total assets stay exactly the same at the moment of purchase.
Q6: Consider the following excerpt from a company's adjusted trial balance: Service Revenue $85,000;
Salaries Expense $42,000; Rent Expense $12,000; Depreciation Expense $8,000; Supplies Expense
$3,000. What is the net income?
A. $20,000
B. $32,000
C. $28,000
D. $20,000
Wait, let me recalculate: $85,000 - $42,000 - $12,000 - $8,000 - $3,000 = $20,000.
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A. $25,000
B. $22,000
C. $18,000
D. $20,000 [CORRECT]
Correct Answer: D
Rationale: You get net income by subtracting all operating expenses from the revenue, and $85,000
minus $65,000 in total expenses leaves you with $20,000.
Q7: A company reports the following current items: Cash $15,000; Accounts Receivable $22,000;
Inventory $18,000; Prepaid Insurance $5,000; Accounts Payable $12,000; Short-term Notes Payable
$8,000. What is the amount of working capital?
A. $40,000 [CORRECT]
B. $60,000
C. $32,000
D. $48,000
Correct Answer: A
Rationale: Working capital is current assets minus current liabilities, so you add up the $60,000 in
current assets and subtract the $20,000 in current obligations to arrive at $40,000.
Q8: On January 1, a business paid $18,000 for a two-year insurance policy. The entire amount was
debited to prepaid insurance. By December 31 of Year 1, what adjusting entry is needed?
A. Debit insurance expense $18,000 and credit prepaid insurance $18,000.
B. Debit prepaid insurance $9,000 and credit insurance expense $9,000.
C. Debit insurance expense $9,000 and credit prepaid insurance $9,000. [CORRECT]
D. Debit insurance expense $18,000 and credit cash $18,000.
Correct Answer: C
Rationale: Since one year has passed out of the two-year policy, half of that prepaid amount—$9,000—
has now been used up and needs to be recognized as expense.
Q9: Where should the cash proceeds from issuing long-term bonds payable be classified on the
statement of cash flows?
A. Operating activities
B. Financing activities [CORRECT]
C. Investing activities
