WGU C213 Complete Study Guide
Accounting A system of providing "quantitative information, primarily financial in nature,
about economic entities that is intended to be useful in making economic
decisions."
Balance Sheet Document which reports the resources of a company (the assets), the company's
obligations (the liabilities), and the owners' equity, which represents how much
money has been invested in the company by its owners.
American Institute of Certified Public Accountants The professional organization of certified public accountants in the United States.
(AICPA)
Bookkeeping The preservation of a systematic, quantitative record of an activity.
Certified Public Accountant A person who has taken a minimum number of college-level accounting classes,
has passed the dreaded CPA exam, and has met other requirements set by his
or her state.
Financial Accounting The name given to accounting information provided for and used by external
users.
Financial Accounting Standards Board (FASB) Private, non-profit body that sets accounting standards in the United States.
Financial Statements The three primary financial information documents: the balance sheet, income
statement, and statement of cash flows.
Income Statement This document reports the amount of net income earned by a company during a
period, with annual and quarterly income statements being the most common.
Internal Revenue Service (IRS) The government agency responsible for tax collection and tax law enforcement.
International Accounting Standards Board (IASB) An independent, international body formed to develop worldwide accounting
standards.
International Financial Reporting Standards (IFRS) The accounting standards produced by the IASB.
Managerial Accounting The name given to accounting systems designed for internal users.
Public Company Accounting Oversight Board (PCAOB) A private, non-profit organization that effectively serves as an arm of the SEC in
registering, inspecting, and disciplining the auditors of all publicly traded
companies.
Statement of Cash Flows This document reports the amount of cash collected and paid out by a company
in the following three types of activities: operating, investing, and financing.
Accounting Equation Assets = Liabilities + Owners' Equity
, WGU C213 Complete Study Guide
Accumulated Other Comprehensive Income The source of these increased assets
Assets Assets are the firm's economic resources, formally defined as "probable future
economic benefits obtained or controlled by a particular entity as a result of past
transactions or events
What does accounting focus on? The impact a business's activities have on its overall financial performance
Which report summarizes cash collections and cash Statement of cash flows
expenditures from operating, investing, and financing
activities over a period of time?
Which users would have a primary concern with an Employees
organization's ability to provide healthcare benefits?
Which benefit does a corporation gain by following An increase in its comparability to other companies
Generally Accepted Accounting Principles (GAAP)?
Which body regulates a certified public accounting firm's The Public Company Accounting Oversight Board (PCAOB)
audit practices when the firm is auditing a large publicly
traded company?
What has had the most significant impact on accounting Information technology
practices?
What two items of information are revealed on the Ownership, Debt
balance sheet?
Which term is defined as the residual interest in the net Owners' equity
assets of a company?
A corporation has total liabilities of $300 million, total $350 million
owners' equity of $100 million, and current assets of $50
million.
What is the value of the firm's long-term assets?
Which situation should result in revenue recognition on In 2014, a company provides services to a customer for which cash will be
the income statement for the year ending 12/31/14 if the collected the next year (2015).
firm is using accrual-basis accounting?
Which category on the statement of cash flows Cash flows from financing activities
summarizes cash receipts and payments to owners and
creditors of the company?
Where would an investor find a summary of a company's In the notes to financial statements
significant accounting policies?
Which assurance does an external audit report provide The company's financial statements fairly reflect its financial position
for its readers?
, WGU C213 Complete Study Guide
Match each accounting term with its definition. Reliable = Information that can be verified
Relevant = Information having to do with the matter at hand
Material = Information that is important enough to make a difference
Conservatism = Information related to recognizing losses as they occur
Order the steps in the decision cycle from first (1) to last 1. Prepare financial statements
(5). 2.Analyze financial statements
3.Gather information
4. Make decision
5. Implement decision
Partial financial information for a company is as follows: 11.0
Current assets $36,543 Total assets $58,719 Current
liabilities $24,824 Total liabilities $48,561 Stockholders'
equity $10,158 Sales $46,997 Net Income $ 3,761
Market value of shares$41,316
What is the price-earnings (PE) ratio for this company?
What does it mean if a company has a debt ratio of The company has 1.5% more total liabilities than total assets.
101.5%?
What is consistent with a continual decline in gross profit Continual decrease in sales
if the firm's cost of goods sold remains the same?
Which two cash flow adequacy ratios represent a cash $6,991/$5,486
cow? $5,220/$1,875
Which formula yields a cash times interest earned ratio Cash before interest and taxes of $11,000 / cash paid for interest of $1,000
of 11?
Which form of debt should be reported in the long-term Notes payable expected to be paid in 18 months
liability category?
Which two values affect the measurement of net Ordinary gains and losses
income? Operating expenses
Which two items' subtotals are included in a multi-step Gross profit
income statement? Income from operations
What was the 2012 net profit amount if the 2013 pro- $153,279
forma net profit of $187,000 was based on a 22%
increase?
What is a common category in a statement of cash Cash from investing activities
flows?
Which cash flow category would include "cash received Cash from financing activities
from investors"?
Which item is an investing activity? Cash payments for purchase of plant assets
What impact does the sale of equipment have on the Increase in cash from investing activities
statement of cash flows?
Accounting A system of providing "quantitative information, primarily financial in nature,
about economic entities that is intended to be useful in making economic
decisions."
Balance Sheet Document which reports the resources of a company (the assets), the company's
obligations (the liabilities), and the owners' equity, which represents how much
money has been invested in the company by its owners.
American Institute of Certified Public Accountants The professional organization of certified public accountants in the United States.
(AICPA)
Bookkeeping The preservation of a systematic, quantitative record of an activity.
Certified Public Accountant A person who has taken a minimum number of college-level accounting classes,
has passed the dreaded CPA exam, and has met other requirements set by his
or her state.
Financial Accounting The name given to accounting information provided for and used by external
users.
Financial Accounting Standards Board (FASB) Private, non-profit body that sets accounting standards in the United States.
Financial Statements The three primary financial information documents: the balance sheet, income
statement, and statement of cash flows.
Income Statement This document reports the amount of net income earned by a company during a
period, with annual and quarterly income statements being the most common.
Internal Revenue Service (IRS) The government agency responsible for tax collection and tax law enforcement.
International Accounting Standards Board (IASB) An independent, international body formed to develop worldwide accounting
standards.
International Financial Reporting Standards (IFRS) The accounting standards produced by the IASB.
Managerial Accounting The name given to accounting systems designed for internal users.
Public Company Accounting Oversight Board (PCAOB) A private, non-profit organization that effectively serves as an arm of the SEC in
registering, inspecting, and disciplining the auditors of all publicly traded
companies.
Statement of Cash Flows This document reports the amount of cash collected and paid out by a company
in the following three types of activities: operating, investing, and financing.
Accounting Equation Assets = Liabilities + Owners' Equity
, WGU C213 Complete Study Guide
Accumulated Other Comprehensive Income The source of these increased assets
Assets Assets are the firm's economic resources, formally defined as "probable future
economic benefits obtained or controlled by a particular entity as a result of past
transactions or events
What does accounting focus on? The impact a business's activities have on its overall financial performance
Which report summarizes cash collections and cash Statement of cash flows
expenditures from operating, investing, and financing
activities over a period of time?
Which users would have a primary concern with an Employees
organization's ability to provide healthcare benefits?
Which benefit does a corporation gain by following An increase in its comparability to other companies
Generally Accepted Accounting Principles (GAAP)?
Which body regulates a certified public accounting firm's The Public Company Accounting Oversight Board (PCAOB)
audit practices when the firm is auditing a large publicly
traded company?
What has had the most significant impact on accounting Information technology
practices?
What two items of information are revealed on the Ownership, Debt
balance sheet?
Which term is defined as the residual interest in the net Owners' equity
assets of a company?
A corporation has total liabilities of $300 million, total $350 million
owners' equity of $100 million, and current assets of $50
million.
What is the value of the firm's long-term assets?
Which situation should result in revenue recognition on In 2014, a company provides services to a customer for which cash will be
the income statement for the year ending 12/31/14 if the collected the next year (2015).
firm is using accrual-basis accounting?
Which category on the statement of cash flows Cash flows from financing activities
summarizes cash receipts and payments to owners and
creditors of the company?
Where would an investor find a summary of a company's In the notes to financial statements
significant accounting policies?
Which assurance does an external audit report provide The company's financial statements fairly reflect its financial position
for its readers?
, WGU C213 Complete Study Guide
Match each accounting term with its definition. Reliable = Information that can be verified
Relevant = Information having to do with the matter at hand
Material = Information that is important enough to make a difference
Conservatism = Information related to recognizing losses as they occur
Order the steps in the decision cycle from first (1) to last 1. Prepare financial statements
(5). 2.Analyze financial statements
3.Gather information
4. Make decision
5. Implement decision
Partial financial information for a company is as follows: 11.0
Current assets $36,543 Total assets $58,719 Current
liabilities $24,824 Total liabilities $48,561 Stockholders'
equity $10,158 Sales $46,997 Net Income $ 3,761
Market value of shares$41,316
What is the price-earnings (PE) ratio for this company?
What does it mean if a company has a debt ratio of The company has 1.5% more total liabilities than total assets.
101.5%?
What is consistent with a continual decline in gross profit Continual decrease in sales
if the firm's cost of goods sold remains the same?
Which two cash flow adequacy ratios represent a cash $6,991/$5,486
cow? $5,220/$1,875
Which formula yields a cash times interest earned ratio Cash before interest and taxes of $11,000 / cash paid for interest of $1,000
of 11?
Which form of debt should be reported in the long-term Notes payable expected to be paid in 18 months
liability category?
Which two values affect the measurement of net Ordinary gains and losses
income? Operating expenses
Which two items' subtotals are included in a multi-step Gross profit
income statement? Income from operations
What was the 2012 net profit amount if the 2013 pro- $153,279
forma net profit of $187,000 was based on a 22%
increase?
What is a common category in a statement of cash Cash from investing activities
flows?
Which cash flow category would include "cash received Cash from financing activities
from investors"?
Which item is an investing activity? Cash payments for purchase of plant assets
What impact does the sale of equipment have on the Increase in cash from investing activities
statement of cash flows?
