WGU C214 Chapter 2 Exam Questions & Answers |
Latest Already Graded A+ |Questions with
Correct Answers 2026 latest update!
Terms in this set (72)
Accounting is backward-looking and risk free.
Finance is forward-looking and involves massive uncertainty.
Cash accounting offers a superior method Correct Answer: False
of analyzing a company. (True or False)
While the cumbersome nature of accrual accounting may
cause cash accounting to look attractive, the truth is that
cash accounting is not a good way to track firm
operations. The movement of cash in and out of the firm
during a period can lead to a highly biased view of the
firm.
Cash Accounting A system in which revenue and expenses are counted as
they are actually received.
Cash accounting: cash in = revenue; cash out = expense
, Accural Accounting A type of accounting that recognizes incomes when they are
earned and expenses when they are incurred, rather than
when they are received or paid.
Accrual accounting: Revenues are recognized when the
earnings process is complete; expenses are "matched" to
recognized revenues
In the accounting world, we use the terms GAAP
accrual accounting and________accounting
interchangeably
The income statement is the most easily False
interpreted of the basic financial statements.
(True or False) The income statement is usually regarded as the most difficult
to analyze and interpret.
The basic equation of an income statement Revenues - expenses = net income
is:
Revenues - liabilities = net income
Assets - expenses = net income
Revenues - expenses = net income
Revenue - net income = liabilities
Revenues minus cost of goods sold is: Gross Profit.
Gross Profit.
Earnings Before Taxes
Operating Profit
Net Income
EBIT (operating profit) Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit
EBT Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit
- Interest Expenses
= EBT
Latest Already Graded A+ |Questions with
Correct Answers 2026 latest update!
Terms in this set (72)
Accounting is backward-looking and risk free.
Finance is forward-looking and involves massive uncertainty.
Cash accounting offers a superior method Correct Answer: False
of analyzing a company. (True or False)
While the cumbersome nature of accrual accounting may
cause cash accounting to look attractive, the truth is that
cash accounting is not a good way to track firm
operations. The movement of cash in and out of the firm
during a period can lead to a highly biased view of the
firm.
Cash Accounting A system in which revenue and expenses are counted as
they are actually received.
Cash accounting: cash in = revenue; cash out = expense
, Accural Accounting A type of accounting that recognizes incomes when they are
earned and expenses when they are incurred, rather than
when they are received or paid.
Accrual accounting: Revenues are recognized when the
earnings process is complete; expenses are "matched" to
recognized revenues
In the accounting world, we use the terms GAAP
accrual accounting and________accounting
interchangeably
The income statement is the most easily False
interpreted of the basic financial statements.
(True or False) The income statement is usually regarded as the most difficult
to analyze and interpret.
The basic equation of an income statement Revenues - expenses = net income
is:
Revenues - liabilities = net income
Assets - expenses = net income
Revenues - expenses = net income
Revenue - net income = liabilities
Revenues minus cost of goods sold is: Gross Profit.
Gross Profit.
Earnings Before Taxes
Operating Profit
Net Income
EBIT (operating profit) Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit
EBT Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit
- Interest Expenses
= EBT
