WGU C213 - ACCOUNTING FOR
DECISION MAKERS FINAL
COMPREHENSIVE QUESTIONS AND
VERIFIED ANSWERS | 100% CORRECT |
GRADE A+
1. Which of the following best describes the fundamental accounting equation?
A. Assets = Liabilities - Shareholders Equity
B. Assets + Liabilities = Shareholders Equity
C. Assets = Revenue - Expenses
D. Assets = Liabilities + Shareholders Equity
Answer: D
Conceptual Explanation: The fundamental accounting equation is Assets = Liabilities +
Shareholders Equity, representing that all resources owned by a company are financed by
either debt or equity.
2. Under accrual-basis accounting, when is revenue recognized?
A. When the performance obligation is satisfied
B. When cash is received from the customer
C. At the end of the fiscal year
,D. When the invoice is printed
Answer: A
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned
(performance obligation satisfied), regardless of when cash is exchanged.
3. A company has a Current Ratio of 0.8. What does this primarily indicate about the
company?
A. The company may have difficulty meeting short-term obligations.
B. The company is highly profitable.
C. The company has too much cash on hand.
D. The company is using its assets efficiently.
Answer: A
Conceptual Explanation: A current ratio below 1.0 suggests that current liabilities exceed
current assets, indicating potential liquidity issues.
4. Which financial statement reports a company’s financial position at a specific point in
time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Retained Earnings Statement
, Answer: C
Conceptual Explanation: The Balance Sheet is a snapshot of assets, liabilities, and equity
at a specific date, unlike other statements which cover a period of time.
5. In a period of rising prices, which inventory valuation method results in the lowest net
income?
A. FIFO (First-In, First-Out)
B. Weighted Average Cost
C. LIFO (Last-In, First-Out)
D. Specific Identification
Answer: C
Conceptual Explanation: LIFO assigns the most recent (higher) costs to Cost of Goods
Sold, which lowers gross profit and net income during inflation.
6. Which of the following is considered a ‘period cost’ rather than a ‘product cost’?
A. Direct materials
B. Factory utilities
C. Manufacturing overhead
D. Sales commissions
Answer: D
DECISION MAKERS FINAL
COMPREHENSIVE QUESTIONS AND
VERIFIED ANSWERS | 100% CORRECT |
GRADE A+
1. Which of the following best describes the fundamental accounting equation?
A. Assets = Liabilities - Shareholders Equity
B. Assets + Liabilities = Shareholders Equity
C. Assets = Revenue - Expenses
D. Assets = Liabilities + Shareholders Equity
Answer: D
Conceptual Explanation: The fundamental accounting equation is Assets = Liabilities +
Shareholders Equity, representing that all resources owned by a company are financed by
either debt or equity.
2. Under accrual-basis accounting, when is revenue recognized?
A. When the performance obligation is satisfied
B. When cash is received from the customer
C. At the end of the fiscal year
,D. When the invoice is printed
Answer: A
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned
(performance obligation satisfied), regardless of when cash is exchanged.
3. A company has a Current Ratio of 0.8. What does this primarily indicate about the
company?
A. The company may have difficulty meeting short-term obligations.
B. The company is highly profitable.
C. The company has too much cash on hand.
D. The company is using its assets efficiently.
Answer: A
Conceptual Explanation: A current ratio below 1.0 suggests that current liabilities exceed
current assets, indicating potential liquidity issues.
4. Which financial statement reports a company’s financial position at a specific point in
time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Retained Earnings Statement
, Answer: C
Conceptual Explanation: The Balance Sheet is a snapshot of assets, liabilities, and equity
at a specific date, unlike other statements which cover a period of time.
5. In a period of rising prices, which inventory valuation method results in the lowest net
income?
A. FIFO (First-In, First-Out)
B. Weighted Average Cost
C. LIFO (Last-In, First-Out)
D. Specific Identification
Answer: C
Conceptual Explanation: LIFO assigns the most recent (higher) costs to Cost of Goods
Sold, which lowers gross profit and net income during inflation.
6. Which of the following is considered a ‘period cost’ rather than a ‘product cost’?
A. Direct materials
B. Factory utilities
C. Manufacturing overhead
D. Sales commissions
Answer: D
