Wgu C213 Objective Assessment Accounting For Decision
Makers Guide (Latest 2026/2027 Update) 100% Verified
Questions & Answers | Grade A
Question 1
Which financial statement reports a company's financial position at a specific point in time?
A) Income Statement
B) Balance Sheet
C) Statement of Cash Flows
D) Statement of Retained Earnings
Answer
Answer: B
Rationale
The balance sheet (statement of financial position) provides a snapshot of a company's assets,
liabilities, and equity at a specific date, following the accounting equation Assets = Liabilities + Equity.
Question 2
Which of the following is a primary objective of financial accounting?
A) To provide information for internal decision-making
B) To provide useful information to external users for investment and credit decisions
C) To calculate taxable income for the IRS
D) To manage daily cash flow
Answer
Answer: B
Rationale
Financial accounting focuses on preparing general-purpose financial statements for external
stakeholders such as investors, creditors, and regulators to aid in economic decision-making.
,Question 3
Under accrual accounting, revenue is recognized when:
A) Cash is received
B) The performance obligation is satisfied
C) The order is placed
D) The invoice is mailed
Answer
Answer: B
Rationale
Under accrual accounting and ASC 606, revenue is recognized when the seller satisfies its
performance obligation by transferring promised goods or services to the customer, regardless of
when cash is received.
Question 4
Which of the following is an asset?
A) Accounts Payable
B) Common Stock
C) Prepaid Rent
D) Retained Earnings
Answer
Answer: C
Rationale
Prepaid rent is a current asset representing advance payments for future benefits (rent expense) the
company will receive. Accounts payable and common stock are liabilities and equity, respectively.
Question 5
The accounting equation is:
A) Assets = Liabilities − Equity
B) Assets = Liabilities + Equity
C) Equity = Assets + Liabilities
2
,D) Liabilities = Assets + Equity
Answer
Answer: B
Rationale
The fundamental accounting equation states that total assets equal total liabilities plus owners' equity,
reflecting the dual-entry bookkeeping system.
Question 6
Which principle requires that expenses be recognized in the same period as the revenues they
helped generate?
A) Revenue Recognition Principle
B) Matching Principle
C) Historical Cost Principle
D) Conservatism Principle
Answer
Answer: B
Rationale
The matching principle requires that expenses be recorded in the same accounting period as the
revenues they helped generate, ensuring accurate measurement of net income.
Question 7
A company purchases equipment for $50,000 cash. What is the effect on the accounting
equation?
A) Assets increase and equity increases
B) Assets increase and liabilities increase
C) Assets increase and assets decrease
D) Assets decrease and equity decreases
Answer
3
, Answer: C
Rationale
Purchasing equipment with cash increases one asset (equipment) and decreases another asset (cash)
by the same amount, leaving total assets unchanged.
Question 8
Which of the following accounts normally has a credit balance?
A) Cash
B) Accounts Receivable
C) Unearned Revenue
D) Equipment
Answer
Answer: C
Rationale
Unearned revenue is a liability account with a normal credit balance, representing cash received
before goods or services are delivered.
Question 9
What is the purpose of a trial balance?
A) To detect all errors in the accounting records
B) To verify that total debits equal total credits
C) To prepare the income statement
D) To calculate depreciation
Answer
Answer: B
Rationale
A trial balance lists all accounts and their balances to confirm that total debits equal total credits. It
does not detect all errors, such as compensating errors or errors of omission.
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Makers Guide (Latest 2026/2027 Update) 100% Verified
Questions & Answers | Grade A
Question 1
Which financial statement reports a company's financial position at a specific point in time?
A) Income Statement
B) Balance Sheet
C) Statement of Cash Flows
D) Statement of Retained Earnings
Answer
Answer: B
Rationale
The balance sheet (statement of financial position) provides a snapshot of a company's assets,
liabilities, and equity at a specific date, following the accounting equation Assets = Liabilities + Equity.
Question 2
Which of the following is a primary objective of financial accounting?
A) To provide information for internal decision-making
B) To provide useful information to external users for investment and credit decisions
C) To calculate taxable income for the IRS
D) To manage daily cash flow
Answer
Answer: B
Rationale
Financial accounting focuses on preparing general-purpose financial statements for external
stakeholders such as investors, creditors, and regulators to aid in economic decision-making.
,Question 3
Under accrual accounting, revenue is recognized when:
A) Cash is received
B) The performance obligation is satisfied
C) The order is placed
D) The invoice is mailed
Answer
Answer: B
Rationale
Under accrual accounting and ASC 606, revenue is recognized when the seller satisfies its
performance obligation by transferring promised goods or services to the customer, regardless of
when cash is received.
Question 4
Which of the following is an asset?
A) Accounts Payable
B) Common Stock
C) Prepaid Rent
D) Retained Earnings
Answer
Answer: C
Rationale
Prepaid rent is a current asset representing advance payments for future benefits (rent expense) the
company will receive. Accounts payable and common stock are liabilities and equity, respectively.
Question 5
The accounting equation is:
A) Assets = Liabilities − Equity
B) Assets = Liabilities + Equity
C) Equity = Assets + Liabilities
2
,D) Liabilities = Assets + Equity
Answer
Answer: B
Rationale
The fundamental accounting equation states that total assets equal total liabilities plus owners' equity,
reflecting the dual-entry bookkeeping system.
Question 6
Which principle requires that expenses be recognized in the same period as the revenues they
helped generate?
A) Revenue Recognition Principle
B) Matching Principle
C) Historical Cost Principle
D) Conservatism Principle
Answer
Answer: B
Rationale
The matching principle requires that expenses be recorded in the same accounting period as the
revenues they helped generate, ensuring accurate measurement of net income.
Question 7
A company purchases equipment for $50,000 cash. What is the effect on the accounting
equation?
A) Assets increase and equity increases
B) Assets increase and liabilities increase
C) Assets increase and assets decrease
D) Assets decrease and equity decreases
Answer
3
, Answer: C
Rationale
Purchasing equipment with cash increases one asset (equipment) and decreases another asset (cash)
by the same amount, leaving total assets unchanged.
Question 8
Which of the following accounts normally has a credit balance?
A) Cash
B) Accounts Receivable
C) Unearned Revenue
D) Equipment
Answer
Answer: C
Rationale
Unearned revenue is a liability account with a normal credit balance, representing cash received
before goods or services are delivered.
Question 9
What is the purpose of a trial balance?
A) To detect all errors in the accounting records
B) To verify that total debits equal total credits
C) To prepare the income statement
D) To calculate depreciation
Answer
Answer: B
Rationale
A trial balance lists all accounts and their balances to confirm that total debits equal total credits. It
does not detect all errors, such as compensating errors or errors of omission.
4
