WGU C213 ACCOUNTING FOR DECISION MAKERS EXAM TEST WITH
ANSWERS
1. Accounting: the recording of the day-to-day financial activities of a company
and the organization of that information into summary reports used to evaluate the
company's financial status
2. Bookkeeping: the preservation of a systematic, quantitative record of an activity
3. accounting system: used by a business to handle routine bookkeeping tasks
and to structure the information so it can be used to evaluate the performance and
financial status of the business
4. Accounting information: Info that is intended to be useful in making decisions
about the future.
5. The balance sheet, the income statement, and the statement of cashflows-
: What are the three primary financial statements?
6. External Users: Who is financial accounting information primarily prepared for
and used by?
7. Managerial Accounting: the name given to accounting systems designed for
internal users
8. Balance Sheet: Reports a company's assets, liabilities, and owners' equity
9. Income Statement: reports the amount of net income earned by a company
during a period
10. Net income: the excess of a company's revenues over its expenses
11. statement of cash flows: reports the amount of cash collected and paid out by a
company in the following three types of activities: operating, investing, and financing
12. FASB: Which private body establishes accounting rules in the U.S.?
13. Financial Accounting Standards Board (FASB): a private body established
and supported by the joint efforts of the U.S. business community, financial analysts,
and practicing accountants
14. The Securities and Exchange Commission (SEC): the organization that reg-
ulates U.S. stock exchanges and seeks to create a fair information environment in
which investors can buy and sell stocks without fear that companies are hiding or
manipulating financial data
15. American Institute of Certified Public Accountants (AICPA): the professional
organization of certified public accountants (CPAs) in the United States
16. Public Company Accounting Oversight Board (PCAOB): the organization
that inspects the audit practices of registered audit firms and has statutory authority
to investigate questionable audit practices and to impose sanctions such as barring
an audit firm from auditing SEC-registered companies
17. Internal Revenue Service (IRS): Gov't agency that establishes rules to define
exactly when income should be taxed. It has no role in setting financial accounting
rules; and a company's financial statements are not used in determining how much
tax the company must pay
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, WGU C213 ACCOUNTING FOR DECISION MAKERS EXAM TEST WITH
ANSWERS
18. The International Accounting Standards Board (IASB): Organization that
was formed to develop a common set of worldwide accounting standards. Its
standards are increasingly accepted worldwide, but FASB rules are still the standard
in the United States.
19. 1. Rapid Advancements in the IT field
2. the international integration of worldwide business
3. Increased scrutiny associated with large corporate accounting scandals: -
Which 3 factors have combined to make right now a time of significant change in
accounting?
20. Sarbanes-Oxley Act: A wave of accounting scandals starting in 2001 resulted
in this act, which increases U.S. federal government scrutiny of the production of
financial statements.
21. Balance Sheet: reports a company's financial position at a specified point in
time and lists the company's resources (assets), obligations (liabilities), and net
ownership interest (owners' equity).
22. Assets: probable future economic benefits obtained or controlled by a company
as a result of past transactions or events
23. Liabilities: probable future sacrifices of economic benefits arising from present
obligations of a company to transfer assets or provide services in the future as a
result of past transactions or events
24. Owners' equity: the residual interest in the assets of a company that remains
after deducting its liabilities
25. Assets = Liabilities + Owners' Equity: What is the accounting equation?
26. By order of liquidity: In what order are assets typically listed on the balance
sheet?
27. Current and Long-term: Liabilities are divided into which 2 categories on the
balance sheet?
28. states that the financial results of an economic entity should be reported
separately from the financial results of other entities, even though all those
entities may be controlled by the same person: What is the entity concept?
29. (revenues-expense= net income): Equation to calculate net income
30. When work has been done and collectability of cash can be reasonably
assured: According to accounting rules, when should revenue be recognized?
31. Operating activities: those activities that comprise the day-to-day operations of
a business.
32. Investing activities: The purchase and sale of long-term assets such as land
and equipment are known as .
33. Financing activities: those activities through which cash is obtained from, or
repaid to, creditors and investors
2/6
ANSWERS
1. Accounting: the recording of the day-to-day financial activities of a company
and the organization of that information into summary reports used to evaluate the
company's financial status
2. Bookkeeping: the preservation of a systematic, quantitative record of an activity
3. accounting system: used by a business to handle routine bookkeeping tasks
and to structure the information so it can be used to evaluate the performance and
financial status of the business
4. Accounting information: Info that is intended to be useful in making decisions
about the future.
5. The balance sheet, the income statement, and the statement of cashflows-
: What are the three primary financial statements?
6. External Users: Who is financial accounting information primarily prepared for
and used by?
7. Managerial Accounting: the name given to accounting systems designed for
internal users
8. Balance Sheet: Reports a company's assets, liabilities, and owners' equity
9. Income Statement: reports the amount of net income earned by a company
during a period
10. Net income: the excess of a company's revenues over its expenses
11. statement of cash flows: reports the amount of cash collected and paid out by a
company in the following three types of activities: operating, investing, and financing
12. FASB: Which private body establishes accounting rules in the U.S.?
13. Financial Accounting Standards Board (FASB): a private body established
and supported by the joint efforts of the U.S. business community, financial analysts,
and practicing accountants
14. The Securities and Exchange Commission (SEC): the organization that reg-
ulates U.S. stock exchanges and seeks to create a fair information environment in
which investors can buy and sell stocks without fear that companies are hiding or
manipulating financial data
15. American Institute of Certified Public Accountants (AICPA): the professional
organization of certified public accountants (CPAs) in the United States
16. Public Company Accounting Oversight Board (PCAOB): the organization
that inspects the audit practices of registered audit firms and has statutory authority
to investigate questionable audit practices and to impose sanctions such as barring
an audit firm from auditing SEC-registered companies
17. Internal Revenue Service (IRS): Gov't agency that establishes rules to define
exactly when income should be taxed. It has no role in setting financial accounting
rules; and a company's financial statements are not used in determining how much
tax the company must pay
1/6
, WGU C213 ACCOUNTING FOR DECISION MAKERS EXAM TEST WITH
ANSWERS
18. The International Accounting Standards Board (IASB): Organization that
was formed to develop a common set of worldwide accounting standards. Its
standards are increasingly accepted worldwide, but FASB rules are still the standard
in the United States.
19. 1. Rapid Advancements in the IT field
2. the international integration of worldwide business
3. Increased scrutiny associated with large corporate accounting scandals: -
Which 3 factors have combined to make right now a time of significant change in
accounting?
20. Sarbanes-Oxley Act: A wave of accounting scandals starting in 2001 resulted
in this act, which increases U.S. federal government scrutiny of the production of
financial statements.
21. Balance Sheet: reports a company's financial position at a specified point in
time and lists the company's resources (assets), obligations (liabilities), and net
ownership interest (owners' equity).
22. Assets: probable future economic benefits obtained or controlled by a company
as a result of past transactions or events
23. Liabilities: probable future sacrifices of economic benefits arising from present
obligations of a company to transfer assets or provide services in the future as a
result of past transactions or events
24. Owners' equity: the residual interest in the assets of a company that remains
after deducting its liabilities
25. Assets = Liabilities + Owners' Equity: What is the accounting equation?
26. By order of liquidity: In what order are assets typically listed on the balance
sheet?
27. Current and Long-term: Liabilities are divided into which 2 categories on the
balance sheet?
28. states that the financial results of an economic entity should be reported
separately from the financial results of other entities, even though all those
entities may be controlled by the same person: What is the entity concept?
29. (revenues-expense= net income): Equation to calculate net income
30. When work has been done and collectability of cash can be reasonably
assured: According to accounting rules, when should revenue be recognized?
31. Operating activities: those activities that comprise the day-to-day operations of
a business.
32. Investing activities: The purchase and sale of long-term assets such as land
and equipment are known as .
33. Financing activities: those activities through which cash is obtained from, or
repaid to, creditors and investors
2/6
