C213 WGU Pre- Assessment Final Exam
with Questions and Verified Rationalized Answers
100% Must Pass
1. Order of assets listed on the balance sheet: Assets are listed in the order of liquidity.
Liquidity is the amount of time it would usually take to covert an asset
into cash. Obviously, cash would be listed first, followed by marketable investments(a
company can quickly convert a short-term investment into cash). Accounts receivable
would be listed next followed by inventory, and long-term investments, fixed assets, and
intangibles.
Current assets are listed before long-term assets.
Current liabilities are listed before long-term liabilities, but there is no specific orderthey are
listed in outside of current and long-term.
There is also no specific order equity accounts are listed on the balance sheet; although,
typically you will see paid-in-capital followed by retained earnings followedby accumulated
other comprehensive income, and lastly, treasury stock.
2. Difference between a manufacturing company and a service company.
Period Costs Product Costs
Service Co. Selling Costs Direct Labor
Administrative Costs Service Overhead
Manufacturing Co Selling Costs Direct Labor
,Administrative Costs Manufacturing Overhead
Direct Materials (inventory: The only difference is - a manufacturing company hasdirect
materials (inventory).
3. Evaluating a historical income statement to project a future income state-ment.
Projected growth for 2017 = 10% increase over 2016 sales. Step 1:
me statement.
Convert the income statement into a common-sized inco asted 2017
Step 2: Multiply 2016 sales by 1.10 (10% growth) to get the forec
sales. Then multiply the projected 2017 sales by the percentages from step 1.Now, what
would you do if you were given the 2017 sales figure and you needto calculate the 2016
sales figure based off the 10% growth for 2017?: Calcu-lation for 2016: 110,.10 =
100,000
4. Role of the U. S. Securities and Exchange Commission (SEC) in financialreporting.:
Regulates the U.S. Stock exchanges.
Seeks to create a fair information environment in which investors can buy and sellstocks.
, Congress created the first securities act in 1933 and the second securities act in1934 in
response to the stock market crash of 1929.
The Securities Act of 1933 requires most companies planning to issue new debt or stock
securities to the public to submit a registration statement to the public forapproval.
The Securities Act of 1934 requires a public company to file detailed periodic reports including
audited financial statements (form 10-K is the annual report; Form 10-Q is the quarterly
report).
Granted the legal authority to establish accounting standards. Currently the SECaccepts
the pronouncements set by FASB.
The SEC can suspend trading of a company's stock, and if hearings show that the issue
failed to comply with the securities laws, the SEC can de-list the security.
Congress strengthened the SEC through the enactment of Sarbanes-Oxley (SOX), which was
enacted after the massive frauds that occurred in the late 1990s and theearly 2000s.
5. Compare and Contrast Traditional Costing to Activity-Based Costing (ABC).: ABC is
a more accurate product costing system than traditional productcosting systems.
ABC requires more time and expense to administer than do traditional costingsystems.
Companies with diverse products involving substantially different production processes,
with Questions and Verified Rationalized Answers
100% Must Pass
1. Order of assets listed on the balance sheet: Assets are listed in the order of liquidity.
Liquidity is the amount of time it would usually take to covert an asset
into cash. Obviously, cash would be listed first, followed by marketable investments(a
company can quickly convert a short-term investment into cash). Accounts receivable
would be listed next followed by inventory, and long-term investments, fixed assets, and
intangibles.
Current assets are listed before long-term assets.
Current liabilities are listed before long-term liabilities, but there is no specific orderthey are
listed in outside of current and long-term.
There is also no specific order equity accounts are listed on the balance sheet; although,
typically you will see paid-in-capital followed by retained earnings followedby accumulated
other comprehensive income, and lastly, treasury stock.
2. Difference between a manufacturing company and a service company.
Period Costs Product Costs
Service Co. Selling Costs Direct Labor
Administrative Costs Service Overhead
Manufacturing Co Selling Costs Direct Labor
,Administrative Costs Manufacturing Overhead
Direct Materials (inventory: The only difference is - a manufacturing company hasdirect
materials (inventory).
3. Evaluating a historical income statement to project a future income state-ment.
Projected growth for 2017 = 10% increase over 2016 sales. Step 1:
me statement.
Convert the income statement into a common-sized inco asted 2017
Step 2: Multiply 2016 sales by 1.10 (10% growth) to get the forec
sales. Then multiply the projected 2017 sales by the percentages from step 1.Now, what
would you do if you were given the 2017 sales figure and you needto calculate the 2016
sales figure based off the 10% growth for 2017?: Calcu-lation for 2016: 110,.10 =
100,000
4. Role of the U. S. Securities and Exchange Commission (SEC) in financialreporting.:
Regulates the U.S. Stock exchanges.
Seeks to create a fair information environment in which investors can buy and sellstocks.
, Congress created the first securities act in 1933 and the second securities act in1934 in
response to the stock market crash of 1929.
The Securities Act of 1933 requires most companies planning to issue new debt or stock
securities to the public to submit a registration statement to the public forapproval.
The Securities Act of 1934 requires a public company to file detailed periodic reports including
audited financial statements (form 10-K is the annual report; Form 10-Q is the quarterly
report).
Granted the legal authority to establish accounting standards. Currently the SECaccepts
the pronouncements set by FASB.
The SEC can suspend trading of a company's stock, and if hearings show that the issue
failed to comply with the securities laws, the SEC can de-list the security.
Congress strengthened the SEC through the enactment of Sarbanes-Oxley (SOX), which was
enacted after the massive frauds that occurred in the late 1990s and theearly 2000s.
5. Compare and Contrast Traditional Costing to Activity-Based Costing (ABC).: ABC is
a more accurate product costing system than traditional productcosting systems.
ABC requires more time and expense to administer than do traditional costingsystems.
Companies with diverse products involving substantially different production processes,
