Accounting for Decision Makers WGU C213 Pre-Assessment Guide
Exam with Questions and Rationalized Answers
100% Graded A+
1. What does accounting focus on?: The impact a business's activities have onits overall
financial performance
2. Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time?: Statementof cash flows
3. Which users would have a primary concern with an organization's ability toprovide
healthcare benefits?: Employees
4. Which body regulates a certified public accounting firm's audit practices when the
firm is auditing a large publicly traded company?: The Public Com-pany Accounting
Oversight Board (PCAOB)
5. What has had the most significant impact on accounting practices?: Infor-mation
technology
6. What two items of information are revealed on the balance sheet?
Choose 2 answers: Ownership.
Debt
7. Which term is defined as the residual interest in the net assets of a compa-ny?:
Owners' equity
8. A corporation has total liabilities of $300 million, total owners' equity of $100million,
and current assets of $50 million.
,What is the value of the firm's long-term assets?: $350 million
9. Which situation should result in revenue recognition on the income state-ment for
the year ending 12/31/14 if the firm is using accrual-basis account-ing?: In 2014, a
company provides services to a customer for which cash will be collected the next year
(2015).
10. Which category on the statement of cash flows summarizes cash receiptsand
payments to owners and creditors of the company?: Cash flows from financing activities
11. Where would an investor find a summary of a company's significant ac-counting
policies?: In the notes to financial statements
12. Which assurance does an external audit report provide for its readers?: -
The company's financial statements fairly reflect its financial position
13. Reliable: Information that can be verified
14. Relevant: Information having to do with the matter at hand
15. Material: Information that is important enough to make a difference
16. Conservatism: Information related to recognizing losses as they occur
17. What are steps in the decision cycle?: 1 Prepare financial statements.2
Analyze financial statements.
, 3 Gather information.
4 Make decision.
5 Implement decision.
18. Partial financial information for a company is as follows:
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
Total liabilities $48,561
Stockholders' equity $10,158
Sales $46,997
Net Income $ 3,761
Market value of shares $41,316
What is the price-earnings (PE) ratio for this company?: 11.0
19. What is consistent with a continual decline in gross profit if the firm's costof goods
sold remains the same?: Continual decrease in sales
20. Which two cash flow adequacy ratios represent a cash cow?: -
$6,991/$5,486. $5,220/$1,875.
21. Which formula yields a cash times interest earned ratio of 11?: Cash beforeinterest
and taxes of $11,000 / cash paid for interest of $1,000
22. Which form of debt should be reported in the long-term liability category?-
: Notes payable expected to be paid in 18 months
23. In January of year 1, a company began doing business as a corporation in order to
sell technology-related accessories and services. During its first month of
Exam with Questions and Rationalized Answers
100% Graded A+
1. What does accounting focus on?: The impact a business's activities have onits overall
financial performance
2. Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time?: Statementof cash flows
3. Which users would have a primary concern with an organization's ability toprovide
healthcare benefits?: Employees
4. Which body regulates a certified public accounting firm's audit practices when the
firm is auditing a large publicly traded company?: The Public Com-pany Accounting
Oversight Board (PCAOB)
5. What has had the most significant impact on accounting practices?: Infor-mation
technology
6. What two items of information are revealed on the balance sheet?
Choose 2 answers: Ownership.
Debt
7. Which term is defined as the residual interest in the net assets of a compa-ny?:
Owners' equity
8. A corporation has total liabilities of $300 million, total owners' equity of $100million,
and current assets of $50 million.
,What is the value of the firm's long-term assets?: $350 million
9. Which situation should result in revenue recognition on the income state-ment for
the year ending 12/31/14 if the firm is using accrual-basis account-ing?: In 2014, a
company provides services to a customer for which cash will be collected the next year
(2015).
10. Which category on the statement of cash flows summarizes cash receiptsand
payments to owners and creditors of the company?: Cash flows from financing activities
11. Where would an investor find a summary of a company's significant ac-counting
policies?: In the notes to financial statements
12. Which assurance does an external audit report provide for its readers?: -
The company's financial statements fairly reflect its financial position
13. Reliable: Information that can be verified
14. Relevant: Information having to do with the matter at hand
15. Material: Information that is important enough to make a difference
16. Conservatism: Information related to recognizing losses as they occur
17. What are steps in the decision cycle?: 1 Prepare financial statements.2
Analyze financial statements.
, 3 Gather information.
4 Make decision.
5 Implement decision.
18. Partial financial information for a company is as follows:
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
Total liabilities $48,561
Stockholders' equity $10,158
Sales $46,997
Net Income $ 3,761
Market value of shares $41,316
What is the price-earnings (PE) ratio for this company?: 11.0
19. What is consistent with a continual decline in gross profit if the firm's costof goods
sold remains the same?: Continual decrease in sales
20. Which two cash flow adequacy ratios represent a cash cow?: -
$6,991/$5,486. $5,220/$1,875.
21. Which formula yields a cash times interest earned ratio of 11?: Cash beforeinterest
and taxes of $11,000 / cash paid for interest of $1,000
22. Which form of debt should be reported in the long-term liability category?-
: Notes payable expected to be paid in 18 months
23. In January of year 1, a company began doing business as a corporation in order to
sell technology-related accessories and services. During its first month of
