WGU C213 Accounting For Decision Makers Exam Questions and Verified Answers 2025

The emphasis in financial accounting is on which of the following external user groups? Educators CPA's Investors and Creditors Management - Investors and creditors The primary internal group that uses accounting information is: Investors Competitors Government Agencies Management - Management Internal Reports are generally used by: Employees Management Suppliers Lenders - Management Which of the following is NOT true of the FASB? It is a government agency It seeks consistency for its proposed standards It consists of 7 full time members It has no legal power to enforce the standards it sets - It is a government agency Generally Accepted Accounting Principles (GAAP) are: Natural laws Based on scientific proofs Developed by accounting rule makers None of the above - Developed by accounting rule makers GAAP stands for what? - Generally Accepted Accounting Principles The current standard setting board for accounting in the private sector is the: AAA FASB IASB SEC - FASB (Financial Accounting Standards Board) Which of the following is the government agency that stipulates the rules and regulations that govern the collection of taxes in the USA? SEC FASB AICPA IRS - IRS (Internal Revenue Service) Which of the following organizations has specific LEGAL authority to establish accounting standards for publicly held companies? FASB AICPA IRS SEC - SEC (Securities and Exchange Commission) The Organization that develops worldwide accounting standards is the: IASC IBAS ICAS IASB - IASB (International Accounting Standards Board) Which of the following is NOT a service typically provided by large public accounting firms? Making management decisions Establishing accounting systems Redesigning operating procedures Performing audits - Making management decisions CPA stands for: - certified public accountant Which of the following is NOT a reason for the integration of worldwide accounting standards? the theoretical necessity of a common set of accounting standards The integration of the global economy The increased efficiency of financial markets The need to evaluate investments across the world - The theoretical necessity of a common set of accounting standards TRUE or FALSE: the IASB is charged with developing worldwide accounting practices? - True Increased federal oversight of the audit process resulted from the passage of the following act of Congress - Sarbanes-Oxley Act Financial Reports Act Access to High Standards Act AGOA Acceleration Act - Sarbanes-Oxley Act TRUE or FALSE: A borrower benefits from providing financial information regarding income and expenses in the form of a lower interest rate on the loan because of reduced uncertainty for the lender with regard to repayment - True Which of the following is NOT one of the 3 primary financial statements? Statement of retained earnings Balance sheet Statement of cash flow Income statement - Statement of retained earnings TRUE or FALSE: One reason for a company's preparing and providing financial statements is to reduce uncertainty for an investor regarding the firms future financial performance - True Basic Accounting Equation - Assets = Liabilities + Owner's Equity Which of the following provides a picture of the enterprise at a particular point in time? Income statement Statement of cash flows Balance sheet Statement of retained earnings - Balance sheet The financial statement that reports resources owned, the obligations to transfer resources to other organizations, and the claims by the entity's owners is known as the: Income statement Statement of retained earnings Statement of cash flows Balance sheet - Balance sheet Why is the accounting equation is true? - Liabilities and owner's equity are the sources that fund the purchase of assets Which of the following distinguishes between current and long term assets? - Classified balance sheet Which of the following would be included on an income statement? Accounts receivable Land Cash Rent expense - Rent expense Revenues cause: An increase in liabilities A decrease in net assets No change in net assets An increase in net assets - An increase in net assets Another name for the income statement is: Retained earnings statement Statement of cash flows Statement of earnings Statement of financial position - Statement of earnings Which of the following is an overall measure of the performance of a business entity's activities? Owners equity Assets Net income/Net loss Revenues - Net income/Net loss Expense and revenue accounts appear on the: Income statement Retained earnings statement Balance sheet Funds statement - Income statement During the month, Meridian Company had the following cash transactions: Cash collected from customers $ 12,500 Cash received from a loan 8,000 Cash paid for wages payable (5,750) Cash paid for the purchase of a building (15,000) Cash received for the issuance of new shares of stock 2,600 Cash received from sale of land 6,400 Cash paid for rent (2,500) Cash paid for dividends (1,500) Given the above information, compute cash flow from investing activities. $4,250 $8,600 ($8,600) ($4,250) - ($8,600) Investing activities: ($15,000) + $6,400 = ($8,600) Which of the following activities would be classified as a financial activity? Selling goods Purchase of equipment Repayment of a loan Payment of wages - Repayment of a loan Which of the following classifications does NOT appear on the Statement of Cash Flows? Borrowing Investing Financing Operating - Borrowing Which of the following classifications refers to those activities associated with buying and selling long-term assets? Financing Borrowing Operating Investing - Investing A major source of cash from operating activities is: Receipts from sale of building Receipts from borrowing Receipts from investment by owner Receipts from sale of goods - Receipts from sale of goods Vital information that CANNOT be captured solely by dollar amounts is reported in a firm's: Balance sheet Income statement Statement of retained earnings Notes to financial statements - Notes to financial statement Which of the following is NOT one of the four general types of financial statement notes? Summary of significant accounting policies Disclosure of important information that is not recognized in the financial statements Supplementary information required by the Internal Revenue Service Additional information about the summary totals found in the financial statements - Supplementary information required by the Internal Revenue Service Which of the following is an example of a significant accounting policy that would be explained in the notes to the financial statements? The disclosure of the uncertain, potential outcome of a lawsuit The description of all the individual items that comprise notes payable The disclosure of quarterly financial information The method used to estimate depreciation on a piece of equipment - The method used to estimate depreciation on a piece of equipment Which of the following is an example of a disclosure of information NOT recognized that would be explained in the notes to the financial statements? The method used to estimate depreciation on a piece of equipment The disclosure of the uncertain, potential outcome of a lawsuit The disclosure of quarterly financial information The description of all the individual items that comprise notes payable - The disclosure of the uncertain, potential outcome of a lawsuit Which of the following is an example of additional information about summary totals that would be explained in the notes to the financial statements? The method used to estimate depreciation on a piece of equipment The disclosure of quarterly financial information The disclosure of the uncertain, potential outcome of a lawsuit The description of all the individual items that comprise notes payable - The description of all the individual items that comprise notes payable An independent audit report is usually issued by: A CPA Management Government agency Private detective - CPA In completing an audit of a company's financial statements, auditors: Provide some assurance that the financial statements are not misleading Assume responsibility for the accuracy of the financial statements Examine every transaction underlying the financial statements Guarantee that the financial statements are accurate - Provide some assurance that the financial statements are not misleading The accuracy of the information contained in the financial statements is the responsibility of the: CPA SEC Management Stockholder - Management Which of the following are the two economic factors that enable us to trust an independent auditor despite the fact that the auditor was hired by the company being audited? Reputation of auditor and government policy Reputation of auditor and risk of lawsuits Risk of lawsuits and integrity of auditor Integrity of auditor and government policy - Reputation of auditor and risk of lawsuits The idea that certain figures on an operating statement help to explain changes in figures on comparative balance sheets is referred to as: Double entry Liquidity Classification Articulation - Articulation The idea that information becomes more useful when it can be related to a benchmark or a standard is referred to as: Materiality Comparability Relevance Conservatism - Comparability The notion that when doubt exists concerning two or more reporting alternatives, users should select the alternative with the least favorable impact on reported income, assets, and liabilities is referred to as: Conservatism Relevance Materiality Comparability - Conservatism Whether an item is big enough that proper accounting will make a difference to users of accounting information is referred to as: Comparability Relevance Materiality Conservatism - Materiality The notion that information will be more useful if it will impact a decision is referred to as: Comparability Conservatism Materiality Relevance - Relevance The following data were taken from the records of Moss Corporation for the year ending December 31, 2012: 01/01/12 - Assets: $11,250 - Liabilities: 8,580 - Owners' equity: ? 12/31/12 - Assets: ? - Liabilities: $10,365 - Owners Equity: 6,465 Given the above information, owners' equity on January 1, 2012 was: $19,830 $2,670 $885 $7,695 - $2,670 Owners equity: $11,250 - $8,580 = $2,670 Which of the following generally is NOT considered to be a liability? Inventory Notes payable Taxes payable Accounts payable - Inventory If a corporation has total assets of $350,000, total liabilities of $150,000, and retained earnings of $100,000, what is the amount of capital stock? $100,000 $250,000 $150,000 $0 - $100,000 Capital Stock: $350,000 - $150,000 - $100,000. = $100,000 Which of the following would be classified as a current asset? Land Capital stock Accounts receivable Accounts payable - Accounts Receivable The total amount invested to acquire an ownership interest in a corporation is called: Common stock and preferred stock Owners equity Retained earnings Net assets - Common stock and preferred stock Current assets usually are listed on a balance sheet in: Decreasing order of liquidity Decreasing order of profitability Increasing order of liquidity A random fashion - Decreasing order of liquidity Which of the following accounts would NOT be considered a current asset? Inventory Cash Equipment Accounts receivable - Equipment In non-US balance sheets, you will often see each of the following EXCEPT: Current assets and current liabilities will be netted together The stockholders' equity section will be listed first on the balance sheet Property, plant, and equipment will be listed first - The stockholders' equity section will be listed first on the balance sheet The process of formally recording an item in the accounting records so that it will be reflected in the financial statements is called: Materiality Disclosure Valuation Recognition - Recognition The process of determining the dollar value to assign to an item that is to be recognized in the financial statements is called: Disclosure Valuation Materiality Recognition - Valuation Historical cost has long been used in accounting because it is: Relevant Useful Reliable Conservative - Reliable Reporting the details of a transaction in the notes to the financial statements is called: Recognition Materiality Valuation Disclosure - Disclosure The process of valuation involves computing numbers that are both: Comparable and consistent Relevant and reliable Material and conservative Understandable and useful - Relevant and reliable When a company purchases equipment on credit, the effect on the accounting equation will be to: increase Inventory and decrease Cash increase Supplies and increase a liability increase Equipment and increase a liability increase Equipment and decrease Cash - Increase equipment and increase a liability When an investor pays cash into a business to become a part owner, the effect on the accounting equation for the business will be to: Increase Cash and increase Paid-in Capital Increase a liability and increase Paid-in Capital Decrease a liability and increase Paid-in Capital Increase Cash and increase a liability - Increase cash and increase paidin Capital When a company pays for a warehouse by paying cash, the effect on the accounting equation will be to: Increase Buildings and increase a liability Increase Equipment in increase Cash Increase Equipment and decrease Cash Increase Buildings and decrease Cash - Increase buildings and decrease cash When a company buys a warehouse by using a mortgage with a local bank, the effect on the accounting equation for the company will be to: Increase Cash and increase Mortgage Payable Increase Mortgage Payable and increase Inventory Decrease Cash and increase Buildings Increase Buildings and increase Mortgage Payable - Increase buildings and increase mortgage payable When a company rents a warehouse by paying for the first six month's rent in advance, the effect on the accounting equation on the day of payment would be to: Increase Land and decrease Cash Increase Prepaid Rent and decrease Cash Increase Cash and increase Prepaid Rent Increase Buildings and decrease Cash - Increase prepaid rent and decrease cash A company's asset mix is determined by: Dividing each asset item on the balance sheet by total assets Dividing each asset item on the balance sheet by total equity Dividing each asset item on the balance sheet by total liabilities Dividing each balance sheet item by total sales for the period - Dividing each asset item on the balance sheet by total assets