WGU D196 TEST QUESTIONS WITH 100% VERIFIED
CORRECT ANSWERS
What is the correct sequence of budgets in a manufacturing business? -
✔✔ANSWER✔✔>>Sales, production, direct materials
What is the effect of a company's accounting department maintaining high ethical
standards? - ✔✔ANSWER✔✔>>The company's accounting information will increase in
value.
Why might employees be interested in their company's financial accounting
information? - ✔✔ANSWER✔✔>>Financial statement data are often used in
determining employee bonuses.
Which group establishes financial accounting rules in the United States? -
✔✔ANSWER✔✔>>Financial Accounting Standards Board (FASB)
Which report is one of the three primary financial statements? -
✔✔ANSWER✔✔>>Statement of cash flows
A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equation? -
✔✔ANSWER✔✔>>Assets increase by $5,000; expenses increase by $5,000.
A company borrowed $80,000 cash from a bank. - ✔✔ANSWER✔✔>>Assets increase
by $80,000; liabilities increase by $80,000.
What is the impact of expenses on the accounting equation? -
✔✔ANSWER✔✔>>Expenses decrease owners' equity.
Which type of account are accounts payable and notes payable both examples of? -
✔✔ANSWER✔✔>>Liability
What is the purpose of the financial accounting cycle? - ✔✔ANSWER✔✔>>To gather
information related to the expenses and income generated by a company
Which event represents a transaction recorded as part of the financial accounting
cycle? - ✔✔ANSWER✔✔>>The sale of a product for cash or on account
What is an arm's-length transaction? - ✔✔ANSWER✔✔>>An exchange between two
independent parties
, In the context of the financial accounting cycle, what is the definition of an account? -
✔✔ANSWER✔✔>>A specific accounting record that provides an efficient way to
categorize similar types of transactions
What is owners' equity? - ✔✔ANSWER✔✔>>The remaining claim to the assets of a
business after liabilities have been deducted
Three primary financial statements - ✔✔ANSWER✔✔>>~ Balance Sheet
~ Income Statement
~ Statement of Cash Flows
Balance Sheet - ✔✔ANSWER✔✔>>(or statement of financial position) reports the
resources of a company (assets), the company's obligations (liabilities), and the
difference between what is owned (assets) and what is owed (liabilities), called owners'
equity.
Income Statement - ✔✔ANSWER✔✔>>reports the amount of net income earned by a
company during a period, with annual and quarterly income statements being the most
common. (Net income is discussed later on.) The income statement represents the
accountant's best effort at measuring the economic performance of a company.
Statement of cash flows - ✔✔ANSWER✔✔>>reports the amount of cash collected and
paid out by a company in operating, investing, and financing activities.
Statement of Retained Earnings - ✔✔ANSWER✔✔>>shows the accumulated profits or
losses of a business since the business started
Capital Stock - ✔✔ANSWER✔✔>>The amount given by shareholders to obtain shares
of stock from a company
Retained Earnings - ✔✔ANSWER✔✔>>Earnings that are retained in the business
Net Income = - ✔✔ANSWER✔✔>>Revenues - Expenses
Income statement - ✔✔ANSWER✔✔>>a report of a company's performance for a
particular period of time
Revenue - ✔✔ANSWER✔✔>>an INCREASE in a company's resources through a
normal business transaction
Expense - ✔✔ANSWER✔✔>>a DECREASE in a company's resources through a
normal business transaction
CORRECT ANSWERS
What is the correct sequence of budgets in a manufacturing business? -
✔✔ANSWER✔✔>>Sales, production, direct materials
What is the effect of a company's accounting department maintaining high ethical
standards? - ✔✔ANSWER✔✔>>The company's accounting information will increase in
value.
Why might employees be interested in their company's financial accounting
information? - ✔✔ANSWER✔✔>>Financial statement data are often used in
determining employee bonuses.
Which group establishes financial accounting rules in the United States? -
✔✔ANSWER✔✔>>Financial Accounting Standards Board (FASB)
Which report is one of the three primary financial statements? -
✔✔ANSWER✔✔>>Statement of cash flows
A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equation? -
✔✔ANSWER✔✔>>Assets increase by $5,000; expenses increase by $5,000.
A company borrowed $80,000 cash from a bank. - ✔✔ANSWER✔✔>>Assets increase
by $80,000; liabilities increase by $80,000.
What is the impact of expenses on the accounting equation? -
✔✔ANSWER✔✔>>Expenses decrease owners' equity.
Which type of account are accounts payable and notes payable both examples of? -
✔✔ANSWER✔✔>>Liability
What is the purpose of the financial accounting cycle? - ✔✔ANSWER✔✔>>To gather
information related to the expenses and income generated by a company
Which event represents a transaction recorded as part of the financial accounting
cycle? - ✔✔ANSWER✔✔>>The sale of a product for cash or on account
What is an arm's-length transaction? - ✔✔ANSWER✔✔>>An exchange between two
independent parties
, In the context of the financial accounting cycle, what is the definition of an account? -
✔✔ANSWER✔✔>>A specific accounting record that provides an efficient way to
categorize similar types of transactions
What is owners' equity? - ✔✔ANSWER✔✔>>The remaining claim to the assets of a
business after liabilities have been deducted
Three primary financial statements - ✔✔ANSWER✔✔>>~ Balance Sheet
~ Income Statement
~ Statement of Cash Flows
Balance Sheet - ✔✔ANSWER✔✔>>(or statement of financial position) reports the
resources of a company (assets), the company's obligations (liabilities), and the
difference between what is owned (assets) and what is owed (liabilities), called owners'
equity.
Income Statement - ✔✔ANSWER✔✔>>reports the amount of net income earned by a
company during a period, with annual and quarterly income statements being the most
common. (Net income is discussed later on.) The income statement represents the
accountant's best effort at measuring the economic performance of a company.
Statement of cash flows - ✔✔ANSWER✔✔>>reports the amount of cash collected and
paid out by a company in operating, investing, and financing activities.
Statement of Retained Earnings - ✔✔ANSWER✔✔>>shows the accumulated profits or
losses of a business since the business started
Capital Stock - ✔✔ANSWER✔✔>>The amount given by shareholders to obtain shares
of stock from a company
Retained Earnings - ✔✔ANSWER✔✔>>Earnings that are retained in the business
Net Income = - ✔✔ANSWER✔✔>>Revenues - Expenses
Income statement - ✔✔ANSWER✔✔>>a report of a company's performance for a
particular period of time
Revenue - ✔✔ANSWER✔✔>>an INCREASE in a company's resources through a
normal business transaction
Expense - ✔✔ANSWER✔✔>>a DECREASE in a company's resources through a
normal business transaction
