WGU D196- Principles of Financial and
Managerial Accounting UPDATED Exam
Questions and CORRECT Answers
What is the effect of a company's accounting department maintaining high ethical standards? -
CORRECT ANSWER - The company's accounting information will increase in value.
Why might employees be interested in their company's financial accounting information? -
CORRECT ANSWER - Financial statement data are often used in determining the
employee bonuses.
Which group establishes financial accounting rules in the US? - CORRECT ANSWER -
Financial Accounting Standards Board (FASB).
A company paid $5000 cash in advertising costs. How does this transaction affect the paying
company's accounting equation? - CORRECT ANSWER - Assets decrease by $5000;
expenses increase by $5000.
What is a transaction? - CORRECT ANSWER - Two parties exchanging something of
value.
A company borrowed $80,000 cash from a bank. How does this transaction affect the accounting
equation of the borrowing company? - CORRECT ANSWER - Assets increase by
$80,000; liabilities increase by $80,000.
What is the impact of expenses on the accounting equation? - CORRECT ANSWER -
Expenses decrease owners' equity.
Which type of account are accounts payable and notes payable both examples of? - CORRECT
ANSWER - Liability
, Whiat is the purpose of the financial accounting cycle? - CORRECT ANSWER - To turn
information about transactions into financial statements.
According to the accounting equation, the amount of liabilities and equity must always be equal
to another amount. What is the other amount? - CORRECT ANSWER - Assets
What is an expense item? - CORRECT ANSWER - Cost of goods sold.
How is gross profit computed? - CORRECT ANSWER - Sales (-) COGS
Which type of account is retained earnings? - CORRECT ANSWER - Equity
For the purpose of cash flow classification in the statement of cash flows, what is an operating
activity? - CORRECT ANSWER - Paying employees
How does a classified balance sheet provide useful information to a decision maker? -
CORRECT ANSWER - It distinguishes between current and long-term assets.
What information does a balance sheet provide to a decision maker? - CORRECT
ANSWER - Summary of the financial position of a company at a particular date.
What is an account payable? - CORRECT ANSWER - The amount owed by a company
that purchased goods or services from a supplier on credit.
What is an example of a financial cost that would result from poor direct labor budgeting and
planning? - CORRECT ANSWER - Increased hiring, training and overtime costs.
What does a manager have control over in a cost center? - CORRECT ANSWER - Costs
Managerial Accounting UPDATED Exam
Questions and CORRECT Answers
What is the effect of a company's accounting department maintaining high ethical standards? -
CORRECT ANSWER - The company's accounting information will increase in value.
Why might employees be interested in their company's financial accounting information? -
CORRECT ANSWER - Financial statement data are often used in determining the
employee bonuses.
Which group establishes financial accounting rules in the US? - CORRECT ANSWER -
Financial Accounting Standards Board (FASB).
A company paid $5000 cash in advertising costs. How does this transaction affect the paying
company's accounting equation? - CORRECT ANSWER - Assets decrease by $5000;
expenses increase by $5000.
What is a transaction? - CORRECT ANSWER - Two parties exchanging something of
value.
A company borrowed $80,000 cash from a bank. How does this transaction affect the accounting
equation of the borrowing company? - CORRECT ANSWER - Assets increase by
$80,000; liabilities increase by $80,000.
What is the impact of expenses on the accounting equation? - CORRECT ANSWER -
Expenses decrease owners' equity.
Which type of account are accounts payable and notes payable both examples of? - CORRECT
ANSWER - Liability
, Whiat is the purpose of the financial accounting cycle? - CORRECT ANSWER - To turn
information about transactions into financial statements.
According to the accounting equation, the amount of liabilities and equity must always be equal
to another amount. What is the other amount? - CORRECT ANSWER - Assets
What is an expense item? - CORRECT ANSWER - Cost of goods sold.
How is gross profit computed? - CORRECT ANSWER - Sales (-) COGS
Which type of account is retained earnings? - CORRECT ANSWER - Equity
For the purpose of cash flow classification in the statement of cash flows, what is an operating
activity? - CORRECT ANSWER - Paying employees
How does a classified balance sheet provide useful information to a decision maker? -
CORRECT ANSWER - It distinguishes between current and long-term assets.
What information does a balance sheet provide to a decision maker? - CORRECT
ANSWER - Summary of the financial position of a company at a particular date.
What is an account payable? - CORRECT ANSWER - The amount owed by a company
that purchased goods or services from a supplier on credit.
What is an example of a financial cost that would result from poor direct labor budgeting and
planning? - CORRECT ANSWER - Increased hiring, training and overtime costs.
What does a manager have control over in a cost center? - CORRECT ANSWER - Costs
