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WGU C213 FINAL EXAM |2025-2026 LATEST UPDATED | ACTUAL
EXAM QUESTIONS WITH SOLUTIONS | 100% RATED CORRECT |
100% VERFIED SOLTIONS | ALREADY GRADED A+
External users of financial statements use financial statement analysis for - (ANSWER)Investing
decisions
When analyzing financial statements, prognosis is - (ANSWER)The prediction of how a
business will perform in the future
Relationships between financial statement amounts are called - (ANSWER)Financial ratios
When analyzing financial statements, diagnosis is - (ANSWER)The identification of where a
business has problems
Which of the following is a measure of the liquid position of a corporation - (ANSWER)Current
ratio
Which of the following is one of the purposes of financial statement analysis? - (ANSWER)Both
diagnosis and prognosis
Which of the following transactions could increase a firm's current ratio - (ANSWER)Payment
of accounts payable
Which of the following ratios is used to measure a firm's leverage - (ANSWER)Debt ratio
Which of the following ratios represents the proportion of borrowed funds used to acquire the
company's assets - (ANSWER)Debt ratio
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Which of the following ratios is calculated using numbers from both the income statement and
the balance sheet - (ANSWER)Return on equity
Which of the following ratios is used to measure the profit earned on each dollar of sales in a
firm - (ANSWER)Return on sales
Which of the following ratios is a comparison of a financial statement number to a market value
number - (ANSWER)Price-earnings ratio
In a common-size income statement, each item on the statement is expressed as a percentage of -
(ANSWER)Revenue (sales revenue)
A useful tool in financial statement analysis is the common-size financial statement. What does
this tool enable the financial analyst to do - (ANSWER)Compare the mix of revenue, and
expenses, and determine efficient use of resources within a company over time or between
companies within a given industry without respect to relative size.
Which of the following below generally is the most useful in analyzing companies of different
sizes - (ANSWER)Common-sized financial statements
When using common-size statements - (ANSWER)Data may be selected for the same business
as of different dates, or for two or more businesses as of the same date
When analyzing a company's debt ratio, if the ratio has a value that is equal to one, then the
company has - (ANSWER)No stockholders' equity
The ratio that reflects the mix of sources of financing for a company is the - (ANSWER)Debt-to-
equity ratio
Which cash flow ratio reflects a company's ability to make its interest payments from cash
generated through operations - (ANSWER)Cash times interest earned
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Which cash flow ratio reflects a company's ability to finance its capital expansion through cash
from operations - (ANSWER)Cash flow adequacy
In general, most companies have significant noncash expenses that reduce net income and also
cause the cash flow-to-net income ratio to be - (ANSWER)Greater than 1
Which of the following would be classified as a long-term asset - (ANSWER)Land - Property,
plant, equipment
Owners of a corporation are referred to as - (ANSWER)Accounts receivable
Owners of a corporation are referred to as - (ANSWER)Stockholders
Which of the following types of accounts show how resources came into a firm -
(ANSWER)Both liabilities and owners' equity
The total amount invested to acquire an ownership interest in a corporation is called -
(ANSWER)Common Stock and Preferred Stock
What decreases owners' equity - (ANSWER)generating a loss
Example of a current asset - (ANSWER)accounts receivable
Asset accounts - (ANSWER)prepaid expenses, equipment, accounts receivable
An enterprise's obligations to pay cash or other economic resources to others are called -
(ANSWER)liabilities
, 4|Page
Current assets usually are listed on a balance sheet in - (ANSWER)Decreasing order of liquidity
In non-U.S. Balance sheets, you will often see - (ANSWER)The stockholders' equity section will
be listed first on the balance sheet. Current assets and current liabilities will be netted together
The process of valuation involves computing numbers that are both - (ANSWER)Relevant and
reliable
The process of determining the dollar value to assign to an item that is to be recognized in the
financial statements is called - (ANSWER)Valuation
Historical cost has long been used in accounting because it is - (ANSWER)Reliable
Reporting the details of a transaction in the notes to the financial statements is called -
(ANSWER)Disclosure
This is sometimes done in place of recognition when the effects of an event cannot be quantified
with any degree of certainty. - (ANSWER)Disclosure
When a company borrows money from a bank to be repaid in over time, the effect on the
accounting equation for the company will be to - (ANSWER)Increase Cash and increase Bank
Loan Payable
When a company purchases equipment on credit, the effect on the accounting equation will be to
- (ANSWER)increase Equipment and increase a liability
When a company pays for a warehouse by paying cash, the effect on the accounting equation
will be to - (ANSWER)Increase Buildings and decrease Cash
WGU C213 FINAL EXAM |2025-2026 LATEST UPDATED | ACTUAL
EXAM QUESTIONS WITH SOLUTIONS | 100% RATED CORRECT |
100% VERFIED SOLTIONS | ALREADY GRADED A+
External users of financial statements use financial statement analysis for - (ANSWER)Investing
decisions
When analyzing financial statements, prognosis is - (ANSWER)The prediction of how a
business will perform in the future
Relationships between financial statement amounts are called - (ANSWER)Financial ratios
When analyzing financial statements, diagnosis is - (ANSWER)The identification of where a
business has problems
Which of the following is a measure of the liquid position of a corporation - (ANSWER)Current
ratio
Which of the following is one of the purposes of financial statement analysis? - (ANSWER)Both
diagnosis and prognosis
Which of the following transactions could increase a firm's current ratio - (ANSWER)Payment
of accounts payable
Which of the following ratios is used to measure a firm's leverage - (ANSWER)Debt ratio
Which of the following ratios represents the proportion of borrowed funds used to acquire the
company's assets - (ANSWER)Debt ratio
,2|Page
Which of the following ratios is calculated using numbers from both the income statement and
the balance sheet - (ANSWER)Return on equity
Which of the following ratios is used to measure the profit earned on each dollar of sales in a
firm - (ANSWER)Return on sales
Which of the following ratios is a comparison of a financial statement number to a market value
number - (ANSWER)Price-earnings ratio
In a common-size income statement, each item on the statement is expressed as a percentage of -
(ANSWER)Revenue (sales revenue)
A useful tool in financial statement analysis is the common-size financial statement. What does
this tool enable the financial analyst to do - (ANSWER)Compare the mix of revenue, and
expenses, and determine efficient use of resources within a company over time or between
companies within a given industry without respect to relative size.
Which of the following below generally is the most useful in analyzing companies of different
sizes - (ANSWER)Common-sized financial statements
When using common-size statements - (ANSWER)Data may be selected for the same business
as of different dates, or for two or more businesses as of the same date
When analyzing a company's debt ratio, if the ratio has a value that is equal to one, then the
company has - (ANSWER)No stockholders' equity
The ratio that reflects the mix of sources of financing for a company is the - (ANSWER)Debt-to-
equity ratio
Which cash flow ratio reflects a company's ability to make its interest payments from cash
generated through operations - (ANSWER)Cash times interest earned
,3|Page
Which cash flow ratio reflects a company's ability to finance its capital expansion through cash
from operations - (ANSWER)Cash flow adequacy
In general, most companies have significant noncash expenses that reduce net income and also
cause the cash flow-to-net income ratio to be - (ANSWER)Greater than 1
Which of the following would be classified as a long-term asset - (ANSWER)Land - Property,
plant, equipment
Owners of a corporation are referred to as - (ANSWER)Accounts receivable
Owners of a corporation are referred to as - (ANSWER)Stockholders
Which of the following types of accounts show how resources came into a firm -
(ANSWER)Both liabilities and owners' equity
The total amount invested to acquire an ownership interest in a corporation is called -
(ANSWER)Common Stock and Preferred Stock
What decreases owners' equity - (ANSWER)generating a loss
Example of a current asset - (ANSWER)accounts receivable
Asset accounts - (ANSWER)prepaid expenses, equipment, accounts receivable
An enterprise's obligations to pay cash or other economic resources to others are called -
(ANSWER)liabilities
, 4|Page
Current assets usually are listed on a balance sheet in - (ANSWER)Decreasing order of liquidity
In non-U.S. Balance sheets, you will often see - (ANSWER)The stockholders' equity section will
be listed first on the balance sheet. Current assets and current liabilities will be netted together
The process of valuation involves computing numbers that are both - (ANSWER)Relevant and
reliable
The process of determining the dollar value to assign to an item that is to be recognized in the
financial statements is called - (ANSWER)Valuation
Historical cost has long been used in accounting because it is - (ANSWER)Reliable
Reporting the details of a transaction in the notes to the financial statements is called -
(ANSWER)Disclosure
This is sometimes done in place of recognition when the effects of an event cannot be quantified
with any degree of certainty. - (ANSWER)Disclosure
When a company borrows money from a bank to be repaid in over time, the effect on the
accounting equation for the company will be to - (ANSWER)Increase Cash and increase Bank
Loan Payable
When a company purchases equipment on credit, the effect on the accounting equation will be to
- (ANSWER)increase Equipment and increase a liability
When a company pays for a warehouse by paying cash, the effect on the accounting equation
will be to - (ANSWER)Increase Buildings and decrease Cash
