WGU C213 Accounting for Decision Makers
Final Exam| Actual Questions and Answers
Latest Updated (Graded A+)
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Incorrect
C213 Accounting for Decision Makers
1 of 73
Definition
Result from intentional errors. Fraudulent financial reporting occurs
when management chooses to intentionally manipulate the financial
statements to serve their own purposes, such as meeting Wall Street's
earnings forecasts as was the case with WorldCom.
Give this one a try later!
, Competitors Frauds
Contracts Lenders
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2 of 73
Definition
buy finished goods and resell them to customers. This category
includes wholesalers and retailers.
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Both manufacturing and
None of these
merchandising companies
Government Agencies Merchandising companies
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3 of 73
Definition
A cost incurred outside the factory or production facility.
These costs are reported as an expense in the period in which they are
,incurred.
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Order of assets listed on the
Fixed Costs:
balance sheet
Identify the order of assets,
Period Costs: liabilities, and stockholders’ equity
accounts on a balance sheet.
Don't know?
4 of 73
Term
Describe the differences between the direct and indirect methods of
the cash flow statement.
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The balance sheet reports a company's assets, liabilities, and owners' equity. It
reports the financial position of a firm at a point in time.
The income statement reports the amount of net income earned by a company
during a period. Net income is the excess of a company's revenues over its
expenses. It reports the financial performance of a firm over a period of time.
, The statement of cash flows reports the amount of cash collected and paid out by
a company in the following three types of activities: operating, investing, and
financing over a period of time.
The direct and indirect method only apply to the operating section of the cash
flow statement. The investing and financing are always prepared using a direct
method. The operating activities section of a statement of cash flows prepared
using the direct method is, in effect, a cash-basis income statement. Unlike the
indirect method, the direct method does not start with net income. Instead,
this method reports directly the major classes of operating cash receipts and
payments of an entity during a period.
The direct method is favored by many users of financial statements because it
is easy to understand.
The indirect method begins with net income as reported in the income
statement and then details the adjustments needed to arrive at cash flow from
operations. The indirect method is favored and used by most companies
because it is relatively easy to construct from existing balance sheet and
income statement data. In addition, the indirect method highlights the reasons
for the difference between net income and cash from operations. In addition,
GAAP required this reconciliation and so if a firm uses the direct method, they
must present the indirect method in the footnotes anyway, thus having to do
the calculations twice.
The statement of cash flows explains how a company's cash was generated during
the period and how that cash was used. Explains change in cash account between
two balance sheet dates.
Audit conducted by external (independent) qualified accountant(s). These
accountants are usually CPAs, but they may not be. Each state determines who can
be a CPA in that state and states have slightly different requirements.
The independent accounting firm conducts tests to determine whether the financial
statements fairly reflect the financial status of the company issuing them and
whether the financial statements were prepared using Generally Accepted
Accounting Principles (GAAP). The tests include an examination of the original
documents underlying key transactions, a spot check to verify that reported
inventory actually does exist, and contact with a sample of customers and suppliers
Final Exam| Actual Questions and Answers
Latest Updated (Graded A+)
Correct
Incorrect
C213 Accounting for Decision Makers
1 of 73
Definition
Result from intentional errors. Fraudulent financial reporting occurs
when management chooses to intentionally manipulate the financial
statements to serve their own purposes, such as meeting Wall Street's
earnings forecasts as was the case with WorldCom.
Give this one a try later!
, Competitors Frauds
Contracts Lenders
Don't know?
2 of 73
Definition
buy finished goods and resell them to customers. This category
includes wholesalers and retailers.
Give this one a try later!
Both manufacturing and
None of these
merchandising companies
Government Agencies Merchandising companies
Don't know?
3 of 73
Definition
A cost incurred outside the factory or production facility.
These costs are reported as an expense in the period in which they are
,incurred.
Give this one a try later!
Order of assets listed on the
Fixed Costs:
balance sheet
Identify the order of assets,
Period Costs: liabilities, and stockholders’ equity
accounts on a balance sheet.
Don't know?
4 of 73
Term
Describe the differences between the direct and indirect methods of
the cash flow statement.
Give this one a try later!
The balance sheet reports a company's assets, liabilities, and owners' equity. It
reports the financial position of a firm at a point in time.
The income statement reports the amount of net income earned by a company
during a period. Net income is the excess of a company's revenues over its
expenses. It reports the financial performance of a firm over a period of time.
, The statement of cash flows reports the amount of cash collected and paid out by
a company in the following three types of activities: operating, investing, and
financing over a period of time.
The direct and indirect method only apply to the operating section of the cash
flow statement. The investing and financing are always prepared using a direct
method. The operating activities section of a statement of cash flows prepared
using the direct method is, in effect, a cash-basis income statement. Unlike the
indirect method, the direct method does not start with net income. Instead,
this method reports directly the major classes of operating cash receipts and
payments of an entity during a period.
The direct method is favored by many users of financial statements because it
is easy to understand.
The indirect method begins with net income as reported in the income
statement and then details the adjustments needed to arrive at cash flow from
operations. The indirect method is favored and used by most companies
because it is relatively easy to construct from existing balance sheet and
income statement data. In addition, the indirect method highlights the reasons
for the difference between net income and cash from operations. In addition,
GAAP required this reconciliation and so if a firm uses the direct method, they
must present the indirect method in the footnotes anyway, thus having to do
the calculations twice.
The statement of cash flows explains how a company's cash was generated during
the period and how that cash was used. Explains change in cash account between
two balance sheet dates.
Audit conducted by external (independent) qualified accountant(s). These
accountants are usually CPAs, but they may not be. Each state determines who can
be a CPA in that state and states have slightly different requirements.
The independent accounting firm conducts tests to determine whether the financial
statements fairly reflect the financial status of the company issuing them and
whether the financial statements were prepared using Generally Accepted
Accounting Principles (GAAP). The tests include an examination of the original
documents underlying key transactions, a spot check to verify that reported
inventory actually does exist, and contact with a sample of customers and suppliers
