WGU C213 ACCOUNTING FOR DECISION MAKERS OA
EXAM BANK | ACCURATE AND CURRENTLY TESTING REAL
EXAM QUESTIONS AND ANSWERS WITH RATIONALES |
EXPERT VERIFIED FOR GUARANTEED PASS
1. What does accounting focus on?
A. Predicting future marketing trends
B. The impact a business’s activities have on its overall financial performance
C. Managing production efficiency
D. Monitoring employee satisfaction
Rationale:
Accounting measures and communicates the financial effects of a business’s transactions and
decisions. It focuses on how those activities impact overall profitability, liquidity, and financial
position, rather than non-financial areas like marketing or human resources.
2. Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time?
A. Income Statement
B. Balance Sheet
C. Statement of Cash Flows
D. Statement of Retained Earnings
Rationale:
The Statement of Cash Flows provides a detailed view of how cash moves in and out of the
company through operations, investments, and financing. It complements the income statement
and balance sheet by explaining actual liquidity changes.
3. Which users would have a primary concern with an organization's ability to provide
healthcare benefits?
A. Investors
B. Creditors
C. Employees
D. Government agencies
Rationale:
Employees are directly affected by their employer’s ability to continue providing benefits such as
,healthcare and pensions. Investors and creditors are more focused on profitability and solvency,
while regulatory bodies enforce compliance rather than benefit continuity.
4. Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAAP)?
A. Increased marketing reach
B. An increase in its comparability to other companies
C. Reduced tax obligations
D. Protection from audits
Rationale:
GAAP ensures that all companies follow standardized reporting procedures, which improves
comparability and transparency of financial statements across firms and industries. It doesn’t
affect taxes or guarantee audit immunity.
5. Which body regulates a certified public accounting firm’s audit practices when the firm
is auditing a large publicly traded company?
A. SEC
B. FASB
C. IRS
D. PCAOB
Rationale:
Although the PCAOB oversees audit quality, the FASB sets the accounting standards (GAAP)
that guide how auditors assess compliance in financial reporting. The SEC enforces regulations,
but the FASB provides the rules auditors must use to evaluate financial accuracy.
6. What has had the most significant impact on accounting practices?
A. Economic recessions
B. Tax laws
C. Information Technology
D. Social media
Rationale:
Information technology has revolutionized accounting through automation, data analytics, and
real-time financial reporting, improving accuracy and efficiency. Although regulations and taxes
matter, technology has reshaped accounting systems most dramatically.
, 7. What two items of information are revealed on the balance sheet?
A. Sales and profits
B. Expenses and taxes
C. Debt and ownership
D. Revenues and cash flows
Rationale:
The balance sheet shows a company’s assets, liabilities, and owner’s equity—essentially
revealing what the business owns, owes, and the owner’s stake. This represents the company’s
financial position at a specific point in time.
8. Which term is defined as the residual interest in the net assets of a company?
A. Revenue
B. Owner’s equity
C. Liability
D. Expense
Rationale:
Owner’s equity (or shareholders’ equity) is the residual interest after liabilities are subtracted
from assets. It reflects the owner’s claim to the net value of the business after all debts are paid.
9. A corporation has total liabilities of $300 million, total owner's equity of $100 million,
and current assets of $50 million. What is the value of the firm’s long-term assets?
A. $50 million
B. $150 million
C. $350 million
D. $400 million
Rationale:
The accounting equation is Assets = Liabilities + Owner’s Equity.
Total assets = $300M + $100M = $400M.
If current assets = $50M, then long-term assets = $400M – $50M = $350M.
10. Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual-basis accounting?
A. A company receives cash in 2015 for 2014 services
B. A company signs a contract for 2015 work
EXAM BANK | ACCURATE AND CURRENTLY TESTING REAL
EXAM QUESTIONS AND ANSWERS WITH RATIONALES |
EXPERT VERIFIED FOR GUARANTEED PASS
1. What does accounting focus on?
A. Predicting future marketing trends
B. The impact a business’s activities have on its overall financial performance
C. Managing production efficiency
D. Monitoring employee satisfaction
Rationale:
Accounting measures and communicates the financial effects of a business’s transactions and
decisions. It focuses on how those activities impact overall profitability, liquidity, and financial
position, rather than non-financial areas like marketing or human resources.
2. Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time?
A. Income Statement
B. Balance Sheet
C. Statement of Cash Flows
D. Statement of Retained Earnings
Rationale:
The Statement of Cash Flows provides a detailed view of how cash moves in and out of the
company through operations, investments, and financing. It complements the income statement
and balance sheet by explaining actual liquidity changes.
3. Which users would have a primary concern with an organization's ability to provide
healthcare benefits?
A. Investors
B. Creditors
C. Employees
D. Government agencies
Rationale:
Employees are directly affected by their employer’s ability to continue providing benefits such as
,healthcare and pensions. Investors and creditors are more focused on profitability and solvency,
while regulatory bodies enforce compliance rather than benefit continuity.
4. Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAAP)?
A. Increased marketing reach
B. An increase in its comparability to other companies
C. Reduced tax obligations
D. Protection from audits
Rationale:
GAAP ensures that all companies follow standardized reporting procedures, which improves
comparability and transparency of financial statements across firms and industries. It doesn’t
affect taxes or guarantee audit immunity.
5. Which body regulates a certified public accounting firm’s audit practices when the firm
is auditing a large publicly traded company?
A. SEC
B. FASB
C. IRS
D. PCAOB
Rationale:
Although the PCAOB oversees audit quality, the FASB sets the accounting standards (GAAP)
that guide how auditors assess compliance in financial reporting. The SEC enforces regulations,
but the FASB provides the rules auditors must use to evaluate financial accuracy.
6. What has had the most significant impact on accounting practices?
A. Economic recessions
B. Tax laws
C. Information Technology
D. Social media
Rationale:
Information technology has revolutionized accounting through automation, data analytics, and
real-time financial reporting, improving accuracy and efficiency. Although regulations and taxes
matter, technology has reshaped accounting systems most dramatically.
, 7. What two items of information are revealed on the balance sheet?
A. Sales and profits
B. Expenses and taxes
C. Debt and ownership
D. Revenues and cash flows
Rationale:
The balance sheet shows a company’s assets, liabilities, and owner’s equity—essentially
revealing what the business owns, owes, and the owner’s stake. This represents the company’s
financial position at a specific point in time.
8. Which term is defined as the residual interest in the net assets of a company?
A. Revenue
B. Owner’s equity
C. Liability
D. Expense
Rationale:
Owner’s equity (or shareholders’ equity) is the residual interest after liabilities are subtracted
from assets. It reflects the owner’s claim to the net value of the business after all debts are paid.
9. A corporation has total liabilities of $300 million, total owner's equity of $100 million,
and current assets of $50 million. What is the value of the firm’s long-term assets?
A. $50 million
B. $150 million
C. $350 million
D. $400 million
Rationale:
The accounting equation is Assets = Liabilities + Owner’s Equity.
Total assets = $300M + $100M = $400M.
If current assets = $50M, then long-term assets = $400M – $50M = $350M.
10. Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual-basis accounting?
A. A company receives cash in 2015 for 2014 services
B. A company signs a contract for 2015 work
