WGU C213 – Accounting for Decision Makers (Western Governors University, 2025/2026) | Exam | Verified Questions with Correct Answers

WGU C213 – Accounting for Decision
Makers Exam Version 2025/2026 –
Verified Questions with Correct Answers

This exam features 100 verified multiple-choice questions for the WGU C213 Objective
Assessment, covering financial statements, managerial accounting, decision-making, cost-
volume-profit analysis, budgeting, and ethics. Questions are drawn from real exam content, with
answers in RED and detailed rationales for A-grade. Organized by topic for efficient study.

Financial Statements and Accounting Basics (Questions 1-
25)
Question 1: What does accounting primarily focus on?
A. Recording only transactions
B. Analyzing the impact of business activities on financial performance
C. Tax preparation exclusively
D. Auditing internal controls
Correct Answer: B. Analyzing the impact of business activities on financial performance
Rationale: Accounting provides data for decision-making by analyzing how operations affect
finances (e.g., profitability). A is bookkeeping; C tax-specific; D auditing subset. AHA financial
analysis uses ratios like ROE.



Question 2: The balance sheet lists:
A. Revenues and expenses
B. Assets, liabilities, and equity at a point in time
C. Cash flows over a period
D. Budget variances
Correct Answer: B. Assets, liabilities, and equity at a point in time
Rationale: Balance sheet = A = L + E; snapshot. A income statement; C cash flow statement; D
managerial tool. Equation holds; analyze liquidity with current ratio >2.



Question 3: Income statement shows:
A. Financial position
B. Revenues, expenses, and net income over a period
C. Cash inflows/outflows

,D. Owner's equity changes
Correct Answer: B. Revenues, expenses, and net income over a period
Rationale: Accrual basis profit/loss. A balance sheet; C cash flow; D equity statement. Gross
margin = (Revenue - COGS)/Revenue.



Question 4: Cash flow statement classifies activities as:
A. Operating, investing, financing
B. Assets, liabilities
C. Revenues, expenses
D. Fixed, variable
Correct Answer: A. Operating, investing, financing
Rationale: Indirect method reconciles net income to cash from operations. Helps assess
liquidity; positive operating cash sustains business.



Question 5: Equity represents:
A. Assets minus liabilities
B. Owner's claim on assets
C. Total revenues
D. Cash reserves
Correct Answer: B. Owner's claim on assets
Rationale: Retained earnings from profits. A accounting equation; C income; D cash flow.



Question 6: GAAP principle requiring economic events to be recorded in the period incurred:
A. Matching principle
B. Revenue recognition
C. Going concern
D. Historical cost
Correct Answer: A. Matching principle
Rationale: Expenses match revenues generated. B when earned; C assumption; D acquisition
cost.



Question 7: The accounting equation is:
A. Assets = Liabilities + Equity
B. Revenues = Expenses
C. Cash = Non-cash
D. Income = Cash flow
Correct Answer: A. Assets = Liabilities + Equity
Rationale: Fundamental; transaction changes maintain balance.

, Question 8: Trial balance purpose:
A. Verify debits = credits
B. Prepare financial statements
C. Both
D. Tax filing
Correct Answer: C. Both
Rationale: End of period check; errors if unbalanced.



Question 9: Accrual accounting recognizes:
A. Revenues when earned, expenses when incurred
B. Cash received/paid
C. Inventory changes
D. Asset depreciation
Correct Answer: A. Revenues when earned, expenses when incurred
Rationale: Matches economic reality; cash basis for small businesses.



Question 10: FASB sets:
A. GAAP for U.S. companies
B. IFRS international
C. Tax rules IRS
D. Audit standards AICPA
Correct Answer: A. GAAP for U.S. companies
Rationale: Financial Accounting Standards Board; convergence IFRS.



Question 11: Notes to financial statements disclose:
A. Accounting policies, contingencies
B. Main numbers only
C. Cash details
D. Tax computations
Correct Answer: A. Accounting policies, contingencies
Rationale: Transparency; e.g., depreciation method.



Question 12: Current ratio = current assets / current liabilities; ideal:
A. >2
B. =1
C. <1