Accounting for Decision Makers – C213 (WGU)
| 2025/2026 Updated Exam Q&A
Accounting - correct answerA system of providing "quantitative information, primarily
financial in nature, about economic entities that is intended to be useful in making
economic decisions."
American Institute of Certified Public Accountants (AICPA) - correct answerThe
professional organization of certified public accountants in the United States.
Balance Sheet - correct answerDocument which reports the resources of a company
(the assets), the company's obligations (the liabilities), and the owners' equity, which
represents how much money has been invested in the company by its owners.
Bookkeeping - correct answerThe preservation of a systematic, quantitative record of an
activity.
Certified Public Accountant - correct answerA person who has taken a minimum
number of college-level accounting classes, has passed the dreaded CPA exam, and
has met other requirements set by his or her state.
Financial Accounting - correct answerThe name given to accounting information
provided for and used by external users.
Financial Accounting Standards Board (FASB) - correct answerGovernmental body that
sets accounting standards in the United States.
Financial Statements - correct answerThe three primary financial information
documents: the balance sheet, income statement, and statement of cash flows.
Income Statement - correct answerThis document reports the amount of net income
earned by a company during a period, with annual and quarterly income statements
being the most common.
Internal Revenue Service (IRS) - correct answerThe government agency responsible for
tax collection and tax law enforcement.
International Accounting Standards Board (IASB) - correct answerAn independent,
international body formed to develop worldwide accounting standards.
International Financial Reporting Standards (IFRS) - correct answerThe accounting
standards produced by the IASB.
,Managerial Accounting - correct answerThe name given to accounting systems
designed for internal users.
Public Company Accounting Oversight Board (PCAOB) - correct answerA private, non-
profit organization that effectively serves as an arm of the SEC in registering,
inspecting, and disciplining the auditors of all publicly traded companies.
Statement of Cash Flows - correct answerThis document reports the amount of cash
collected and paid out by a company in the following three types of activities: operating,
investing, and financing
Accounting Equation - correct answerAssets = Liabilities + Owners' Equity
Accumulated Other Comprehensive Income - correct answerThe source of these
increased assets
Assets - correct answerAssets are the firm's economic resources, formally defined as
"probable future economic benefits obtained or controlled by a particular entity as a
result of past transactions or events
Balance Sheet - correct answerA statement of financial position shows the financial
resources the company owns or controls and the claims on those resources
Book Value - correct answerThe book value of an asset is the asset's cost minus the
asset's accumulated depreciation.
Comparability - correct answerTnformation that becomes much more useful when it can
be related to a benchmark or standard
Conservatism - correct answera pervasive factor in accounting, can be summarized as
follows: When in doubt, recognize all losses but don't recognize any gains.
Consistency - correct answerThe consistency principle states that, once you adopt an
accounting principle or method, continue to follow it consistently in future accounting
periods.
Disclosure - correct answer
Earnings Per Share (EPS) - correct answerEPS tells the owner of one share of stock
what he or she really wants to know
Entity Concept - correct answerThe idea that personal financial activity is kept separate
from business financial activity
,Expenses - correct answerThe amount of assets consumed from the performance of
business operations and thus are the opposite of revenues
External Audit - correct answeraudit conducted by external (independent) qualified
accountant(s)
Financing Activities - correct answerThose activities whereby cash is obtained from, or
repaid to, owners and creditors
Gains - correct answerRefers to money made on activities outside the normal business
of a company
Going Concern Assumption - correct answerallows the readers of financial statements
to assume that the company will continue on long enough to carry out its objectives and
commitments.
Historical Cost Convention - correct answerAn accounting technique that values an
asset for balance sheet purposes at the price paid for the asset at the time of its
acquisition
Income Statement - correct answerA company's financial performance for a specified
period of time.
Investing Activities - correct answerThe purchase and sale of land, buildings, and
equipment. Investing activities also include buying and selling stocks of other
companies
Liabilities - correct answerthe future sacrifices of economic benefits that the entity is
presently obliged to make to other entities as a result of past transactions or other past
events
Liquidity, - correct answerthe ease with which the item can be turned into cash
Losses - correct answerRefers to money lost on activities outside the normal business
of a company
Materiality - correct answerthe question of whether an item is large enough to make any
difference to anyone
Net Assets - correct answertotal assets minus total liabilities. In a sole proprietorship the
amount of net assets is reported as owner's equity. In a corporation the amount of net
assets is reported as stockholders' equity.
Net Loss - correct answerthe difference between revenues and expenses. If revenues
exceed expenses, net income results. If, on the other hand, expenses exceed revenues,
there will be a net loss
, Notes to Financial Statements - correct answerThese provide additional information
pertaining to a company's operations and financial position and are considered to be an
integral part of the financial statements.
Operating Activities - correct answerThose activities involved in producing and selling
goods and services and thus comprise the day-to-day business of a company
Owners' Equity - correct answerportion of the assets that the owners of the organization
can really call their own
Paid-in Capital - correct answerThe value of the assets given in exchange for shares of
stock.
Recognition - correct answer
Relevance - correct answerA qualitative characteristic in accounting. Relevance is
associated with information that is timely, useful, has predictive value, and is going to
make a difference to a decision maker.
Reliability - correct answerA qualitative characteristic in accounting. It is achieved when
information is verifiable, objective (not subjective) and you can depend on it.
Retained Earnings - correct answerRepresent the portion of stockholders' equity
(resulting from cumulative profitable operations) that has not been paid to the owners as
dividends
Revenue - correct answerThe amount of assets created through the performance of
business operations
Revenue Recognition - correct answera cornerstone of accrual accounting together with
matching principle. They both determine the accounting period, in which revenues and
expenses are recognized.
Statement of Cash Flows - correct answerIndividual cash flow items that are classified
according to three main activities: operating, investing, and financing.
Stockholders' Equity - correct answerThe portion of the balance sheet that represents
the capital received from investors in exchange for stock (paid-in capital), donated
capital and retained earnings
Time Period Concept - correct answerThe time period principle is the concept that a
business should report the financial results of its activities over a standard time period,
which is usually monthly, quarterly, or annually.
| 2025/2026 Updated Exam Q&A
Accounting - correct answerA system of providing "quantitative information, primarily
financial in nature, about economic entities that is intended to be useful in making
economic decisions."
American Institute of Certified Public Accountants (AICPA) - correct answerThe
professional organization of certified public accountants in the United States.
Balance Sheet - correct answerDocument which reports the resources of a company
(the assets), the company's obligations (the liabilities), and the owners' equity, which
represents how much money has been invested in the company by its owners.
Bookkeeping - correct answerThe preservation of a systematic, quantitative record of an
activity.
Certified Public Accountant - correct answerA person who has taken a minimum
number of college-level accounting classes, has passed the dreaded CPA exam, and
has met other requirements set by his or her state.
Financial Accounting - correct answerThe name given to accounting information
provided for and used by external users.
Financial Accounting Standards Board (FASB) - correct answerGovernmental body that
sets accounting standards in the United States.
Financial Statements - correct answerThe three primary financial information
documents: the balance sheet, income statement, and statement of cash flows.
Income Statement - correct answerThis document reports the amount of net income
earned by a company during a period, with annual and quarterly income statements
being the most common.
Internal Revenue Service (IRS) - correct answerThe government agency responsible for
tax collection and tax law enforcement.
International Accounting Standards Board (IASB) - correct answerAn independent,
international body formed to develop worldwide accounting standards.
International Financial Reporting Standards (IFRS) - correct answerThe accounting
standards produced by the IASB.
,Managerial Accounting - correct answerThe name given to accounting systems
designed for internal users.
Public Company Accounting Oversight Board (PCAOB) - correct answerA private, non-
profit organization that effectively serves as an arm of the SEC in registering,
inspecting, and disciplining the auditors of all publicly traded companies.
Statement of Cash Flows - correct answerThis document reports the amount of cash
collected and paid out by a company in the following three types of activities: operating,
investing, and financing
Accounting Equation - correct answerAssets = Liabilities + Owners' Equity
Accumulated Other Comprehensive Income - correct answerThe source of these
increased assets
Assets - correct answerAssets are the firm's economic resources, formally defined as
"probable future economic benefits obtained or controlled by a particular entity as a
result of past transactions or events
Balance Sheet - correct answerA statement of financial position shows the financial
resources the company owns or controls and the claims on those resources
Book Value - correct answerThe book value of an asset is the asset's cost minus the
asset's accumulated depreciation.
Comparability - correct answerTnformation that becomes much more useful when it can
be related to a benchmark or standard
Conservatism - correct answera pervasive factor in accounting, can be summarized as
follows: When in doubt, recognize all losses but don't recognize any gains.
Consistency - correct answerThe consistency principle states that, once you adopt an
accounting principle or method, continue to follow it consistently in future accounting
periods.
Disclosure - correct answer
Earnings Per Share (EPS) - correct answerEPS tells the owner of one share of stock
what he or she really wants to know
Entity Concept - correct answerThe idea that personal financial activity is kept separate
from business financial activity
,Expenses - correct answerThe amount of assets consumed from the performance of
business operations and thus are the opposite of revenues
External Audit - correct answeraudit conducted by external (independent) qualified
accountant(s)
Financing Activities - correct answerThose activities whereby cash is obtained from, or
repaid to, owners and creditors
Gains - correct answerRefers to money made on activities outside the normal business
of a company
Going Concern Assumption - correct answerallows the readers of financial statements
to assume that the company will continue on long enough to carry out its objectives and
commitments.
Historical Cost Convention - correct answerAn accounting technique that values an
asset for balance sheet purposes at the price paid for the asset at the time of its
acquisition
Income Statement - correct answerA company's financial performance for a specified
period of time.
Investing Activities - correct answerThe purchase and sale of land, buildings, and
equipment. Investing activities also include buying and selling stocks of other
companies
Liabilities - correct answerthe future sacrifices of economic benefits that the entity is
presently obliged to make to other entities as a result of past transactions or other past
events
Liquidity, - correct answerthe ease with which the item can be turned into cash
Losses - correct answerRefers to money lost on activities outside the normal business
of a company
Materiality - correct answerthe question of whether an item is large enough to make any
difference to anyone
Net Assets - correct answertotal assets minus total liabilities. In a sole proprietorship the
amount of net assets is reported as owner's equity. In a corporation the amount of net
assets is reported as stockholders' equity.
Net Loss - correct answerthe difference between revenues and expenses. If revenues
exceed expenses, net income results. If, on the other hand, expenses exceed revenues,
there will be a net loss
, Notes to Financial Statements - correct answerThese provide additional information
pertaining to a company's operations and financial position and are considered to be an
integral part of the financial statements.
Operating Activities - correct answerThose activities involved in producing and selling
goods and services and thus comprise the day-to-day business of a company
Owners' Equity - correct answerportion of the assets that the owners of the organization
can really call their own
Paid-in Capital - correct answerThe value of the assets given in exchange for shares of
stock.
Recognition - correct answer
Relevance - correct answerA qualitative characteristic in accounting. Relevance is
associated with information that is timely, useful, has predictive value, and is going to
make a difference to a decision maker.
Reliability - correct answerA qualitative characteristic in accounting. It is achieved when
information is verifiable, objective (not subjective) and you can depend on it.
Retained Earnings - correct answerRepresent the portion of stockholders' equity
(resulting from cumulative profitable operations) that has not been paid to the owners as
dividends
Revenue - correct answerThe amount of assets created through the performance of
business operations
Revenue Recognition - correct answera cornerstone of accrual accounting together with
matching principle. They both determine the accounting period, in which revenues and
expenses are recognized.
Statement of Cash Flows - correct answerIndividual cash flow items that are classified
according to three main activities: operating, investing, and financing.
Stockholders' Equity - correct answerThe portion of the balance sheet that represents
the capital received from investors in exchange for stock (paid-in capital), donated
capital and retained earnings
Time Period Concept - correct answerThe time period principle is the concept that a
business should report the financial results of its activities over a standard time period,
which is usually monthly, quarterly, or annually.
