WGU C213 Final Exam Accounting for Decision
Makers () – 100% Verified Original Copy
Multiple-Choice Questions
1. Which organization has the primary authority to establish accounting
standards for publicly held companies in the United States?
A. Internal Revenue Service (IRS)
B. Financial Accounting Standards Board (FASB)
C. Securities and Exchange Commission (SEC)
D. Public Company Accounting Oversight Board (PCAOB)
Correct Answer: B
Rationale: The FASB is responsible for developing Generally Accepted Ac-
counting Principles (GAAP) for publicly held companies in the U.S.
2. What is the primary focus of accounting for decision makers?
A. Executing sales transactions
B. Analyzing the financial impact of business activities
C. Managing employee relations
D. Developing marketing strategies
Correct Answer: B
Rationale: Accounting provides quantitative financial information to eval-
uate business performance and aid decision-making.
3. Which financial statement reports a company’s revenues and expenses
over a period of time?
A. Balance Sheet
B. Statement of Cash Flows
C. Income Statement
D. Statement of Retained Earnings
Correct Answer: C
Rationale: The Income Statement summarizes revenues, expenses, and
net income for a specific period.
4. Which of the following is NOT a key component of the definition of ac-
counting?
A. Quantitative information
B. Financial in nature
C. Qualitative information
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, D. Useful for economic decisions
Correct Answer: C
Rationale: Accounting focuses on quantitative, primarily financial, infor-
mation for decision-making.
5. What does the double-entry system of bookkeeping ensure?
A. All transactions are recorded in cash
B. Assets equal liabilities plus owners’ equity
C. Revenues exceed expenses
D. Financial statements are audited
Correct Answer: B
Rationale: Double-entry bookkeeping maintains the accounting equation:
Assets = Liabilities + Owners’ Equity.
6. Which of the following is considered a current asset?
A. Accounts Receivable
B. Building
C. Long-term Investments
D. Patents
Correct Answer: A
Rationale: Accounts Receivable is expected to be converted to cash within
one year, qualifying as a current asset.
7. What is the purpose of the Statement of Cash Flows?
A. Report net income
B. Summarize cash inflows and outflows
C. List assets and liabilities
D. Show changes in owners’ equity
Correct Answer: B
Rationale: The Statement of Cash Flows tracks cash movements from op-
erating, investing, and financing activities.
8. Which body regulates the audit practices of firms auditing publicly
traded companies?
A. FASB
B. PCAOB
C. IRS
D. SEC
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, Correct Answer: B
Rationale: The PCAOB oversees the audits of public companies to protect
investors.
9. Which of the following is an example of a period cost for a manufac-
turing company?
A. Direct Materials
B. Selling Expenses
C. Manufacturing Overhead
D. Direct Labor
Correct Answer: B
Rationale: Selling expenses are period costs, expensed in the period in-
curred, not tied to production.
10. What is the formula for calculating the current ratio?
A. Total Assets / Total Liabilities
B. Current Assets / Current Liabilities
C. Net Income / Total Equity
D. Cash / Total Liabilities
Correct Answer: B
Rationale: The current ratio measures liquidity by dividing current assets
by current liabilities.
11. A company has sales of $500,000, cost of goods sold of $300,000, and
operating expenses of $150,000. What is the operating income?
A. $50,000
B. $200,000
C. $350,000
D. $500,000
Correct Answer: A
Rationale: Operating Income = Sales - COGS - Operating Expenses = $500,000
- $300,000 - $150,000 = $50,000.
12. Which of the following decreases owners’ equity?
A. Issuing common stock
B. Net income
C. Dividends paid
D. Accounts receivable
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Makers () – 100% Verified Original Copy
Multiple-Choice Questions
1. Which organization has the primary authority to establish accounting
standards for publicly held companies in the United States?
A. Internal Revenue Service (IRS)
B. Financial Accounting Standards Board (FASB)
C. Securities and Exchange Commission (SEC)
D. Public Company Accounting Oversight Board (PCAOB)
Correct Answer: B
Rationale: The FASB is responsible for developing Generally Accepted Ac-
counting Principles (GAAP) for publicly held companies in the U.S.
2. What is the primary focus of accounting for decision makers?
A. Executing sales transactions
B. Analyzing the financial impact of business activities
C. Managing employee relations
D. Developing marketing strategies
Correct Answer: B
Rationale: Accounting provides quantitative financial information to eval-
uate business performance and aid decision-making.
3. Which financial statement reports a company’s revenues and expenses
over a period of time?
A. Balance Sheet
B. Statement of Cash Flows
C. Income Statement
D. Statement of Retained Earnings
Correct Answer: C
Rationale: The Income Statement summarizes revenues, expenses, and
net income for a specific period.
4. Which of the following is NOT a key component of the definition of ac-
counting?
A. Quantitative information
B. Financial in nature
C. Qualitative information
1
, D. Useful for economic decisions
Correct Answer: C
Rationale: Accounting focuses on quantitative, primarily financial, infor-
mation for decision-making.
5. What does the double-entry system of bookkeeping ensure?
A. All transactions are recorded in cash
B. Assets equal liabilities plus owners’ equity
C. Revenues exceed expenses
D. Financial statements are audited
Correct Answer: B
Rationale: Double-entry bookkeeping maintains the accounting equation:
Assets = Liabilities + Owners’ Equity.
6. Which of the following is considered a current asset?
A. Accounts Receivable
B. Building
C. Long-term Investments
D. Patents
Correct Answer: A
Rationale: Accounts Receivable is expected to be converted to cash within
one year, qualifying as a current asset.
7. What is the purpose of the Statement of Cash Flows?
A. Report net income
B. Summarize cash inflows and outflows
C. List assets and liabilities
D. Show changes in owners’ equity
Correct Answer: B
Rationale: The Statement of Cash Flows tracks cash movements from op-
erating, investing, and financing activities.
8. Which body regulates the audit practices of firms auditing publicly
traded companies?
A. FASB
B. PCAOB
C. IRS
D. SEC
2
, Correct Answer: B
Rationale: The PCAOB oversees the audits of public companies to protect
investors.
9. Which of the following is an example of a period cost for a manufac-
turing company?
A. Direct Materials
B. Selling Expenses
C. Manufacturing Overhead
D. Direct Labor
Correct Answer: B
Rationale: Selling expenses are period costs, expensed in the period in-
curred, not tied to production.
10. What is the formula for calculating the current ratio?
A. Total Assets / Total Liabilities
B. Current Assets / Current Liabilities
C. Net Income / Total Equity
D. Cash / Total Liabilities
Correct Answer: B
Rationale: The current ratio measures liquidity by dividing current assets
by current liabilities.
11. A company has sales of $500,000, cost of goods sold of $300,000, and
operating expenses of $150,000. What is the operating income?
A. $50,000
B. $200,000
C. $350,000
D. $500,000
Correct Answer: A
Rationale: Operating Income = Sales - COGS - Operating Expenses = $500,000
- $300,000 - $150,000 = $50,000.
12. Which of the following decreases owners’ equity?
A. Issuing common stock
B. Net income
C. Dividends paid
D. Accounts receivable
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