WGU C213 PA & OA STUDY GUIDE
QUESTIONS & ACCURATE
COMPLETE ANSWERS
What does accounting focus on? - Correct Answer ✔✔ The impact a business's
activities have on its overall financial performance
Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time? - Correct Answer ✔✔
Statement of cash flows
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - Correct Answer ✔✔ Employees
Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAPP)? - Correct Answer ✔✔ An increase in its compatibility to other
companies
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - Correct Answer ✔✔ The Public Company
Accounting Oversight Board (PACOB)
What has had the most significant impact on Accounting practices? - Correct Answer
✔✔ Information technology
What two items of information are revealed on the balance sheet? - Correct Answer ✔✔
Ownership and Debt
Which term is defined as the residual in the net assets of a company? - Correct Answer
✔✔ Owners equity
Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual accounting? - Correct Answer ✔✔ In
2014, a company provides services to a customer for which cash will be collected the
next year (2015).
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company? - Correct Answer ✔✔ Cash from
financing activities
Where would an investor find a summary of a company's significant accounting
policies? - Correct Answer ✔✔ In the notes to financial statements
,Which assurance does an external audit report provide for its readers? - Correct Answer
✔✔ The company's financial statements fairly reflect its financial position
Information that can be verified - Correct Answer ✔✔ Reliable
Information having to do with the matter at hand - Correct Answer ✔✔ Relevant
Information that is important enough to make a difference - Correct Answer ✔✔ Material
Information related to recognizing losses as they occur - Correct Answer ✔✔
Conservatism
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - Correct Answer ✔✔ Continual decrease in sales
Which form of debt should be reported in the long-term liability category? - Correct
Answer ✔✔ Notes payable expected to be paid in 18 months
Which values affect the measurement of net income? - Correct Answer ✔✔ Operating
expenses &
Ordinary gains and losses
Which items' subtotals are included in a multi-step income statement? - Correct Answer
✔✔ Gross profit &
Income from operations
What is a common category in a statement of cash flows? - Correct Answer ✔✔ Cash
from investing activities
Which cash flow category would include "cash received from investors"? - Correct
Answer ✔✔ Cash from financing activities
Which item is an investing activity? - Correct Answer ✔✔ Cash payments for purchase
of plant assets
What impact does the sale of equipment have on the statement of cash flows? - Correct
Answer ✔✔ Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash
flow? - Correct Answer ✔✔ The indirect method is more popular among large U.S.
companies
Which internal control is intended to ensure that a company does not mistakenly pay a
supplier for an invoice that includes more items than were actually received? - Correct
, Answer ✔✔ The inventory department counts and inspects items as received and
forwards the receiving record to accounts payable.
What are common reasons for managers to manipulate reported earnings? - Correct
Answer ✔✔ Pressure to meet internal sales goals &
Preparing to qualify for a bank loan
Which requirements must accounting firms that audit public companies meet under the
Sarbanes-Oxley Act? - Correct Answer ✔✔ Firms must not provide certain non-audit
services to audit clients, such as management functions or legal services. &
Firms must report to and be retained by the audit committee rather than the CFO or
other company management.
Which actions do internal auditors perform to assist in maintaining the integrity of
financial statements? - Correct Answer ✔✔ They search for and investigate fraud.
&
They review financial records and internal controls.
What is a significant role of the U.S. Securities and Exchange Commission (SEC) in
financial reporting? - Correct Answer ✔✔ They ensure that financial statement users
are provided with reliable information to use in decision making
What does management accounting provide? - Correct Answer ✔✔ A better insight for
management so a business can perform more effectively
&
A competitive edge to a business by providing its managers with the detailed data
needed to make decisions
How does management accounting differ from financial accounting? - Correct Answer
✔✔ Management accounting is used primarily for internal planning, control, and
evaluation.
Which account is seen on the balance sheet of a manufacturing company but not on the
balance sheet of a service-oriented company? - Correct Answer ✔✔ Inventory
What is a cost that will change in the future based upon the decision made? - Correct
Answer ✔✔ Differential cost
Which are examples are period costs? - Correct Answer ✔✔ Administrative expenses &
Selling expenses
A company manufactures custom-built wooden bookshelves.
Which two costs would the company classify as period costs?
Answer Choices: Wood cost, Salary cost of the craftsperson, Salary cost of the
receptionist, Advertising cost - Correct Answer ✔✔ Salary cost of the receptionist
QUESTIONS & ACCURATE
COMPLETE ANSWERS
What does accounting focus on? - Correct Answer ✔✔ The impact a business's
activities have on its overall financial performance
Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time? - Correct Answer ✔✔
Statement of cash flows
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - Correct Answer ✔✔ Employees
Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAPP)? - Correct Answer ✔✔ An increase in its compatibility to other
companies
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - Correct Answer ✔✔ The Public Company
Accounting Oversight Board (PACOB)
What has had the most significant impact on Accounting practices? - Correct Answer
✔✔ Information technology
What two items of information are revealed on the balance sheet? - Correct Answer ✔✔
Ownership and Debt
Which term is defined as the residual in the net assets of a company? - Correct Answer
✔✔ Owners equity
Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual accounting? - Correct Answer ✔✔ In
2014, a company provides services to a customer for which cash will be collected the
next year (2015).
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company? - Correct Answer ✔✔ Cash from
financing activities
Where would an investor find a summary of a company's significant accounting
policies? - Correct Answer ✔✔ In the notes to financial statements
,Which assurance does an external audit report provide for its readers? - Correct Answer
✔✔ The company's financial statements fairly reflect its financial position
Information that can be verified - Correct Answer ✔✔ Reliable
Information having to do with the matter at hand - Correct Answer ✔✔ Relevant
Information that is important enough to make a difference - Correct Answer ✔✔ Material
Information related to recognizing losses as they occur - Correct Answer ✔✔
Conservatism
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - Correct Answer ✔✔ Continual decrease in sales
Which form of debt should be reported in the long-term liability category? - Correct
Answer ✔✔ Notes payable expected to be paid in 18 months
Which values affect the measurement of net income? - Correct Answer ✔✔ Operating
expenses &
Ordinary gains and losses
Which items' subtotals are included in a multi-step income statement? - Correct Answer
✔✔ Gross profit &
Income from operations
What is a common category in a statement of cash flows? - Correct Answer ✔✔ Cash
from investing activities
Which cash flow category would include "cash received from investors"? - Correct
Answer ✔✔ Cash from financing activities
Which item is an investing activity? - Correct Answer ✔✔ Cash payments for purchase
of plant assets
What impact does the sale of equipment have on the statement of cash flows? - Correct
Answer ✔✔ Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash
flow? - Correct Answer ✔✔ The indirect method is more popular among large U.S.
companies
Which internal control is intended to ensure that a company does not mistakenly pay a
supplier for an invoice that includes more items than were actually received? - Correct
, Answer ✔✔ The inventory department counts and inspects items as received and
forwards the receiving record to accounts payable.
What are common reasons for managers to manipulate reported earnings? - Correct
Answer ✔✔ Pressure to meet internal sales goals &
Preparing to qualify for a bank loan
Which requirements must accounting firms that audit public companies meet under the
Sarbanes-Oxley Act? - Correct Answer ✔✔ Firms must not provide certain non-audit
services to audit clients, such as management functions or legal services. &
Firms must report to and be retained by the audit committee rather than the CFO or
other company management.
Which actions do internal auditors perform to assist in maintaining the integrity of
financial statements? - Correct Answer ✔✔ They search for and investigate fraud.
&
They review financial records and internal controls.
What is a significant role of the U.S. Securities and Exchange Commission (SEC) in
financial reporting? - Correct Answer ✔✔ They ensure that financial statement users
are provided with reliable information to use in decision making
What does management accounting provide? - Correct Answer ✔✔ A better insight for
management so a business can perform more effectively
&
A competitive edge to a business by providing its managers with the detailed data
needed to make decisions
How does management accounting differ from financial accounting? - Correct Answer
✔✔ Management accounting is used primarily for internal planning, control, and
evaluation.
Which account is seen on the balance sheet of a manufacturing company but not on the
balance sheet of a service-oriented company? - Correct Answer ✔✔ Inventory
What is a cost that will change in the future based upon the decision made? - Correct
Answer ✔✔ Differential cost
Which are examples are period costs? - Correct Answer ✔✔ Administrative expenses &
Selling expenses
A company manufactures custom-built wooden bookshelves.
Which two costs would the company classify as period costs?
Answer Choices: Wood cost, Salary cost of the craftsperson, Salary cost of the
receptionist, Advertising cost - Correct Answer ✔✔ Salary cost of the receptionist
