WGU C213 ACCOUNTING FOR DECISION MAKERS FINAL
EXAM 2026/2027 | Questions and Verified Answers | 100%
Correct | Pass Guaranteed - A+ Graded
Part 1: Financial Accounting Foundations & the Accounting Cycle
(Questions 1–15)
Q1: Maria is reviewing her company's transactions for the month. She notices that the
business purchased $15,000 of equipment using cash. How should this transaction
affect the accounting equation?
A. Assets increase by $15,000 and liabilities increase by $15,000
B. Assets decrease by $15,000 and equity decreases by $15,000
C. One asset (equipment) increases by $15,000 while another asset (cash) decreases
by $15,000, leaving total assets unchanged [CORRECT]
D. Assets increase by $15,000 and equity increases by $15,000
Correct Answer: C
Rationale: When a company purchases equipment with cash, this is an exchange of one
asset for another—equipment (asset) increases while cash (asset) decreases by the
same amount. Total assets remain unchanged, and neither liabilities nor equity are
,affected. Option A incorrectly suggests borrowing, B suggests an expense or loss, and D
suggests revenue or investment.
Q2: Under GAAP, which principle requires that expenses be recorded in the same period
as the revenues they help generate?
A. Historical cost principle requiring assets to be recorded at purchase price
B. Revenue recognition principle specifying when to record revenue
C. Matching principle ensuring expenses align with related revenues [CORRECT]
D. Full disclosure principle requiring comprehensive financial reporting
Correct Answer: C
Rationale: The matching principle (or expense recognition principle) dictates that
expenses be recognized in the same accounting period as the revenues they help
generate, ensuring accurate profit measurement. Historical cost (A) governs asset
valuation. Revenue recognition (B) governs when to record revenue, not expenses. Full
disclosure (D) ensures transparency but doesn't address timing of expense recognition.
Q3: A company prepays $12,000 for six months of rent on December 1. Under accrual
accounting, what adjusting entry is required on December 31?
,A. Debit rent expense $12,000 and credit cash $12,000
B. Debit prepaid rent $2,000 and credit rent expense $2,000
C. Debit rent expense $2,000 and credit prepaid rent $2,000 [CORRECT]
D. No adjusting entry is needed until the six months have expired
Correct Answer: C
Rationale: At December 31, one month of rent has been used ($12,000 ÷ 6 = $2,000).
The adjusting entry recognizes the expense incurred and reduces the prepaid asset:
debit Rent Expense $2,000, credit Prepaid Rent $2,000. Option A incorrectly records the
entire amount as immediate expense. Option B reverses the debit and credit. Option D
violates the matching principle.
Q4: Which assumption underlies the practice of preparing annual and quarterly financial
reports?
A. Economic entity assumption separating business from personal transactions
B. Going concern assumption assuming the business will continue operating
C. Time period assumption allowing division of economic life into artificial periods
[CORRECT]
, D. Monetary unit assumption requiring transactions be measured in currency
Correct Answer: C
Rationale: The time period (or periodicity) assumption allows accountants to divide the
continuous economic life of a business into artificial time periods (months, quarters,
years) for reporting purposes. The economic entity assumption (A) concerns separation
of business and personal activities. Going concern (B) assumes continued operation.
Monetary unit (D) assumes stable currency as measurement unit.
Q5: James is analyzing a trial balance and notices that the debit column totals $47,500
while the credit column totals $47,900. What does this discrepancy indicate?
A. The company has net income of $400 for the period
B. There is a $400 posting error that must be located and corrected [CORRECT]
C. The company has a $400 net loss for the period
D. This is normal and requires no correction
Correct Answer: B
Rationale: In a trial balance, total debits must equal total credits. A $400 discrepancy
indicates a posting error (transposition, slide, omission, or incorrect amount) that must
be found and corrected before proceeding. Net income or loss (A, C) doesn't cause trial
EXAM 2026/2027 | Questions and Verified Answers | 100%
Correct | Pass Guaranteed - A+ Graded
Part 1: Financial Accounting Foundations & the Accounting Cycle
(Questions 1–15)
Q1: Maria is reviewing her company's transactions for the month. She notices that the
business purchased $15,000 of equipment using cash. How should this transaction
affect the accounting equation?
A. Assets increase by $15,000 and liabilities increase by $15,000
B. Assets decrease by $15,000 and equity decreases by $15,000
C. One asset (equipment) increases by $15,000 while another asset (cash) decreases
by $15,000, leaving total assets unchanged [CORRECT]
D. Assets increase by $15,000 and equity increases by $15,000
Correct Answer: C
Rationale: When a company purchases equipment with cash, this is an exchange of one
asset for another—equipment (asset) increases while cash (asset) decreases by the
same amount. Total assets remain unchanged, and neither liabilities nor equity are
,affected. Option A incorrectly suggests borrowing, B suggests an expense or loss, and D
suggests revenue or investment.
Q2: Under GAAP, which principle requires that expenses be recorded in the same period
as the revenues they help generate?
A. Historical cost principle requiring assets to be recorded at purchase price
B. Revenue recognition principle specifying when to record revenue
C. Matching principle ensuring expenses align with related revenues [CORRECT]
D. Full disclosure principle requiring comprehensive financial reporting
Correct Answer: C
Rationale: The matching principle (or expense recognition principle) dictates that
expenses be recognized in the same accounting period as the revenues they help
generate, ensuring accurate profit measurement. Historical cost (A) governs asset
valuation. Revenue recognition (B) governs when to record revenue, not expenses. Full
disclosure (D) ensures transparency but doesn't address timing of expense recognition.
Q3: A company prepays $12,000 for six months of rent on December 1. Under accrual
accounting, what adjusting entry is required on December 31?
,A. Debit rent expense $12,000 and credit cash $12,000
B. Debit prepaid rent $2,000 and credit rent expense $2,000
C. Debit rent expense $2,000 and credit prepaid rent $2,000 [CORRECT]
D. No adjusting entry is needed until the six months have expired
Correct Answer: C
Rationale: At December 31, one month of rent has been used ($12,000 ÷ 6 = $2,000).
The adjusting entry recognizes the expense incurred and reduces the prepaid asset:
debit Rent Expense $2,000, credit Prepaid Rent $2,000. Option A incorrectly records the
entire amount as immediate expense. Option B reverses the debit and credit. Option D
violates the matching principle.
Q4: Which assumption underlies the practice of preparing annual and quarterly financial
reports?
A. Economic entity assumption separating business from personal transactions
B. Going concern assumption assuming the business will continue operating
C. Time period assumption allowing division of economic life into artificial periods
[CORRECT]
, D. Monetary unit assumption requiring transactions be measured in currency
Correct Answer: C
Rationale: The time period (or periodicity) assumption allows accountants to divide the
continuous economic life of a business into artificial time periods (months, quarters,
years) for reporting purposes. The economic entity assumption (A) concerns separation
of business and personal activities. Going concern (B) assumes continued operation.
Monetary unit (D) assumes stable currency as measurement unit.
Q5: James is analyzing a trial balance and notices that the debit column totals $47,500
while the credit column totals $47,900. What does this discrepancy indicate?
A. The company has net income of $400 for the period
B. There is a $400 posting error that must be located and corrected [CORRECT]
C. The company has a $400 net loss for the period
D. This is normal and requires no correction
Correct Answer: B
Rationale: In a trial balance, total debits must equal total credits. A $400 discrepancy
indicates a posting error (transposition, slide, omission, or incorrect amount) that must
be found and corrected before proceeding. Net income or loss (A, C) doesn't cause trial
