WGU C213 ACCOUNTING FOR DECISION MAKERS EXAM
2026/2027 | Questions & Verified Answers | A Grade | Pass
Guaranteed - A+ Graded
SECTION 1: ACCOUNTING FOUNDATIONS & FINANCIAL
STATEMENTS (Questions 1-15)
Q1. Accounting is defined as the process of:
A. Only preparing tax returns for individuals
B. Identifying, measuring, and communicating financial information to permit
informed judgments and decisions by users of the information
C. Only counting cash in a business
D. Managing employee payroll exclusively
Correct Answer: B
Rationale: Accounting (AICPA/GAAP definition) involves identifying, measuring, and
communicating financial information to internal and external users for decision-
making. It encompasses financial accounting (external), managerial accounting
(internal), tax, audit, and advisory services. Option A describes only tax accounting.
Option C is too narrow. Option D is only one function. [WGU C213 emphasis:
Accounting definition.]
Q2. Which of the following is the PRIMARY distinction between financial accounting
and managerial accounting?
A. Financial accounting is for internal users; managerial accounting is for external
users
B. Financial accounting is for external users (investors, creditors, regulators) and
follows GAAP; managerial accounting is for internal users (managers) and is future-
,oriented with no GAAP requirement
C. Managerial accounting is only for small businesses
D. Financial accounting does not use financial statements
Correct Answer: B
Rationale: Financial accounting serves external stakeholders with standardized,
historical, GAAP-compliant reports (10-K, 10-Q). Managerial accounting serves
internal decision-makers with detailed, forward-looking, flexible reports (budgets,
variance analyses, segment reports). Option A reverses the users. Option C is false—
managerial accounting applies to all sizes. Option D is false—financial accounting
produces financial statements. [WGU C213 emphasis: Financial vs. managerial
accounting.]
Q3. The accounting equation is:
A. Assets + Liabilities = Owners' Equity
B. Assets = Liabilities + Owners' Equity
C. Assets = Liabilities – Owners' Equity
D. Assets + Owners' Equity = Liabilities
Correct Answer: B
Rationale: The fundamental accounting equation: Assets = Liabilities + Owners'
Equity (A = L + OE). Assets are resources owned. Liabilities are obligations to
creditors. Equity is the residual claim of owners. Every transaction affects at least two
accounts, maintaining this balance (double-entry bookkeeping). Options A, C, and D
are mathematically incorrect formulations. [WGU C213 emphasis: Accounting
equation.]
Q4. Under the economic entity assumption:
A. All businesses in an industry are combined into one accounting report
B. The business is treated as a separate entity from its owners, and personal
,transactions of owners are kept separate from business transactions
C. Inflation is recorded in the financial statements
D. Only cash transactions are recorded
Correct Answer: B
Rationale: The economic entity assumption requires separating business
transactions from personal transactions of owners. This ensures financial statements
reflect only the business's economic activities. Option A violates the entity concept.
Option C relates to the monetary unit assumption (which ignores inflation). Option D
describes cash basis, not accrual accounting. [WGU C213 emphasis: GAAP
assumptions.]
Q5. The going concern assumption states that:
A. The business will be liquidated in the near future
B. The business will continue operating for the foreseeable future, justifying the use
of historical cost and depreciation
C. Only short-term assets should be recorded
D. The business cannot borrow money
Correct Answer: B
Rationale: The going concern assumption presumes the business will continue
operating indefinitely, allowing: depreciation (allocation over useful life),
amortization, and classification of assets/liabilities as current vs. non-current. If going
concern is in doubt, financial statements must disclose this, and assets may be
revalued at liquidation value. Option A is liquidation, not going concern. Options C
and D are unrelated. [WGU C213 emphasis: Going concern.]
Q6. Which account normally has a debit balance?
A. Accounts payable
B. Revenue
, C. Cash
D. Common stock
Correct Answer: C
Rationale: Normal balances: Assets (debit), Liabilities (credit), Equity (credit),
Revenues (credit), Expenses (debit), Dividends/Distributions (debit). Cash is an asset
→ debit balance. Accounts payable (A) is liability → credit. Revenue (B) increases
equity → credit. Common stock (D) is equity → credit. Understanding normal
balances is essential for journal entries and error detection. [WGU C213 emphasis:
Normal balances.]
Q7. Which financial statement reports a company's financial position at a specific
point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of changes in owners' equity
Correct Answer: C
Rationale: The balance sheet (statement of financial position) reports assets,
liabilities, and equity at a specific date (e.g., December 31, 2026). It is a snapshot. The
income statement (A) covers a period. The statement of cash flows (B) covers a
period. The statement of changes in equity (D) covers a period. The accounting
equation underlies the balance sheet: Assets = Liabilities + Equity. [WGU C213
emphasis: Financial statements.]
Q8. The income statement reports:
A. Assets and liabilities at a point in time
B. Revenues, expenses, and net income or net loss over a period of time
2026/2027 | Questions & Verified Answers | A Grade | Pass
Guaranteed - A+ Graded
SECTION 1: ACCOUNTING FOUNDATIONS & FINANCIAL
STATEMENTS (Questions 1-15)
Q1. Accounting is defined as the process of:
A. Only preparing tax returns for individuals
B. Identifying, measuring, and communicating financial information to permit
informed judgments and decisions by users of the information
C. Only counting cash in a business
D. Managing employee payroll exclusively
Correct Answer: B
Rationale: Accounting (AICPA/GAAP definition) involves identifying, measuring, and
communicating financial information to internal and external users for decision-
making. It encompasses financial accounting (external), managerial accounting
(internal), tax, audit, and advisory services. Option A describes only tax accounting.
Option C is too narrow. Option D is only one function. [WGU C213 emphasis:
Accounting definition.]
Q2. Which of the following is the PRIMARY distinction between financial accounting
and managerial accounting?
A. Financial accounting is for internal users; managerial accounting is for external
users
B. Financial accounting is for external users (investors, creditors, regulators) and
follows GAAP; managerial accounting is for internal users (managers) and is future-
,oriented with no GAAP requirement
C. Managerial accounting is only for small businesses
D. Financial accounting does not use financial statements
Correct Answer: B
Rationale: Financial accounting serves external stakeholders with standardized,
historical, GAAP-compliant reports (10-K, 10-Q). Managerial accounting serves
internal decision-makers with detailed, forward-looking, flexible reports (budgets,
variance analyses, segment reports). Option A reverses the users. Option C is false—
managerial accounting applies to all sizes. Option D is false—financial accounting
produces financial statements. [WGU C213 emphasis: Financial vs. managerial
accounting.]
Q3. The accounting equation is:
A. Assets + Liabilities = Owners' Equity
B. Assets = Liabilities + Owners' Equity
C. Assets = Liabilities – Owners' Equity
D. Assets + Owners' Equity = Liabilities
Correct Answer: B
Rationale: The fundamental accounting equation: Assets = Liabilities + Owners'
Equity (A = L + OE). Assets are resources owned. Liabilities are obligations to
creditors. Equity is the residual claim of owners. Every transaction affects at least two
accounts, maintaining this balance (double-entry bookkeeping). Options A, C, and D
are mathematically incorrect formulations. [WGU C213 emphasis: Accounting
equation.]
Q4. Under the economic entity assumption:
A. All businesses in an industry are combined into one accounting report
B. The business is treated as a separate entity from its owners, and personal
,transactions of owners are kept separate from business transactions
C. Inflation is recorded in the financial statements
D. Only cash transactions are recorded
Correct Answer: B
Rationale: The economic entity assumption requires separating business
transactions from personal transactions of owners. This ensures financial statements
reflect only the business's economic activities. Option A violates the entity concept.
Option C relates to the monetary unit assumption (which ignores inflation). Option D
describes cash basis, not accrual accounting. [WGU C213 emphasis: GAAP
assumptions.]
Q5. The going concern assumption states that:
A. The business will be liquidated in the near future
B. The business will continue operating for the foreseeable future, justifying the use
of historical cost and depreciation
C. Only short-term assets should be recorded
D. The business cannot borrow money
Correct Answer: B
Rationale: The going concern assumption presumes the business will continue
operating indefinitely, allowing: depreciation (allocation over useful life),
amortization, and classification of assets/liabilities as current vs. non-current. If going
concern is in doubt, financial statements must disclose this, and assets may be
revalued at liquidation value. Option A is liquidation, not going concern. Options C
and D are unrelated. [WGU C213 emphasis: Going concern.]
Q6. Which account normally has a debit balance?
A. Accounts payable
B. Revenue
, C. Cash
D. Common stock
Correct Answer: C
Rationale: Normal balances: Assets (debit), Liabilities (credit), Equity (credit),
Revenues (credit), Expenses (debit), Dividends/Distributions (debit). Cash is an asset
→ debit balance. Accounts payable (A) is liability → credit. Revenue (B) increases
equity → credit. Common stock (D) is equity → credit. Understanding normal
balances is essential for journal entries and error detection. [WGU C213 emphasis:
Normal balances.]
Q7. Which financial statement reports a company's financial position at a specific
point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of changes in owners' equity
Correct Answer: C
Rationale: The balance sheet (statement of financial position) reports assets,
liabilities, and equity at a specific date (e.g., December 31, 2026). It is a snapshot. The
income statement (A) covers a period. The statement of cash flows (B) covers a
period. The statement of changes in equity (D) covers a period. The accounting
equation underlies the balance sheet: Assets = Liabilities + Equity. [WGU C213
emphasis: Financial statements.]
Q8. The income statement reports:
A. Assets and liabilities at a point in time
B. Revenues, expenses, and net income or net loss over a period of time
