WGU C213 OA Prep Questions and
Answers
1. The ability a company has to pay its debts in the short run is its
Answer Liquidity
2. Which of the following is a measure of the liquid position of a
corporation?
Answer -
Debt ratio
3. Which of the following ratios is used to measure a firm's leverage?
Answer Debt Ratio
4. Which of the following ratios is used to measure the profit
earned on each dollar invested in a firm?
Answer Return on Equity
5. The emphasis in financial accounting is on which of the following
external user groups?
Answer Investors and creditors
6. The primary internal group that uses accounting information is
, Answer Management
7. Internal reports are generally used by
Answer Management
8. Which of the following is NOT an external user of financial
information?
Answer Man- agement
9. Which of the following is NOT true of the Financial Accounting
Standards Board (FASB)?
Answer It is a government agency
10. Generally accepted accounting principles are
Answer Developed by accounting rule makers
11. The initials GAAP stand for
Answer Generally Accepted Accounting Principles
12. The current standard-setting board for accounting in the
private sector is the
Answer Financial Accounting Standards Board (FASB)
13. The organization that develops worldwide accounting
,standards is the
Answer Inter- national Accounting Standards Board (IASB)
14. The initials CPA stand for
Answer Certified Public Accountant
15. Which of the following is NOT a service typically provided
by large public accounting firms?
Answer Making management decisions
16. Standards established by the International Accounting
Standards Board are referred to as
Answer International Financial Reporting Standards
17. Which of the following is the government agency that
stipulates the rules and regulations that govern the collection of
taxes in the United States?
Answer Internal Revenue Service
18. Which of the following is NOT a reason for the integration
of worldwide accounting standards?
Answer the theoretical necessity of a common set of accounting standards
19. The International Accounting Standards Board (IASB) is
charged with devel- oping worldwide accounting practices?
, Answer True
20. With the current state of information technology, investors
outside a com- pany are now allowed access to a company's internal
database of financial information and do their own customized
analysis of a firm's performance.
Answer False
21. Increased federal oversight of the audit process resulted from
the passage of the following act of Congress -
Answer Sarbanes-Oxley Act
22. A borrower benefits from providing financial information
regarding income and expenses in the form of a lower interest rate
on the loan because of reduced uncertainty for the lender with
regard to repayment.
Answer True
23. Which of the following is NOT one of the three primary financial
statements?-
Answer The Statement of Retained Earnings
24. One reason for a company's preparing and providing
financial statements is to reduce uncertainty for an investor
Answers
1. The ability a company has to pay its debts in the short run is its
Answer Liquidity
2. Which of the following is a measure of the liquid position of a
corporation?
Answer -
Debt ratio
3. Which of the following ratios is used to measure a firm's leverage?
Answer Debt Ratio
4. Which of the following ratios is used to measure the profit
earned on each dollar invested in a firm?
Answer Return on Equity
5. The emphasis in financial accounting is on which of the following
external user groups?
Answer Investors and creditors
6. The primary internal group that uses accounting information is
, Answer Management
7. Internal reports are generally used by
Answer Management
8. Which of the following is NOT an external user of financial
information?
Answer Man- agement
9. Which of the following is NOT true of the Financial Accounting
Standards Board (FASB)?
Answer It is a government agency
10. Generally accepted accounting principles are
Answer Developed by accounting rule makers
11. The initials GAAP stand for
Answer Generally Accepted Accounting Principles
12. The current standard-setting board for accounting in the
private sector is the
Answer Financial Accounting Standards Board (FASB)
13. The organization that develops worldwide accounting
,standards is the
Answer Inter- national Accounting Standards Board (IASB)
14. The initials CPA stand for
Answer Certified Public Accountant
15. Which of the following is NOT a service typically provided
by large public accounting firms?
Answer Making management decisions
16. Standards established by the International Accounting
Standards Board are referred to as
Answer International Financial Reporting Standards
17. Which of the following is the government agency that
stipulates the rules and regulations that govern the collection of
taxes in the United States?
Answer Internal Revenue Service
18. Which of the following is NOT a reason for the integration
of worldwide accounting standards?
Answer the theoretical necessity of a common set of accounting standards
19. The International Accounting Standards Board (IASB) is
charged with devel- oping worldwide accounting practices?
, Answer True
20. With the current state of information technology, investors
outside a com- pany are now allowed access to a company's internal
database of financial information and do their own customized
analysis of a firm's performance.
Answer False
21. Increased federal oversight of the audit process resulted from
the passage of the following act of Congress -
Answer Sarbanes-Oxley Act
22. A borrower benefits from providing financial information
regarding income and expenses in the form of a lower interest rate
on the loan because of reduced uncertainty for the lender with
regard to repayment.
Answer True
23. Which of the following is NOT one of the three primary financial
statements?-
Answer The Statement of Retained Earnings
24. One reason for a company's preparing and providing
financial statements is to reduce uncertainty for an investor
