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WGU C213 ACCOUNTING FOR DECISION MAKERS ACTUAL
EXAM 2026/2027 | Competency Validation | Verified
Answers | Pass Guaranteed - A+ Graded
[Section 1: Financial Statement Analysis & Interpretation (Q1-15)]
Q1. A controller reviewing the balance sheet notes the following: Cash $50,000;
Accounts Receivable $80,000; Inventory $120,000; Prepaid Expenses $10,000; Current
Liabilities $130,000. The company's current ratio is:
A. 1.85 B. 2.00 C. 2.15 D. 1.00
Correct Answer: B. 2.00 [CORRECT]
Rationale: Current ratio = Current Assets ($260,000) / Current Liabilities ($130,000) =
2.00. A excludes prepaid expenses, C includes non-current assets, and D reverses the
ratio.
Correct Answer: B
Q2. Using the same current asset data from Q1, the company's quick (acid-test) ratio
is:
A. 2.00 B. 1.38 C. 1.00 D. 0.92
Correct Answer: C. 1.00 [CORRECT]
Rationale: Quick ratio = (Cash + Receivables) / Current Liabilities = $130,000 /
$130,000 = 1.00. A is the current ratio, B incorrectly includes prepaid expenses, and D
uses only cash.
Correct Answer: C
Q3. A manufacturing firm reports operating income of $480,000 and interest expense
of $60,000. The times interest earned ratio is:
A. 6.0 B. 7.0 C. 8.0 D. 9.0
Correct Answer: C. 8.0 [CORRECT]
Rationale: TIE = EBIT / Interest Expense = $480,000 / $60,000 = 8.0. A subtracts
interest from EBIT, B uses net income, and D adds interest to the numerator.
,2
Correct Answer: C
Q4. A company's net income is $150,000 and average stockholders' equity is
$1,000,000. Return on equity is:
A. 6.7% B. 10.0% C. 15.0% D. 25.0%
Correct Answer: C. 15.0% [CORRECT]
Rationale: ROE = Net Income / Average Equity = $150,000 / $1,000,000 = 15%. A
reverses the ratio, B understates the return, and D uses total assets.
Correct Answer: C
Q5. A retailer reports cost of goods sold of $900,000 and average inventory of
$150,000. Inventory turnover is:
A. 4.0 B. 5.0 C. 6.0 D. 7.5
Correct Answer: C. 6.0 [CORRECT]
Rationale: Inventory turnover = COGS / Average Inventory = $900,000 / $150,000 =
6.0. A uses ending inventory only, B miscalculates average, and D uses sales instead
of COGS.
Correct Answer: C
Q6. A firm has average accounts receivable of $90,000 and annual credit sales of
$1,200,000. Days sales outstanding is approximately:
A. 15.2 days B. 21.9 days C. 27.4 days D. 30.0 days
Correct Answer: C. 27.4 days [CORRECT]
Rationale: DSO = (Average AR / Credit Sales) × 365 = ($90,000 / $1,200,000) × 365 =
27.4 days. A uses ending AR, B inverts the ratio, and D approximates without
calculation.
Correct Answer: C
Q7. A company reports sales of $2,000,000, cost of goods sold of $1,200,000, and net
income of $160,000. Which statement is correct?
A. Gross profit margin is 8% B. Net profit margin is 40% C. Gross profit margin is 40%
D. Operating leverage is 12.5%
, 3
Correct Answer: C. Gross profit margin is 40% [CORRECT]
Rationale: Gross profit margin = ($2,000,000 - $1,200,000) / $2,000,000 = 40%. A
confuses gross with net margin, B confuses gross margin with net, and D is not
calculable from the data.
Correct Answer: C
Q8. A company's statement of cash flows (indirect method) shows net income of
$250,000. Depreciation expense is $45,000, accounts receivable increased by $35,000,
inventory decreased by $20,000, and accounts payable increased by $15,000. Net
cash from operating activities is:
A. $255,000 B. $295,000 C. $345,000 D. $205,000
Correct Answer: B. $295,000 [CORRECT]
Rationale: $250,000 + $45,000 - $35,000 + $20,000 + $15,000 = $295,000. A
subtracts the AP increase, C adds the AR increase, and D subtracts depreciation.
Correct Answer: B
Q9. A firm purchased equipment for $200,000, sold land for $75,000, issued common
stock for $150,000, and paid dividends of $30,000. Net cash from financing activities
is:
A. $120,000 B. $225,000 C. $150,000 D. $195,000
Correct Answer: A. $120,000 [CORRECT]
Rationale: Financing activities include stock issuance ($150,000 inflow) and dividends
($30,000 outflow) = $120,000 net. B includes investing activities, C ignores dividends,
and D incorrectly nets all activities.
Correct Answer: A
Q10. Under accrual accounting, revenue is recognized when:
A. Cash is received from the customer B. The performance obligation is satisfied and
the earnings process is complete C. The invoice is mailed to the customer D. The
contract is signed
Correct Answer: B. The performance obligation is satisfied and the earnings process
is complete [CORRECT]
WGU C213 ACCOUNTING FOR DECISION MAKERS ACTUAL
EXAM 2026/2027 | Competency Validation | Verified
Answers | Pass Guaranteed - A+ Graded
[Section 1: Financial Statement Analysis & Interpretation (Q1-15)]
Q1. A controller reviewing the balance sheet notes the following: Cash $50,000;
Accounts Receivable $80,000; Inventory $120,000; Prepaid Expenses $10,000; Current
Liabilities $130,000. The company's current ratio is:
A. 1.85 B. 2.00 C. 2.15 D. 1.00
Correct Answer: B. 2.00 [CORRECT]
Rationale: Current ratio = Current Assets ($260,000) / Current Liabilities ($130,000) =
2.00. A excludes prepaid expenses, C includes non-current assets, and D reverses the
ratio.
Correct Answer: B
Q2. Using the same current asset data from Q1, the company's quick (acid-test) ratio
is:
A. 2.00 B. 1.38 C. 1.00 D. 0.92
Correct Answer: C. 1.00 [CORRECT]
Rationale: Quick ratio = (Cash + Receivables) / Current Liabilities = $130,000 /
$130,000 = 1.00. A is the current ratio, B incorrectly includes prepaid expenses, and D
uses only cash.
Correct Answer: C
Q3. A manufacturing firm reports operating income of $480,000 and interest expense
of $60,000. The times interest earned ratio is:
A. 6.0 B. 7.0 C. 8.0 D. 9.0
Correct Answer: C. 8.0 [CORRECT]
Rationale: TIE = EBIT / Interest Expense = $480,000 / $60,000 = 8.0. A subtracts
interest from EBIT, B uses net income, and D adds interest to the numerator.
,2
Correct Answer: C
Q4. A company's net income is $150,000 and average stockholders' equity is
$1,000,000. Return on equity is:
A. 6.7% B. 10.0% C. 15.0% D. 25.0%
Correct Answer: C. 15.0% [CORRECT]
Rationale: ROE = Net Income / Average Equity = $150,000 / $1,000,000 = 15%. A
reverses the ratio, B understates the return, and D uses total assets.
Correct Answer: C
Q5. A retailer reports cost of goods sold of $900,000 and average inventory of
$150,000. Inventory turnover is:
A. 4.0 B. 5.0 C. 6.0 D. 7.5
Correct Answer: C. 6.0 [CORRECT]
Rationale: Inventory turnover = COGS / Average Inventory = $900,000 / $150,000 =
6.0. A uses ending inventory only, B miscalculates average, and D uses sales instead
of COGS.
Correct Answer: C
Q6. A firm has average accounts receivable of $90,000 and annual credit sales of
$1,200,000. Days sales outstanding is approximately:
A. 15.2 days B. 21.9 days C. 27.4 days D. 30.0 days
Correct Answer: C. 27.4 days [CORRECT]
Rationale: DSO = (Average AR / Credit Sales) × 365 = ($90,000 / $1,200,000) × 365 =
27.4 days. A uses ending AR, B inverts the ratio, and D approximates without
calculation.
Correct Answer: C
Q7. A company reports sales of $2,000,000, cost of goods sold of $1,200,000, and net
income of $160,000. Which statement is correct?
A. Gross profit margin is 8% B. Net profit margin is 40% C. Gross profit margin is 40%
D. Operating leverage is 12.5%
, 3
Correct Answer: C. Gross profit margin is 40% [CORRECT]
Rationale: Gross profit margin = ($2,000,000 - $1,200,000) / $2,000,000 = 40%. A
confuses gross with net margin, B confuses gross margin with net, and D is not
calculable from the data.
Correct Answer: C
Q8. A company's statement of cash flows (indirect method) shows net income of
$250,000. Depreciation expense is $45,000, accounts receivable increased by $35,000,
inventory decreased by $20,000, and accounts payable increased by $15,000. Net
cash from operating activities is:
A. $255,000 B. $295,000 C. $345,000 D. $205,000
Correct Answer: B. $295,000 [CORRECT]
Rationale: $250,000 + $45,000 - $35,000 + $20,000 + $15,000 = $295,000. A
subtracts the AP increase, C adds the AR increase, and D subtracts depreciation.
Correct Answer: B
Q9. A firm purchased equipment for $200,000, sold land for $75,000, issued common
stock for $150,000, and paid dividends of $30,000. Net cash from financing activities
is:
A. $120,000 B. $225,000 C. $150,000 D. $195,000
Correct Answer: A. $120,000 [CORRECT]
Rationale: Financing activities include stock issuance ($150,000 inflow) and dividends
($30,000 outflow) = $120,000 net. B includes investing activities, C ignores dividends,
and D incorrectly nets all activities.
Correct Answer: A
Q10. Under accrual accounting, revenue is recognized when:
A. Cash is received from the customer B. The performance obligation is satisfied and
the earnings process is complete C. The invoice is mailed to the customer D. The
contract is signed
Correct Answer: B. The performance obligation is satisfied and the earnings process
is complete [CORRECT]
