WGU C213 Accounting For Decision Makers Final
Exam Update: Questions & Answers (Verified
Answers), 100 % Guaranteed Pass - PDF
Q1. Which of the following best describes the primary
purpose of financial accounting?
a) Provide information for internal decision-making
b) Record daily transactions for tax purposes only
c) Provide financial information to external users
d) Ensure the company makes a profit
Answer: c
Rationale: Financial accounting focuses on producing
financial statements (income statement, balance sheet,
cash flow statement) for external users like investors and
creditors. Internal decision-making (a) is managerial
accounting. Daily recording (b) is bookkeeping, not the
primary purpose. Profit (d) is a business goal, not
accounting’s purpose.
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,Q2. 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 retained earnings
Answer: c
Rationale: The balance sheet shows assets, liabilities, and
equity on a specific date (e.g., Dec 31). Income statement
(a) covers a period. Cash flows (b) covers a period.
Retained earnings (d) shows changes over time.
Q3. Which of the following is an asset?
a) Accounts payable
b) Common stock
c) Equipment
d) Service revenue
Answer: c
Rationale: Equipment is a resource owned that provides
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,future benefit (asset). Accounts payable (a) is a liability.
Common stock (b) is equity. Service revenue (d) is income,
not an asset.
Q4. The accounting equation is:
a) Assets = Liabilities – Equity
b) Assets = Liabilities + Equity
c) Assets + Liabilities = Equity
d) Assets + Equity = Liabilities
Answer: b
Rationale: Fundamental accounting equation: Assets =
Liabilities + Equity. Any deviation violates double-entry
bookkeeping.
Q5. If a company has assets of $500,000 and liabilities
of $300,000, equity equals:
a) $800,000
b) $200,000
c) $500,000
d) $300,000
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, Answer: b
Rationale: Equity = Assets – Liabilities = $500,000 –
$300,000 = $200,000.
Q6. Revenues are recognized when:
a) Cash is received
b) The order is placed
c) Earned, regardless of cash receipt (under accrual
accounting)
d) The invoice is printed
Answer: c
Rationale: Accrual accounting uses revenue recognition
principle: revenue when earned, not when cash received.
Cash basis (a) is not GAAP for most businesses.
Q7. Which is an example of a liability?
a) Inventory
b) Prepaid insurance
c) Notes payable
d) Retained earnings
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Exam Update: Questions & Answers (Verified
Answers), 100 % Guaranteed Pass - PDF
Q1. Which of the following best describes the primary
purpose of financial accounting?
a) Provide information for internal decision-making
b) Record daily transactions for tax purposes only
c) Provide financial information to external users
d) Ensure the company makes a profit
Answer: c
Rationale: Financial accounting focuses on producing
financial statements (income statement, balance sheet,
cash flow statement) for external users like investors and
creditors. Internal decision-making (a) is managerial
accounting. Daily recording (b) is bookkeeping, not the
primary purpose. Profit (d) is a business goal, not
accounting’s purpose.
1
,Q2. 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 retained earnings
Answer: c
Rationale: The balance sheet shows assets, liabilities, and
equity on a specific date (e.g., Dec 31). Income statement
(a) covers a period. Cash flows (b) covers a period.
Retained earnings (d) shows changes over time.
Q3. Which of the following is an asset?
a) Accounts payable
b) Common stock
c) Equipment
d) Service revenue
Answer: c
Rationale: Equipment is a resource owned that provides
2
,future benefit (asset). Accounts payable (a) is a liability.
Common stock (b) is equity. Service revenue (d) is income,
not an asset.
Q4. The accounting equation is:
a) Assets = Liabilities – Equity
b) Assets = Liabilities + Equity
c) Assets + Liabilities = Equity
d) Assets + Equity = Liabilities
Answer: b
Rationale: Fundamental accounting equation: Assets =
Liabilities + Equity. Any deviation violates double-entry
bookkeeping.
Q5. If a company has assets of $500,000 and liabilities
of $300,000, equity equals:
a) $800,000
b) $200,000
c) $500,000
d) $300,000
3
, Answer: b
Rationale: Equity = Assets – Liabilities = $500,000 –
$300,000 = $200,000.
Q6. Revenues are recognized when:
a) Cash is received
b) The order is placed
c) Earned, regardless of cash receipt (under accrual
accounting)
d) The invoice is printed
Answer: c
Rationale: Accrual accounting uses revenue recognition
principle: revenue when earned, not when cash received.
Cash basis (a) is not GAAP for most businesses.
Q7. Which is an example of a liability?
a) Inventory
b) Prepaid insurance
c) Notes payable
d) Retained earnings
4
