WGU C213 Accounting for Decision
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1. Which organization is a private body established and supported by the joint efforts
of the U.S. business community, financial analysts, and practicing accountants?
A) Internal Revenue Service (IRS)
B) Securities and Exchange Commission (SEC)
C) Financial Accounting Standards Board (FASB)
D) Public Company Accounting Oversight Board (PCAOB)
Answer: C
2. What act, resulting from accounting scandals starting in 2001, increased U.S.
federal government scrutiny of financial statements?
A) Securities Act of 1933
B) Sarbanes-Oxley Act
C) Investment Company Act of 1940
D) Securities Exchange Act of 1934
Answer: B
3. According to accounting rules, when should revenue be recognized?
A) When cash is received from customers
B) When the product is manufactured
C) When work has been done and collectability of cash can be reasonably assured
D) At the end of the fiscal year
Answer: C
4. What does the Price-Earnings Ratio measure?
A) The amount of debt a company has
B) The amount investors are willing to pay for each dollar of earnings; indication of
growth potential
C) The efficiency of asset utilization
D) The percentage of profit margins
Answer: B
5. What is a disclosure in accounting?
A) A section of the balance sheet
B) An alternative way to report information, describing details in a narrative note
C) A type of depreciation method
D) A financial ratio used for analysis
, Answer: B
6. Which of the following is classified as a current asset?
A) Long-term bonds payable
B) An asset that is expected to be used within one year of the balance sheet date
C) Land and buildings
D) Intangible assets with indefinite lives
Answer: B
7. What are Common-size financial statements?
A) Statements that only include similar-sized companies
B) Statements prepared using only cash basis accounting
C) Financial docs that allow comparison across years and between companies,
prepared by dividing all numbers by sales
D) Statements required only for small businesses
Answer: C
8. Do gains/losses reported on the income statement arise from which type of
activities?
A) Internal activities only
B) Manufacturing activities only
C) External activities
D) Administrative activities only
Answer: C
9. What is the equation to calculate net income?
A) Assets - Liabilities = Net Income
B) Revenues - Expenses = Net Income
C) Cash Inflows - Cash Outflows = Net Income
D) Sales + Gains - Losses = Net Income
Answer: B
10. What is the primary role of the Internal Revenue Service (IRS)?
A) To establish financial accounting rules
B) To regulate stock exchanges
C) Gov't agency that establishes rules to define when income should be taxed; has
no role in setting financial accounting rules
D) To oversee audit practices
Answer: C
11. Operating Income is defined as:
A) Revenue minus cost of goods sold
B) Gross profit minus all other expenses except for interest and taxes; measures
performance of fundamental business operations
Makers – Actual Questions & Answers
100% Guarantee Pass
1. Which organization is a private body established and supported by the joint efforts
of the U.S. business community, financial analysts, and practicing accountants?
A) Internal Revenue Service (IRS)
B) Securities and Exchange Commission (SEC)
C) Financial Accounting Standards Board (FASB)
D) Public Company Accounting Oversight Board (PCAOB)
Answer: C
2. What act, resulting from accounting scandals starting in 2001, increased U.S.
federal government scrutiny of financial statements?
A) Securities Act of 1933
B) Sarbanes-Oxley Act
C) Investment Company Act of 1940
D) Securities Exchange Act of 1934
Answer: B
3. According to accounting rules, when should revenue be recognized?
A) When cash is received from customers
B) When the product is manufactured
C) When work has been done and collectability of cash can be reasonably assured
D) At the end of the fiscal year
Answer: C
4. What does the Price-Earnings Ratio measure?
A) The amount of debt a company has
B) The amount investors are willing to pay for each dollar of earnings; indication of
growth potential
C) The efficiency of asset utilization
D) The percentage of profit margins
Answer: B
5. What is a disclosure in accounting?
A) A section of the balance sheet
B) An alternative way to report information, describing details in a narrative note
C) A type of depreciation method
D) A financial ratio used for analysis
, Answer: B
6. Which of the following is classified as a current asset?
A) Long-term bonds payable
B) An asset that is expected to be used within one year of the balance sheet date
C) Land and buildings
D) Intangible assets with indefinite lives
Answer: B
7. What are Common-size financial statements?
A) Statements that only include similar-sized companies
B) Statements prepared using only cash basis accounting
C) Financial docs that allow comparison across years and between companies,
prepared by dividing all numbers by sales
D) Statements required only for small businesses
Answer: C
8. Do gains/losses reported on the income statement arise from which type of
activities?
A) Internal activities only
B) Manufacturing activities only
C) External activities
D) Administrative activities only
Answer: C
9. What is the equation to calculate net income?
A) Assets - Liabilities = Net Income
B) Revenues - Expenses = Net Income
C) Cash Inflows - Cash Outflows = Net Income
D) Sales + Gains - Losses = Net Income
Answer: B
10. What is the primary role of the Internal Revenue Service (IRS)?
A) To establish financial accounting rules
B) To regulate stock exchanges
C) Gov't agency that establishes rules to define when income should be taxed; has
no role in setting financial accounting rules
D) To oversee audit practices
Answer: C
11. Operating Income is defined as:
A) Revenue minus cost of goods sold
B) Gross profit minus all other expenses except for interest and taxes; measures
performance of fundamental business operations
