WGU C213 PA & OA Study Guide –
Actual Questions & Answers 100%
Guarantee Pass
A company allocates one type of overhead costs on the basis of movement of
materials. The number of movement materials processed is an example of a(n): -
------------ANS: Cost driver
A company is experiencing an increase in their bad debt expense.
Which change in credit policy would cause this increase? - ------------ANS: Credit
limits were increased for all customers
A company manufactures custom-built wooden bookshelves.
Which two costs would the company classify as period costs?
Answer Choices: Wood cost, Salary cost of the craftsperson, Salary cost of the
receptionist, Advertising cost - ------------ANS: Salary cost of the receptionist
Advertising cost
A company's asset mix is determined by - ------------ANS: Dividing each asset item
on the balance sheet by total assets
A company's asset mix is strongly influenced by - ------------ANS: The company's
industry
A measure of a company's performance that is intended to summarize in one
number the overall performance of a company in a given period is - ------------ANS:
Net income
A more accurate allocation of manufacturing overhead and product costing can take
place when costs are assigned on the basis of: - ------------ANS: Cost driver
A non-manufacturing cost is classified as - ------------ANS: A period cost
A wholesale bakery would normally recognize revenue when - ------------ANS: Goods
are delivered to the customer
According to Sarbanes-Oxley who are auditors required to report to and be retained
by? - ------------ANS: Audit committee
,According to Sarbanes-Oxley, which one of the following services is an accounting
firm permitted to provide to it's audit client? - ------------ANS: Opinions about the
reliability of internal controls
According to Sarbanes-Oxley, which one of the following services is an accounting
firm permitted to provide to its audit client? - ------------ANS: Opinions about the
reliability of internal controls
Accounting information helps management to: - ------------ANS: Make products,
control operations, decide what prices to charge
Activity based costing is most useful when there are variations in: - ------------ANS:
Production volume, size of products, complexity of products
Activity-based costing deals with the allocation of: - ------------ANS: Manufacturing
overhead costs
An activity that affects a particular cost is a(n): - ------------ANS: Cost driver
An independent audit report is usually issued by - ------------ANS: Certified Public
Accountant
Another name for income statement is - ------------ANS: Statement of earnings
Another name for the balance sheet is the - ------------ANS: Statement of Financial
Position
Cash flow adequacy ratio is computed as - ------------ANS: Cash from operations +
Cash from investing activities
Company A calculated the following information under traditional and activity-based
costing for the production and sale of 1,000 units of Product B:
Traditional ABC
Sales $100,000 $100,000
Cost of goods sold $70,000 $110,000
Gross margin $30,000 ($10,000)
Which decision should be made about the selling price of Product B? -
------------ANS: The price of Product B should be increased.
Control operations does NOT involve - ------------ANS: Analyzing results
, Costs that are directly traceable to a unit of business or segment being analyzed are
called: - ------------ANS: Direct costs
Costs that are incurred during the normal operations of a business to generate
revenues are called - ------------ANS: Expenses
Costs that can be reasonably associated with specific revenues but NOT with
specific products should be - ------------ANS: expensed in the period in which the
related revenue is recognized
Current assets are usually listed on a balance sheet in - ------------ANS: Decreasing
order of liquidity
Earnings management through aggressive accounting is best exemplified by -
------------ANS: Changing the useful life of a depreciable asset and fully disclosing it
in the notes
Earnings management through deceptive accounting is best exemplified by -
------------ANS: Changing the interest rate used in accounting for leases without
describing the change in the notes to financial statements.
Earnings management through strategic matching is exemplified by - ------------ANS:
Timing transactions so that large one-time gains and losses occur in the same
quarter.
Expense and revenue accounts appear on - ------------ANS: Income statement
Expenses generally cause - ------------ANS: A decrease in net assets
External users of financial statements use financial statement analysis for -
------------ANS: Investing decisions
Failure to record the used portion of supplies on hand during the month has the
following effect on the financial statements prepared at the end of the month -
------------ANS: Overstates assets
Financial statement analysis is greatly enhanced when financial ratios are compared
with - ------------ANS: Both past values and values for other firms in the same
industry
Financing mix is a measure of - ------------ANS: The degree to which a company
finances assets using liabilities or owners' equity
Actual Questions & Answers 100%
Guarantee Pass
A company allocates one type of overhead costs on the basis of movement of
materials. The number of movement materials processed is an example of a(n): -
------------ANS: Cost driver
A company is experiencing an increase in their bad debt expense.
Which change in credit policy would cause this increase? - ------------ANS: Credit
limits were increased for all customers
A company manufactures custom-built wooden bookshelves.
Which two costs would the company classify as period costs?
Answer Choices: Wood cost, Salary cost of the craftsperson, Salary cost of the
receptionist, Advertising cost - ------------ANS: Salary cost of the receptionist
Advertising cost
A company's asset mix is determined by - ------------ANS: Dividing each asset item
on the balance sheet by total assets
A company's asset mix is strongly influenced by - ------------ANS: The company's
industry
A measure of a company's performance that is intended to summarize in one
number the overall performance of a company in a given period is - ------------ANS:
Net income
A more accurate allocation of manufacturing overhead and product costing can take
place when costs are assigned on the basis of: - ------------ANS: Cost driver
A non-manufacturing cost is classified as - ------------ANS: A period cost
A wholesale bakery would normally recognize revenue when - ------------ANS: Goods
are delivered to the customer
According to Sarbanes-Oxley who are auditors required to report to and be retained
by? - ------------ANS: Audit committee
,According to Sarbanes-Oxley, which one of the following services is an accounting
firm permitted to provide to it's audit client? - ------------ANS: Opinions about the
reliability of internal controls
According to Sarbanes-Oxley, which one of the following services is an accounting
firm permitted to provide to its audit client? - ------------ANS: Opinions about the
reliability of internal controls
Accounting information helps management to: - ------------ANS: Make products,
control operations, decide what prices to charge
Activity based costing is most useful when there are variations in: - ------------ANS:
Production volume, size of products, complexity of products
Activity-based costing deals with the allocation of: - ------------ANS: Manufacturing
overhead costs
An activity that affects a particular cost is a(n): - ------------ANS: Cost driver
An independent audit report is usually issued by - ------------ANS: Certified Public
Accountant
Another name for income statement is - ------------ANS: Statement of earnings
Another name for the balance sheet is the - ------------ANS: Statement of Financial
Position
Cash flow adequacy ratio is computed as - ------------ANS: Cash from operations +
Cash from investing activities
Company A calculated the following information under traditional and activity-based
costing for the production and sale of 1,000 units of Product B:
Traditional ABC
Sales $100,000 $100,000
Cost of goods sold $70,000 $110,000
Gross margin $30,000 ($10,000)
Which decision should be made about the selling price of Product B? -
------------ANS: The price of Product B should be increased.
Control operations does NOT involve - ------------ANS: Analyzing results
, Costs that are directly traceable to a unit of business or segment being analyzed are
called: - ------------ANS: Direct costs
Costs that are incurred during the normal operations of a business to generate
revenues are called - ------------ANS: Expenses
Costs that can be reasonably associated with specific revenues but NOT with
specific products should be - ------------ANS: expensed in the period in which the
related revenue is recognized
Current assets are usually listed on a balance sheet in - ------------ANS: Decreasing
order of liquidity
Earnings management through aggressive accounting is best exemplified by -
------------ANS: Changing the useful life of a depreciable asset and fully disclosing it
in the notes
Earnings management through deceptive accounting is best exemplified by -
------------ANS: Changing the interest rate used in accounting for leases without
describing the change in the notes to financial statements.
Earnings management through strategic matching is exemplified by - ------------ANS:
Timing transactions so that large one-time gains and losses occur in the same
quarter.
Expense and revenue accounts appear on - ------------ANS: Income statement
Expenses generally cause - ------------ANS: A decrease in net assets
External users of financial statements use financial statement analysis for -
------------ANS: Investing decisions
Failure to record the used portion of supplies on hand during the month has the
following effect on the financial statements prepared at the end of the month -
------------ANS: Overstates assets
Financial statement analysis is greatly enhanced when financial ratios are compared
with - ------------ANS: Both past values and values for other firms in the same
industry
Financing mix is a measure of - ------------ANS: The degree to which a company
finances assets using liabilities or owners' equity
