WGU C213 ACCOUNTING FOR DECISION MAKERS
OBJECTIVE ASSESSMENT – 170 QUESTIONS WITH
ANSWERS AND RATIONALES (2026 EDITION) LATEST
UPDATE THIS YEAR.pdf
Financial accounting basics & the three statements
Ratio analysis & decision making
Cost behavior, CVP, and budgeting
Relevant costs, capital budgeting, and performance metrics
Internal controls, ethics, and governance
Format: single best answer, correct option in bold, with a brief rationale. Use this
as a study aid only, not as the real WGU OA.
Financial Accounting Foundations & Statements (Q1–40)
1. The primary purpose of financial accounting is to:
A. Provide internal management reports only
B. Provide external users with information about the company’s financial
performance and position
C. Calculate employee bonuses
D. Prepare tax returns only
Financial accounting focuses on external reporting (investors, creditors,
regulators).
2. Which of the following is NOT one of the three primary financial statements?
A. Balance sheet
B. Income statement
,C. Statement of cash flows
D. Statement of retained management decisions
The core statements are balance sheet, income statement, and cash flow
statement.
3. The balance sheet reports:
A. Revenues and expenses for a period
B. Assets, liabilities, and equity at a specific point in time
C. Cash inflows and outflows for a period
D. Only long-term debt
Balance sheet = financial position at a date.
4. The income statement reports:
A. Assets and liabilities
B. Revenues, expenses, and net income (or loss) for a period
C. Cash flows from operations only
D. Only equity transactions
Income statement = performance over time.
5. The statement of cash flows categorizes cash flows into:
A. Operating, investing, and financing activities
B. Operating, investing, and financing activities
C. Revenue, expense, and equity activities
D. Short-term and long-term activities only
Cash flows are classified as operating, investing, and financing.
6. Under accrual accounting, revenue is recognized when:
,A. Cash is received
B. It is earned and realizable, regardless of cash receipt
C. The product is manufactured
D. The invoice is sent
Accrual basis matches revenue when earned.
7. Expenses are matched with revenues in the same period under the:
A. Cash basis
B. Matching principle
C. Conservatism principle
D. Materiality principle
Matching principle aligns expenses with related revenues.
8. Which of the following is an asset?
A. Accounts payable
B. Accounts receivable
C. Common stock
D. Retained earnings
Accounts receivable is a resource owned by the company.
9. Which of the following is a liability?
A. Inventory
B. Notes payable
C. Retained earnings
D. Equipment
Notes payable is an obligation to pay.
10. Stockholders’ equity includes all EXCEPT:
, A. Common stock
B. Retained earnings
C. Accounts receivable
D. Additional paid-in capital
Accounts receivable is an asset, not equity.
11. Net income is calculated as:
A. Assets − Liabilities
B. Revenues − Expenses
C. Cash inflows − Cash outflows
D. Equity − Dividends
Net income = revenues minus expenses.
12. If a company has revenues of $500,000 and expenses of $420,000, net
income is:
A. $20,000
B. $80,000
C. $420,000
D. $500,000
$500,000 − $420,000 = $80,000.
13. Which financial statement links the income statement and balance sheet
through retained earnings?
A. Statement of cash flows
B. Statement of stockholders’ equity (or retained earnings)
C. Income statement only
D. Balance sheet only
Retained earnings connect net income to equity.
OBJECTIVE ASSESSMENT – 170 QUESTIONS WITH
ANSWERS AND RATIONALES (2026 EDITION) LATEST
UPDATE THIS YEAR.pdf
Financial accounting basics & the three statements
Ratio analysis & decision making
Cost behavior, CVP, and budgeting
Relevant costs, capital budgeting, and performance metrics
Internal controls, ethics, and governance
Format: single best answer, correct option in bold, with a brief rationale. Use this
as a study aid only, not as the real WGU OA.
Financial Accounting Foundations & Statements (Q1–40)
1. The primary purpose of financial accounting is to:
A. Provide internal management reports only
B. Provide external users with information about the company’s financial
performance and position
C. Calculate employee bonuses
D. Prepare tax returns only
Financial accounting focuses on external reporting (investors, creditors,
regulators).
2. Which of the following is NOT one of the three primary financial statements?
A. Balance sheet
B. Income statement
,C. Statement of cash flows
D. Statement of retained management decisions
The core statements are balance sheet, income statement, and cash flow
statement.
3. The balance sheet reports:
A. Revenues and expenses for a period
B. Assets, liabilities, and equity at a specific point in time
C. Cash inflows and outflows for a period
D. Only long-term debt
Balance sheet = financial position at a date.
4. The income statement reports:
A. Assets and liabilities
B. Revenues, expenses, and net income (or loss) for a period
C. Cash flows from operations only
D. Only equity transactions
Income statement = performance over time.
5. The statement of cash flows categorizes cash flows into:
A. Operating, investing, and financing activities
B. Operating, investing, and financing activities
C. Revenue, expense, and equity activities
D. Short-term and long-term activities only
Cash flows are classified as operating, investing, and financing.
6. Under accrual accounting, revenue is recognized when:
,A. Cash is received
B. It is earned and realizable, regardless of cash receipt
C. The product is manufactured
D. The invoice is sent
Accrual basis matches revenue when earned.
7. Expenses are matched with revenues in the same period under the:
A. Cash basis
B. Matching principle
C. Conservatism principle
D. Materiality principle
Matching principle aligns expenses with related revenues.
8. Which of the following is an asset?
A. Accounts payable
B. Accounts receivable
C. Common stock
D. Retained earnings
Accounts receivable is a resource owned by the company.
9. Which of the following is a liability?
A. Inventory
B. Notes payable
C. Retained earnings
D. Equipment
Notes payable is an obligation to pay.
10. Stockholders’ equity includes all EXCEPT:
, A. Common stock
B. Retained earnings
C. Accounts receivable
D. Additional paid-in capital
Accounts receivable is an asset, not equity.
11. Net income is calculated as:
A. Assets − Liabilities
B. Revenues − Expenses
C. Cash inflows − Cash outflows
D. Equity − Dividends
Net income = revenues minus expenses.
12. If a company has revenues of $500,000 and expenses of $420,000, net
income is:
A. $20,000
B. $80,000
C. $420,000
D. $500,000
$500,000 − $420,000 = $80,000.
13. Which financial statement links the income statement and balance sheet
through retained earnings?
A. Statement of cash flows
B. Statement of stockholders’ equity (or retained earnings)
C. Income statement only
D. Balance sheet only
Retained earnings connect net income to equity.
