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WGU C213 Accounting for Decision Makers
LATEST VERSION WITH COMPLETE 300
QUESTIONS AND CORRECT DETAILED
SOLUTIONS JUST RELEASED THIS YEAR
WGU C213 Accounting for Decision Makers — 300 Randomized MCQs
Question 1: A company purchases inventory on credit. How does this transaction affect the
accounting equation?
A) Assets increase and liabilities increase
B) Assets increase and equity increases
C) Assets decrease and liabilities decrease
D) Liabilities increase and equity decreases
Answer: A) Assets increase and liabilities increase
Rationale: Purchasing inventory on credit increases inventory (an asset) and increases accounts
payable (a liability). The accounting equation (Assets = Liabilities + Equity) remains balanced.
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Question 2: 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 Changes in Equity
Answer: C) Balance Sheet
Rationale: The Balance Sheet is a snapshot of a company's financial position at a specific date,
showing assets, liabilities, and equity. The Income Statement covers a period of time (e.g., a year
or quarter).
Question 3: Under accrual accounting, when should revenue be recognized?
A) When cash is received from the customer
B) When the customer places an order
C) When the goods are delivered or services are performed
D) When the invoice is prepared
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Answer: C) When the goods are delivered or services are performed
Rationale: The revenue recognition principle requires revenue to be recognized when it is
earned—when goods are transferred or services are provided—regardless of when cash is
received.
Question 4: What is the effect of paying salaries to employees on the accounting equation?
A) Assets increase and liabilities decrease
B) Assets decrease and equity decreases
C) Assets decrease and liabilities increase
D) Assets increase and equity increases
Answer: B) Assets decrease and equity decreases
Rationale: Paying salaries reduces cash (an asset) and reduces retained earnings (equity)
because salaries are an expense that reduces net income.
Question 5: Which of the following is an example of an intangible asset?
A) Land
B) Buildings
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C) Copyright
D) Inventory
Answer: C) Copyright
Rationale: Intangible assets are non-physical assets with long-term value, including patents,
copyrights, trademarks, and goodwill. Land, buildings, and inventory are tangible assets.
Question 6: A company has current assets of $150,000 and current liabilities of $50,000. What
is the current ratio?
A) 1.0
B) 2.0
C) 3.0
D) 4.0
Answer: C) 3.0
Rationale: Current Ratio = Current Assets / Current Liabilities = $150,000 / $50,000 = 3.0. This
ratio measures short-term liquidity and the ability to pay current obligations.
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SUCCESS!
WGU C213 Accounting for Decision Makers
LATEST VERSION WITH COMPLETE 300
QUESTIONS AND CORRECT DETAILED
SOLUTIONS JUST RELEASED THIS YEAR
WGU C213 Accounting for Decision Makers — 300 Randomized MCQs
Question 1: A company purchases inventory on credit. How does this transaction affect the
accounting equation?
A) Assets increase and liabilities increase
B) Assets increase and equity increases
C) Assets decrease and liabilities decrease
D) Liabilities increase and equity decreases
Answer: A) Assets increase and liabilities increase
Rationale: Purchasing inventory on credit increases inventory (an asset) and increases accounts
payable (a liability). The accounting equation (Assets = Liabilities + Equity) remains balanced.
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Question 2: 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 Changes in Equity
Answer: C) Balance Sheet
Rationale: The Balance Sheet is a snapshot of a company's financial position at a specific date,
showing assets, liabilities, and equity. The Income Statement covers a period of time (e.g., a year
or quarter).
Question 3: Under accrual accounting, when should revenue be recognized?
A) When cash is received from the customer
B) When the customer places an order
C) When the goods are delivered or services are performed
D) When the invoice is prepared
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Answer: C) When the goods are delivered or services are performed
Rationale: The revenue recognition principle requires revenue to be recognized when it is
earned—when goods are transferred or services are provided—regardless of when cash is
received.
Question 4: What is the effect of paying salaries to employees on the accounting equation?
A) Assets increase and liabilities decrease
B) Assets decrease and equity decreases
C) Assets decrease and liabilities increase
D) Assets increase and equity increases
Answer: B) Assets decrease and equity decreases
Rationale: Paying salaries reduces cash (an asset) and reduces retained earnings (equity)
because salaries are an expense that reduces net income.
Question 5: Which of the following is an example of an intangible asset?
A) Land
B) Buildings
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C) Copyright
D) Inventory
Answer: C) Copyright
Rationale: Intangible assets are non-physical assets with long-term value, including patents,
copyrights, trademarks, and goodwill. Land, buildings, and inventory are tangible assets.
Question 6: A company has current assets of $150,000 and current liabilities of $50,000. What
is the current ratio?
A) 1.0
B) 2.0
C) 3.0
D) 4.0
Answer: C) 3.0
Rationale: Current Ratio = Current Assets / Current Liabilities = $150,000 / $50,000 = 3.0. This
ratio measures short-term liquidity and the ability to pay current obligations.
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