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LATEST WGU C213 ACCOUNTING FOR DECISION MAKERS
Exam 2026-2027 BANK QUESTIONS WITH DETAILED
VERIFIED ANSWERS EXAM QUESTIONS WILL COME
FROM HERE (100% Latest Already Graded A+
1. Which accounting concept assumes a business will continue
operating indefinitely?
A. Monetary unit assumption
B. Economic entity assumption
C. Going concern assumption
D. Periodicity assumption
Correct Answer: C
Explanation: The going concern assumption is the fundamental
accounting principle that an entity will remain in operation for the
foreseeable future. This assumption justifies the use of historical cost for
assets (rather than liquidation value) and allows for the deferral of
certain expenses. Option A is incorrect because the monetary unit
assumption states that transactions are recorded in a stable currency.
Option B is incorrect because the economic entity assumption separates
the business's transactions from its owners' personal affairs. Option D is
incorrect because the periodicity assumption allows a company's life to
be divided into artificial time periods for reporting purposes.
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2. Under accrual accounting, revenue is recognized when:
A. Cash is received
B. The customer places an order
C. Earned, regardless of cash receipt
D. The invoice is printed
Correct Answer: C
Explanation: The revenue recognition principle is a cornerstone of
accrual accounting, dictating that revenue should be recognized when it
is earned, which typically occurs when goods are delivered or services
are performed, regardless of when cash changes hands. Option A
describes the cash basis of accounting. Option B is premature, as an
order does not signify the completion of the earnings process. Option D
is also insufficient, as printing an invoice is an administrative step that
does not necessarily confirm revenue is earned.
3. The matching principle requires:
A. Revenues = expenses
B. Expenses matched to revenues in same period
C. Cash outflows equal cash inflows
D. Assets = Liabilities + Equity
Correct Answer: B
Explanation: The matching principle dictates that expenses should be
recorded in the same accounting period as the revenues they helped to
generate. For example, the cost of goods sold is matched with the
revenue from the sale of those goods. Option A is false, as revenues
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rarely equal expenses (this would result in zero net income). Option C
describes a cash flow scenario, not a fundamental accounting principle.
Option D is the accounting equation, not the matching principle.
4. A company buys equipment for $50,000 cash. The effect on the
accounting equation is:
A. Assets decrease, equity decreases
B. Assets increase, assets decrease (no net change)
C. Liabilities increase, assets increase
D. Equity increases, assets increase
Correct Answer: B
Explanation: This transaction involves an exchange of one asset (cash)
for another asset (equipment). The accounting equation (Assets =
Liabilities + Equity) remains in balance because total assets do not
change. One asset (equipment) increases by $50,000, while another
asset (cash) decreases by the same amount. There is no effect on
liabilities or equity.
5. Which financial statement reports assets, liabilities, and equity at a
point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Correct Answer: C
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Explanation: The balance sheet is a snapshot of a company's financial
position at a specific moment in time, usually the end of a quarter or
fiscal year. It reports a company's assets, liabilities, and shareholders'
equity. Option A (income statement) and Option B (statement of cash
flows) report financial performance over a period of time. Option D
(statement of retained earnings) shows changes in retained earnings
over a period.
6. Retained earnings on the balance sheet represents:
A. Cash available for dividends
B. Cumulative net income not distributed as dividends
C. Total contributed capital
D. Market value of the company
Correct Answer: B
Explanation: Retained earnings are the cumulative net income of a
company that has been kept (retained) within the business rather than
distributed to shareholders as dividends. It is a component of
shareholders' equity. Option A is a common misconception; retained
earnings are not cash, as the cash may have been reinvested in other
assets. Option C describes contributed capital (common stock and
additional paid-in capital). Option D describes market capitalization, not
an accounting figure.
7. Which of the following is a liability?
A. Prepaid rent
B. Unearned revenue
LATEST WGU C213 ACCOUNTING FOR DECISION MAKERS
Exam 2026-2027 BANK QUESTIONS WITH DETAILED
VERIFIED ANSWERS EXAM QUESTIONS WILL COME
FROM HERE (100% Latest Already Graded A+
1. Which accounting concept assumes a business will continue
operating indefinitely?
A. Monetary unit assumption
B. Economic entity assumption
C. Going concern assumption
D. Periodicity assumption
Correct Answer: C
Explanation: The going concern assumption is the fundamental
accounting principle that an entity will remain in operation for the
foreseeable future. This assumption justifies the use of historical cost for
assets (rather than liquidation value) and allows for the deferral of
certain expenses. Option A is incorrect because the monetary unit
assumption states that transactions are recorded in a stable currency.
Option B is incorrect because the economic entity assumption separates
the business's transactions from its owners' personal affairs. Option D is
incorrect because the periodicity assumption allows a company's life to
be divided into artificial time periods for reporting purposes.
,2|Page
2. Under accrual accounting, revenue is recognized when:
A. Cash is received
B. The customer places an order
C. Earned, regardless of cash receipt
D. The invoice is printed
Correct Answer: C
Explanation: The revenue recognition principle is a cornerstone of
accrual accounting, dictating that revenue should be recognized when it
is earned, which typically occurs when goods are delivered or services
are performed, regardless of when cash changes hands. Option A
describes the cash basis of accounting. Option B is premature, as an
order does not signify the completion of the earnings process. Option D
is also insufficient, as printing an invoice is an administrative step that
does not necessarily confirm revenue is earned.
3. The matching principle requires:
A. Revenues = expenses
B. Expenses matched to revenues in same period
C. Cash outflows equal cash inflows
D. Assets = Liabilities + Equity
Correct Answer: B
Explanation: The matching principle dictates that expenses should be
recorded in the same accounting period as the revenues they helped to
generate. For example, the cost of goods sold is matched with the
revenue from the sale of those goods. Option A is false, as revenues
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rarely equal expenses (this would result in zero net income). Option C
describes a cash flow scenario, not a fundamental accounting principle.
Option D is the accounting equation, not the matching principle.
4. A company buys equipment for $50,000 cash. The effect on the
accounting equation is:
A. Assets decrease, equity decreases
B. Assets increase, assets decrease (no net change)
C. Liabilities increase, assets increase
D. Equity increases, assets increase
Correct Answer: B
Explanation: This transaction involves an exchange of one asset (cash)
for another asset (equipment). The accounting equation (Assets =
Liabilities + Equity) remains in balance because total assets do not
change. One asset (equipment) increases by $50,000, while another
asset (cash) decreases by the same amount. There is no effect on
liabilities or equity.
5. Which financial statement reports assets, liabilities, and equity at a
point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Correct Answer: C
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Explanation: The balance sheet is a snapshot of a company's financial
position at a specific moment in time, usually the end of a quarter or
fiscal year. It reports a company's assets, liabilities, and shareholders'
equity. Option A (income statement) and Option B (statement of cash
flows) report financial performance over a period of time. Option D
(statement of retained earnings) shows changes in retained earnings
over a period.
6. Retained earnings on the balance sheet represents:
A. Cash available for dividends
B. Cumulative net income not distributed as dividends
C. Total contributed capital
D. Market value of the company
Correct Answer: B
Explanation: Retained earnings are the cumulative net income of a
company that has been kept (retained) within the business rather than
distributed to shareholders as dividends. It is a component of
shareholders' equity. Option A is a common misconception; retained
earnings are not cash, as the cash may have been reinvested in other
assets. Option C describes contributed capital (common stock and
additional paid-in capital). Option D describes market capitalization, not
an accounting figure.
7. Which of the following is a liability?
A. Prepaid rent
B. Unearned revenue
