Wgu C213 Final Exam Study Guide

WGU C213 Final Exam study
guide With Answers Graded
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1. Order of assets listed on the balance sheet: Assets are listed in the order
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of liquidity. Liquidity is the amount of time it would usually take to covert a
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n asset into c
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ash. Obviously, cash would be listed first, followed by marketable investme
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nts (a com pany can quickly convert a short-
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term investment into cash). Accounts
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receivable would be listed next followed by inve ntory, and long-
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term investments, fixed assets, and intangibles.
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Current assets are listed before long-
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term assets. g




Current liabilities are listed before long-
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term liabilities, but there is no specific order
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they are listed in outside of current and lo ng-term.
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There is also no specific order equity accounts are listed on the balance she
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et; althou gh, typically you will see paid-in-
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,capital followed by retained earnings followed
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by accumulated other comprehensive i ncome, and lastly, treasury stock.
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2. Difference between a manufacturing company and a service company.
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Period Costs Product Costs
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1

,Service Co. Selling Costs Direct Labor Administrative
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g Costs Service Overhead g g




Manufacturing Co Selling Costs Direct Labor Administrative g g g g g g




g Costs Manufacturing Overhead
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Direct Materials (inventory: The only difference is -
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g a manufacturing company has direct materials (inventory).
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3. Evaluating a historical income statement to project a future income state-
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g ment.


Projected growth for 2017 = 10% increase over 2016 sales.
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e statement.
Step 1: Convert the income statement into a common-
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asted 2017 g g g g g g
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sized incom Step 2: Multiply 2016 sales by 1.10 (10% growth) to get the
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forec
sales. Then multiply the projected 2017 sales by the percentages from step 1. N
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ow, what would you do if you were given the 2017 sales figure and you need
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to c alculate the 2016 sales figure based off the 10% growth for 2017?: Calcu-
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g lation for 2016: 110,.10 = 100,000
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4. Role of the U. S. Securities and Exchange Commission (SEC) in financial r
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eporting.: Regulates the U.S. Stock exchanges. g g g g g




Seeks to create a fair information environment in which investors can buy
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and sell sto cks.
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2

, Congress created the first securities act in 1933 and the second securities
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act in 1934 in response to the stock market crash of 1929.
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The Securities Act of 1933 requires most companies planning to issue new
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debt or s g g




tock securities to the public to submit a registration statement to the publi
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c for appro val.
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The Securities Act of 1934 requires a public company to file detailed period
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ic reports in cluding audited financial statements (form 10-
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K is the annual report; Form 10-
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Q is the quarterly report).
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Granted the legal authority to establish accounting standards. Currently th
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e SEC ac cepts the pronouncements set by FASB.
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The SEC can suspend trading of a company's stock, and if hearings show th
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at the iss ue failed to comply with the securities laws, the SEC can de-
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list the security. g g




Congress strengthened the SEC through the enactment of Sarbanes-
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Oxley (SOX), g g




which was enacted after the massive frauds that occurred in the late 19
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90s and the early 2000s. g g g g




5. Compare and Contrast Traditional Costing to Activity- g g g g g g




Based Costing (ABC).: ABC is a more accurate product costing system th
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