WGU D196 Pre-Assessment Questions and Answers with Verified Solutions

WGU D196 Pre-Assessment Questions and Answers with Verified Solutions What is the effect of a company's accounting department maintaining high ethical standards? -The company can report more favorable results in its financial statements. -The company's accounting information will decrease in value. -The company can hire fewer accountants to do the same amount of work. -The company's accounting information will increase in value. The company's accounting information will increase in value. Why might employees be interested in their company's financial accounting information? -Financial statement data are used to record long term liabilities. -Financial statement data provide detailed internal budget information. -Financial statement data are often used in determining employee bonuses. -Financial statement data provide item-by-item product cost information. Financial statement data are often used in determining employee bonuses. Which group establishes financial accounting rules in the United States? -Internal Revenue Service (IRS) -American Institute of Certified Public Accountants (AICPA) -Financial Accounting Standards Board (FASB) -International Accounting Standards Board (IASB) Financial Accounting Standards Board (FASB) Which report is one of the three primary financial statements? -Statement of stakeholder funds -Statement of cash flows -Statement of the accounting cycle -Statement of management accounting Statement of cash flows A company paid $5,000 cash in advertising costs. How does this transaction affect the paying company's accounting equation? -Assets decrease by $5,000; expenses increase by $5,000. -Assets decrease by $5,000; liabilities increase by $5,000. -Assets decrease by $5,000; revenues increase by $5,000. -Assets increase by $5,000; expenses increase by $5,000. Assets decrease by $5,000; expenses increase by $5,000. What is a transaction? -Two parties exchanging something of value -An example of an online business document -A type of commonly used accounting software -A category of merchandiser or retailer Two parties exchanging something of value A company borrowed $80,000 cash from a bank. How does this transaction affect the accounting equation of the borrowing company? -Expenses decrease owners' equity. -Expenses increase liabilities. -Expenses decrease liabilities. -Expenses increase owners' equity. Expenses decrease owners' equity. What is the impact of expenses on the accounting equation? -Expenses decrease owners' equity. -Expenses increase liabilities. -Expenses decrease liabilities. -Expenses increase owners' equity. Expenses decrease owners' equity. Which type of account are accounts payable and notes payable both examples of? -Asset -Equity -Expense -Liability Liability What is the purpose of the financial accounting cycle? -To turn information about transactions into financial statements -To gather information related to the expenses and income generated by a company -To produce and analyze a company's monthly bank statement -To collect confidential information for management to use as a competitive tool To turn information about transactions into financial statements According to the accounting equation, the amount of liabilities and equity must always be equal to another amount. What is that other amount? -Cash -The sum of expenses and dividends -Assets -The sum of revenues and expenses Assets Which item is an expense item? -Accounts receivable -Accounts payable -Cost of goods sold -Loans payable Cost of goods sold How is gross profit computed? -Sales minus cost of goods sold -Total revenues minus total expenses -Accounts receivable minus accounts payable -Total assets minus total liabilities Sales minus cost of goods sold Which type of account is retained earnings? -Liability -Asset -Equity -Revenue Equity For purposes of cash flow classification in the statement of cash flows, which item is an operating activity? -Buying equipment -Paying employees -Distributing dividends -Selling bonds Paying employees How does a classified balance sheet provide useful information to a decision maker? -It provides data for a period of time instead of as a point in time. -It distinguishes between current and long-term assets. -It distinguishes liabilities from expenses. -It provides data that are not publicly disclosed. It distinguishes between current and long-term assets. What