WGU D196 Exam Practice Questions With Correct Answers | Latest Update Graded A+ (2023/2024)

Which type of account are accounts payable and notes payable both examples of? Liability Asset Expense Equity ANS Liability 5 / 11 10. What is the purpose of the financial accounting cycle? To collect confidential information for management to use as a competitive tool 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 ANS To turn infor- mation about transactions into financial statements 11. 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 revenues and expenses Assets The sum of expenses and dividends ANS Assets 6 / 11 12. Which item is an expense item? Cost of goods sold Loans payable Accounts receivable Accounts payable ANS Cost of goods sold 13. How is gross profit computed? Total revenues minus total expenses Sales minus cost of goods sold Total assets minus total liabilities Accounts receivable minus accounts payable ANS Sales minus cost of goods sold 14. Which type of account is retained earnings? Asset Revenue Equity Liability ANS Equity 15. For purposes of cash flow classification in the statement of cash flows, which item is an operating activity? Distributing dividends Paying employees Buying equipment 7 / 11 Selling bonds ANS Paying employees 16. How does a classified balance sheet provide useful information to a decision maker? It distinguishes between current and long-term assets. It provides data that are not publicly disclosed. It provides data for a period of time instead of as a point in time. It distinguishes liabilities from expenses. ANS It distinguishes between current and long-term assets. 17. What information does a balance sheet provide to a decision maker? Summary of the operating performance of a company during a period Summary of the operating performance of a company at a particular date Summary of the cash flows of a company during a period Summary of the financial position of a company at a particular date ANS Summa- ry of the financial position of a company at a particular date 18. What is an account payable? The amount to be paid by a company for dividends to shareholders The amount to be paid by a company in repayment of both loans and 8 / 11 dividends The amount owed to a company that sold goods or services to a customer on credit The amount owed by a company that purchased goods or services from a supplier on credit ANS The amount owed by a company that purchased goods or services from a supplier on credit 19. What is an example of a financial cost that would result from poor direct labor budgeting and planning? Excessive inventory storage costs Increased hiring, training, and overtime costs Delayed cash collections from credit customers Increased depreciation costs for facilities ANS Increased hiring, training, and over- time costs 20. What does a manager have control over in a cost center? Costs Assets Dividends Revenues ANS Costs 21. What should be considered when developing a measure to evaluate the performance of a manager? Only controllable costs