Updated 2023 WGC C213 Final Exam Accounting For Decision Makers Questions and ASnswers 2023 (A+ GUARANTEE))

Assets = Liabilities + Paid-in Capital + (Revenues - Expenses - Dividends)- : Individual transactions impacting income can be analyzed using the expanded accounting equation, which is: 9. Forecast income for future periods.: What is an important use of an income statement? It requires an understanding of what underlying factors determine the level of a revenue or an expense. 10. Accrual Accounting: What is the process that accountants use in adjusting raw transaction data into refined measures of a firm's economic performance? 11. Financial Capital Maintenance: A concept that states that income exists when the dollar amount of a company's net assets (assets - liabilities, or owners' equity) increases during the year, after excluding the effects of new owner invest- ment or payment of dividends to owners. What is this approach called? 12. Gross Profit: What equals sales revenues minus the cost of goods sold. This is the money you take in from selling goods and how much those good cost you to make. 13. Net Profit: What is equal to gross profit minus fixed costs. Start with gross profit and subtract fixed costs (rent, salaries, taxes, utilities, fees, amortization, depreciation 14. Gross profit is an important number. If a company is not generating enough from the sale of a product or service to cover the costs directly associated with that product or service, that company will not be able to stay in that line of business for long.: Why is Gross Profit an important number? 15. Operating Income: What measures the performance of the fundamental busi- ness operations conducted by a company and is computed as gross profit minus operating expenses? 16. Operating income tells users how well a business is performing in the activities unique to that business, separate from the financing and income tax management policies that are handled at the corporate headquarters level.: What does Operating Income tell a business? 17. Provides interested parties with information that can be used to predict how a company will perform in the future.: What is a key purpose of financialaccounting? 18. Income from Continuing Operations: What is a desired income number that reflects the aspects of a company's performance that is expected to continue into the future? 19. It is computed by subtracting interest expense, income tax expense, and other miscellaneous items from operating income.: How is Income from Continuing Operations Computed? 20. Income from Discontinued Operations. and Extraordinary Gains and Losses: Income from continuing operations is significant because of the two categories of items that it excludes. What are those two categories? 21. Comprehensive Income: What is the number used to reflect an overall mea- sure of the change in a company's wealth during the period is the number used to reflect an overall measure of the change in a company's wealth during the period. 22. Financial Capital Maintenance: The concept that income is defined as the excess of net assets at the end of an accounting period over the net assets at the beginning of the accounting period, excluding effect of transactions with owners is called? 23. Correct Answer: $1,450 $5,500 - $2,000 - $1,500 - $350 - $200 = $1,450: Given the following information, compute income from continuing operations - Cost of Goods Sold $2,000 Extraordinary Item -170 Income Taxes 350 Interest Expense 200 Operating Expenses 1,500 Sales 5,500 24. Correct Answer: $1,280 $5,500 - $2,000 - $1,500 - $350 - $200 - $170 = $1,280: Given the following information, compute net income - Cost of Goods Sold $2,000 Extraordinary Item -170 Income Taxes 350 Interest Expense 200 Operating Expenses 1,500 Sales 5,500 25. Revenue: The reported amount of " " represents the value of the goods and services provided by a company in its business operations. 26. Expenses: The recorded amount of " " represents the value of resources used in generating the reported revenue.