WGU C213 Accounting for Decision Makers
Questions With All Correct & Verified
Answers
What does accounting focus on? Correct answer-The impact a business's activities have on it's
overall financial performance
Which report summarizes cash collections and cash expenditures from operating, investing, and
financing activities over a period of time? Correct answer-Statement of cash flows
Which users would have a primary concern with an organization's ability to provide healthcare
benefits? Correct answer-Employees
Which benefit does a corporation gain by following Generally Accepted Accounting Principals
(GAAP)? Correct answer-An increase in its comparability to other companies
Which body regulates a certified public accounting firm's audit practices when the firm is auditing a
large publicly traded company? Correct answer-The FASB
What has had the most significant impact on accounting practices? Correct answer-Information
Technology
What two items of information are revealed on the balance sheet? Correct answer-Debt,
Ownership
Which term is defined as the residual interest in the net assets of a company? Correct answer-
Owner's equity
A corporation has total liabilities of $300 million, total owner's equity of $100 million, and current
assets of $50 million. What is the value of the firm's long-term assets? Correct answer-$350 million
Which situation should result in revenue recognition on the income statement for the year ending
12/31/14 if the firm is using accrual-basis accounting? Correct answer-In 2014, a company
provides services to a customer for which cash will be collected the next year (2015)
Which category on the statement of cash flows summarizes cash receipts and payments to owners
and creditors of the company? Correct answer-Cash flows from financing activities
Where would an investor find a summary of a company's significant accounting policies? Correct
answer-In the notes to the financial statements
What does it mean if a company has a debt ratio of 101.5%? Correct answer-The company has
1.5% more total liabilities that total assets
Which assurances does an external audit report provide for its readers? Correct answer-The
company's financial statements fairly reflects its financial position
What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the
same? Correct answer-Continual decrease in sales
, Which formula yields a cash time interest earned ratio of 11? Correct answer-Cash before interest
and taxes of $11,000/cash paid for interest of $1,000
Which form of debt should be reported in the long-term liability category? Correct answer-Notes
payable expected to be paid in 18 months
Which two values affect the measurement of net income? Correct answer-Dividend paid, operating
expenses
Which two items subtotals are included in a multi-step income statement? Correct answer-gross
profit, income from operations
A furniture company using accrual accounting purchased 20 sofas in November 2011, In December
2011, 8 of the sofas were sold to customers. The customers all signed contracts agreeing to pay half
the amount owed in February 2012 and the remaining half in March 2012. At the time of sale, the
company was reasonably sure the customers would pay the amount owed.
In which month should advertising costs be expended? Correct answer-November 2011
On May 1, 2011, a company using accural accounting purchased equipment costing $500,000. It
expects the equipment to have a useful life of five years. At the time of purchase, the company also
purchased a one-year insurance policy on this equipment, which cost $6,000.
How much insurance expense should the company have recognized of the year ending in 2011?
Correct answer-$4,000
What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000 was based on a
22% increase? Correct answer-$153,279
What is a common category in a statement of cash flows? Correct answer-Cash from investing
activities
Which cash flow category would include cash received from investors? Correct answer-Cash from
financing activites
Which item is an investing activity? Correct answer-Cash payments for purchase of plant assests
What impact does the sale of equipment have on the statement of cash flows? Correct answer-
Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash flow?
Correct answer-The indirect method is more popular among large US companies
Which two examples represent financial statement errors? Correct answer-The accounting dept.
miscalculates the payroll tax due at year-end, resulting in an inaccurate liability.
The accountant unintentionally records amounts as revenue that were prepaid by customers but not
yet earned.
Which internal control is intended to ensure that a company does not mistakenly pay a supplier for
an invoice that includes more items than were actually received? Correct answer-The inventory
Questions With All Correct & Verified
Answers
What does accounting focus on? Correct answer-The impact a business's activities have on it's
overall financial performance
Which report summarizes cash collections and cash expenditures from operating, investing, and
financing activities over a period of time? Correct answer-Statement of cash flows
Which users would have a primary concern with an organization's ability to provide healthcare
benefits? Correct answer-Employees
Which benefit does a corporation gain by following Generally Accepted Accounting Principals
(GAAP)? Correct answer-An increase in its comparability to other companies
Which body regulates a certified public accounting firm's audit practices when the firm is auditing a
large publicly traded company? Correct answer-The FASB
What has had the most significant impact on accounting practices? Correct answer-Information
Technology
What two items of information are revealed on the balance sheet? Correct answer-Debt,
Ownership
Which term is defined as the residual interest in the net assets of a company? Correct answer-
Owner's equity
A corporation has total liabilities of $300 million, total owner's equity of $100 million, and current
assets of $50 million. What is the value of the firm's long-term assets? Correct answer-$350 million
Which situation should result in revenue recognition on the income statement for the year ending
12/31/14 if the firm is using accrual-basis accounting? Correct answer-In 2014, a company
provides services to a customer for which cash will be collected the next year (2015)
Which category on the statement of cash flows summarizes cash receipts and payments to owners
and creditors of the company? Correct answer-Cash flows from financing activities
Where would an investor find a summary of a company's significant accounting policies? Correct
answer-In the notes to the financial statements
What does it mean if a company has a debt ratio of 101.5%? Correct answer-The company has
1.5% more total liabilities that total assets
Which assurances does an external audit report provide for its readers? Correct answer-The
company's financial statements fairly reflects its financial position
What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the
same? Correct answer-Continual decrease in sales
, Which formula yields a cash time interest earned ratio of 11? Correct answer-Cash before interest
and taxes of $11,000/cash paid for interest of $1,000
Which form of debt should be reported in the long-term liability category? Correct answer-Notes
payable expected to be paid in 18 months
Which two values affect the measurement of net income? Correct answer-Dividend paid, operating
expenses
Which two items subtotals are included in a multi-step income statement? Correct answer-gross
profit, income from operations
A furniture company using accrual accounting purchased 20 sofas in November 2011, In December
2011, 8 of the sofas were sold to customers. The customers all signed contracts agreeing to pay half
the amount owed in February 2012 and the remaining half in March 2012. At the time of sale, the
company was reasonably sure the customers would pay the amount owed.
In which month should advertising costs be expended? Correct answer-November 2011
On May 1, 2011, a company using accural accounting purchased equipment costing $500,000. It
expects the equipment to have a useful life of five years. At the time of purchase, the company also
purchased a one-year insurance policy on this equipment, which cost $6,000.
How much insurance expense should the company have recognized of the year ending in 2011?
Correct answer-$4,000
What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000 was based on a
22% increase? Correct answer-$153,279
What is a common category in a statement of cash flows? Correct answer-Cash from investing
activities
Which cash flow category would include cash received from investors? Correct answer-Cash from
financing activites
Which item is an investing activity? Correct answer-Cash payments for purchase of plant assests
What impact does the sale of equipment have on the statement of cash flows? Correct answer-
Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash flow?
Correct answer-The indirect method is more popular among large US companies
Which two examples represent financial statement errors? Correct answer-The accounting dept.
miscalculates the payroll tax due at year-end, resulting in an inaccurate liability.
The accountant unintentionally records amounts as revenue that were prepaid by customers but not
yet earned.
Which internal control is intended to ensure that a company does not mistakenly pay a supplier for
an invoice that includes more items than were actually received? Correct answer-The inventory
