WGU D196 Pre-Assessment UPDATED
ACTUAL Exam Questions and CORRECT
Answers
What is the effect of a company's accounting department maintaining high ethical standards? -
CORRECT ANSWER The company's accounting information will increase in value.
Why might employees be interested in their company's financial accounting information? -
CORRECT ANSWER Financial statement data are often used in determining employee
bonuses.
Which group establishes financial accounting rules in the United States? - CORRECT
ANSWER Financial Accounting Standards Board (FASB)
Which report is one of the three primary financial statements? - CORRECT
ANSWER Statement of cash flows
A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equation? - CORRECT
ANSWER Assets decrease by $5,000; expenses increase by $5,000.
What is a transaction? - CORRECT ANSWER 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? -
CORRECT ANSWER Expenses decrease owners' equity.
What is the impact of expenses on the accounting equation? - CORRECT
ANSWER Expenses decrease owners' equity.
, Which type of account are accounts payable and notes payable both examples of? - CORRECT
ANSWER Liability
What is the purpose of the financial accounting cycle? - CORRECT ANSWER 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? - CORRECT ANSWER Assets
Which item is an expense item? - CORRECT ANSWER Cost of goods sold
How is gross profit computed? - CORRECT ANSWER Sales minus cost of goods sold
Which type of account is retained earnings? - CORRECT ANSWER Equity
For purposes of cash flow classification in the statement of cash flows, which item is an
operating activity? - CORRECT ANSWER Paying employees
How does a classified balance sheet provide useful information to a decision maker? -
CORRECT ANSWER It distinguishes between current and long-term assets.
What information does a balance sheet provide to a decision maker? - CORRECT
ANSWER Summary of the financial position of a company at a particular date
What is an account payable? - CORRECT ANSWER The amount owed by a company that
purchased goods or services from a supplier on credit
What is an example of a financial cost that would result from poor direct labor budgeting and
planning? - CORRECT ANSWER Increased hiring, training, and overtime costs
ACTUAL Exam Questions and CORRECT
Answers
What is the effect of a company's accounting department maintaining high ethical standards? -
CORRECT ANSWER The company's accounting information will increase in value.
Why might employees be interested in their company's financial accounting information? -
CORRECT ANSWER Financial statement data are often used in determining employee
bonuses.
Which group establishes financial accounting rules in the United States? - CORRECT
ANSWER Financial Accounting Standards Board (FASB)
Which report is one of the three primary financial statements? - CORRECT
ANSWER Statement of cash flows
A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equation? - CORRECT
ANSWER Assets decrease by $5,000; expenses increase by $5,000.
What is a transaction? - CORRECT ANSWER 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? -
CORRECT ANSWER Expenses decrease owners' equity.
What is the impact of expenses on the accounting equation? - CORRECT
ANSWER Expenses decrease owners' equity.
, Which type of account are accounts payable and notes payable both examples of? - CORRECT
ANSWER Liability
What is the purpose of the financial accounting cycle? - CORRECT ANSWER 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? - CORRECT ANSWER Assets
Which item is an expense item? - CORRECT ANSWER Cost of goods sold
How is gross profit computed? - CORRECT ANSWER Sales minus cost of goods sold
Which type of account is retained earnings? - CORRECT ANSWER Equity
For purposes of cash flow classification in the statement of cash flows, which item is an
operating activity? - CORRECT ANSWER Paying employees
How does a classified balance sheet provide useful information to a decision maker? -
CORRECT ANSWER It distinguishes between current and long-term assets.
What information does a balance sheet provide to a decision maker? - CORRECT
ANSWER Summary of the financial position of a company at a particular date
What is an account payable? - CORRECT ANSWER The amount owed by a company that
purchased goods or services from a supplier on credit
What is an example of a financial cost that would result from poor direct labor budgeting and
planning? - CORRECT ANSWER Increased hiring, training, and overtime costs
