1
WGU C213 Accounting for
Decision Makers 2025 –
Actual Exam Questions and
Verified Answers | Object
Assessment | 100% Correct |
A Grade
1. What is the primary purpose of accounting in a business?
A. To manage employee performance
B. To provide quantitative financial information for decision-making
C. To ensure compliance with environmental regulations
D. To track customer satisfaction
Correct Answer: B (To provide quantitative financial information for decision-
making)
Rationale: Accounting focuses on recording, summarizing, and reporting financial data
to aid stakeholders in making informed economic decisions. Stice & Stice, Accounting for
MBAs, Ch. 1.
2. Which financial statement summarizes a company’s revenues and expenses over a
period?
A. Balance Sheet
B. Statement of Cash Flows
C. Income Statement
D. Statement of Retained Earnings
Correct Answer: C (Income Statement)
Rationale: The income statement reports revenues, expenses, and net income or loss for
a specific period, reflecting operational performance. Stice & Stice, Accounting for
MBAs, Ch. 2.
3. Which of the following is NOT one of the four general types of financial statement
notes?
A. Significant accounting policies
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B. Additional information about summary totals
C. Supplementary information required by the IRS
D. Disclosure of information not recognized
Correct Answer: C (Supplementary information required by the IRS)
Rationale: Financial statement notes include significant accounting policies, additional
details on totals, and unrecognized information (e.g., lawsuits), but IRS-specific
supplementary information is not a standard category. Stice & Stice, Accounting for
MBAs, Ch. 2.
4. A company’s balance sheet shows assets of $500,000, liabilities of $200,000, and
stockholders’ equity of $300,000. What does this indicate?
A. The company is insolvent
B. The accounting equation is balanced
C. The company has negative cash flow
D. The company has no retained earnings
Correct Answer: B (The accounting equation is balanced)
Rationale: The accounting equation (Assets = Liabilities + Equity) is satisfied: $500,000
= $200,000 + $300,000. Stice & Stice, Accounting for MBAs, Ch. 2.
5. What does the statement of cash flows primarily report?
A. Net income for the period
B. Cash inflows and outflows from operating, investing, and financing activities
C. Changes in stockholders’ equity
D. Total assets at year-end
Correct Answer: B (Cash inflows and outflows from operating, investing, and
financing activities)
Rationale: The statement of cash flows categorizes cash activities into operating,
investing, and financing to show cash movement. Stice & Stice, Accounting for MBAs,
Ch. 4.
6. Which organization has the authority to establish accounting standards for publicly
held companies in the U.S.?
A. Internal Revenue Service (IRS)
B. Financial Accounting Standards Board (FASB)
C. Securities and Exchange Commission (SEC)
D. Public Company Accounting Oversight Board (PCAOB)
Correct Answer: B (Financial Accounting Standards Board (FASB))
Rationale: The FASB sets Generally Accepted Accounting Principles (GAAP) for U.S.
public companies, while the SEC oversees compliance. Stice & Stice, Accounting for
MBAs, Ch. 1.
7. If a company fails to record accrued wages at year-end, how does this affect the
financial statements?
A. Overstates assets
B. Understates liabilities
C. Understates revenues
D. Overstates cash flow
Correct Answer: B (Understates liabilities)
Rationale: Failing to record accrued wages understates liabilities (wages payable) and
overstates net income and equity. Stice & Stice, Accounting for MBAs, Ch. 3.
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8. Which of the following is an example of a significant accounting policy disclosed in
financial statement notes?
A. The outcome of a pending lawsuit
B. The method used to estimate depreciation
C. The company’s marketing strategy
D. Employee performance reviews
Correct Answer: B (The method used to estimate depreciation)
Rationale: Significant accounting policies, like depreciation methods, are disclosed to
explain how financial figures are calculated. Stice & Stice, Accounting for MBAs, Ch. 2.
9. A company reports $2,000 in cost of goods sold, $1,500 in operating expenses, $200
in interest expense, $350 in income taxes, and a $170 extraordinary loss. If revenues
are $4,500, what is the operating income?
A. $2,000
B. $2,500
C. $1,950
D. $1,780
Correct Answer: B ($2,500)
Rationale: Operating income = Revenues − Cost of Goods Sold − Operating Expenses =
$4,500 − $2,000 − $1,500 = $2,500. Interest, taxes, and extraordinary items are excluded.
Stice & Stice, Accounting for MBAs, Ch. 3.
10. Which of the following activities would internal auditors NOT typically perform?
A. Detect fraud
B. Evaluate internal controls
C. Prepare primary financial statements
D. Assist with operational efficiency
Correct Answer: C (Prepare primary financial statements)
Rationale: Internal auditors focus on controls, fraud detection, and efficiency, not
preparing financial statements, which is management’s responsibility. Stice & Stice,
Accounting for MBAs, Ch. 1.
11. What is the purpose of the accrual basis of accounting?
A. Record cash transactions only
B. Match expenses with related revenues in the same period
C. Report expenses when cash is paid
D. Track inventory levels only
Correct Answer: B (Match expenses with related revenues in the same period)
Rationale: Accrual accounting recognizes revenues and expenses when earned or
incurred, not when cash changes hands, ensuring accurate period matching. Stice & Stice,
Accounting for MBAs, Ch. 3.
12. A company’s beginning cash balance is $5,000. Operating activities provide
$100,000, investing activities use $50,000, and financing activities use $30,000. What
is the ending cash balance?
A. $25,000
B. $15,000
C. $5,000
D. $75,000
Correct Answer: B ($15,000)
WGU C213 Accounting for
Decision Makers 2025 –
Actual Exam Questions and
Verified Answers | Object
Assessment | 100% Correct |
A Grade
1. What is the primary purpose of accounting in a business?
A. To manage employee performance
B. To provide quantitative financial information for decision-making
C. To ensure compliance with environmental regulations
D. To track customer satisfaction
Correct Answer: B (To provide quantitative financial information for decision-
making)
Rationale: Accounting focuses on recording, summarizing, and reporting financial data
to aid stakeholders in making informed economic decisions. Stice & Stice, Accounting for
MBAs, Ch. 1.
2. Which financial statement summarizes a company’s revenues and expenses over a
period?
A. Balance Sheet
B. Statement of Cash Flows
C. Income Statement
D. Statement of Retained Earnings
Correct Answer: C (Income Statement)
Rationale: The income statement reports revenues, expenses, and net income or loss for
a specific period, reflecting operational performance. Stice & Stice, Accounting for
MBAs, Ch. 2.
3. Which of the following is NOT one of the four general types of financial statement
notes?
A. Significant accounting policies
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B. Additional information about summary totals
C. Supplementary information required by the IRS
D. Disclosure of information not recognized
Correct Answer: C (Supplementary information required by the IRS)
Rationale: Financial statement notes include significant accounting policies, additional
details on totals, and unrecognized information (e.g., lawsuits), but IRS-specific
supplementary information is not a standard category. Stice & Stice, Accounting for
MBAs, Ch. 2.
4. A company’s balance sheet shows assets of $500,000, liabilities of $200,000, and
stockholders’ equity of $300,000. What does this indicate?
A. The company is insolvent
B. The accounting equation is balanced
C. The company has negative cash flow
D. The company has no retained earnings
Correct Answer: B (The accounting equation is balanced)
Rationale: The accounting equation (Assets = Liabilities + Equity) is satisfied: $500,000
= $200,000 + $300,000. Stice & Stice, Accounting for MBAs, Ch. 2.
5. What does the statement of cash flows primarily report?
A. Net income for the period
B. Cash inflows and outflows from operating, investing, and financing activities
C. Changes in stockholders’ equity
D. Total assets at year-end
Correct Answer: B (Cash inflows and outflows from operating, investing, and
financing activities)
Rationale: The statement of cash flows categorizes cash activities into operating,
investing, and financing to show cash movement. Stice & Stice, Accounting for MBAs,
Ch. 4.
6. Which organization has the authority to establish accounting standards for publicly
held companies in the U.S.?
A. Internal Revenue Service (IRS)
B. Financial Accounting Standards Board (FASB)
C. Securities and Exchange Commission (SEC)
D. Public Company Accounting Oversight Board (PCAOB)
Correct Answer: B (Financial Accounting Standards Board (FASB))
Rationale: The FASB sets Generally Accepted Accounting Principles (GAAP) for U.S.
public companies, while the SEC oversees compliance. Stice & Stice, Accounting for
MBAs, Ch. 1.
7. If a company fails to record accrued wages at year-end, how does this affect the
financial statements?
A. Overstates assets
B. Understates liabilities
C. Understates revenues
D. Overstates cash flow
Correct Answer: B (Understates liabilities)
Rationale: Failing to record accrued wages understates liabilities (wages payable) and
overstates net income and equity. Stice & Stice, Accounting for MBAs, Ch. 3.
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8. Which of the following is an example of a significant accounting policy disclosed in
financial statement notes?
A. The outcome of a pending lawsuit
B. The method used to estimate depreciation
C. The company’s marketing strategy
D. Employee performance reviews
Correct Answer: B (The method used to estimate depreciation)
Rationale: Significant accounting policies, like depreciation methods, are disclosed to
explain how financial figures are calculated. Stice & Stice, Accounting for MBAs, Ch. 2.
9. A company reports $2,000 in cost of goods sold, $1,500 in operating expenses, $200
in interest expense, $350 in income taxes, and a $170 extraordinary loss. If revenues
are $4,500, what is the operating income?
A. $2,000
B. $2,500
C. $1,950
D. $1,780
Correct Answer: B ($2,500)
Rationale: Operating income = Revenues − Cost of Goods Sold − Operating Expenses =
$4,500 − $2,000 − $1,500 = $2,500. Interest, taxes, and extraordinary items are excluded.
Stice & Stice, Accounting for MBAs, Ch. 3.
10. Which of the following activities would internal auditors NOT typically perform?
A. Detect fraud
B. Evaluate internal controls
C. Prepare primary financial statements
D. Assist with operational efficiency
Correct Answer: C (Prepare primary financial statements)
Rationale: Internal auditors focus on controls, fraud detection, and efficiency, not
preparing financial statements, which is management’s responsibility. Stice & Stice,
Accounting for MBAs, Ch. 1.
11. What is the purpose of the accrual basis of accounting?
A. Record cash transactions only
B. Match expenses with related revenues in the same period
C. Report expenses when cash is paid
D. Track inventory levels only
Correct Answer: B (Match expenses with related revenues in the same period)
Rationale: Accrual accounting recognizes revenues and expenses when earned or
incurred, not when cash changes hands, ensuring accurate period matching. Stice & Stice,
Accounting for MBAs, Ch. 3.
12. A company’s beginning cash balance is $5,000. Operating activities provide
$100,000, investing activities use $50,000, and financing activities use $30,000. What
is the ending cash balance?
A. $25,000
B. $15,000
C. $5,000
D. $75,000
Correct Answer: B ($15,000)
