WGU C213 FINAL EXAM / ACTUAL TEST QUESTIONS WITH DETAILED VERIFIED
ANSWERS / ALREADY GRADED A+(REAL DEAL)
Question 1
On a classified balance sheet, assets are typically listed in what order?
A) From largest to smallest dollar value.
B) From smallest to largest dollar value.
C) In order of liquidity.
D) In alphabetical order.
Correct Answer: C) In order of liquidity.
Rationale: Assets on a balance sheet are listed based on how quickly they can be converted
into cash. This is known as the order of liquidity. Cash is listed first, followed by short-term
investments, accounts receivable, inventory, and then long-term assets.
Question 2
Which of the following assets would be listed first on a balance sheet?
A) Inventory
B) Accounts Receivable
C) Cash
D) Property, Plant, and Equipment
Correct Answer: C) Cash
Rationale: Cash is the most liquid asset, as it is already in its most spendable form. Therefore,
it is always the first asset listed on a balance sheet.
Question 3
In which section of the balance sheet would you find Treasury Stock?
A) Current Assets
B) Long-Term Liabilities
C) Stockholders' Equity
D) Current Liabilities
Correct Answer: C) Stockholders' Equity
Rationale: Treasury Stock is a contra-equity account, meaning it reduces total stockholders'
,equity. It represents shares of the company's own stock that it has repurchased from the open
market.
Question 4
What is the primary difference in the cost structure between a manufacturing company and a
service company?
A) A service company has direct labor, but a manufacturing company does not.
B) A manufacturing company has direct materials (inventory), but a service company does not.
C) A manufacturing company has administrative costs, but a service company does not.
D) A service company has overhead costs, but a manufacturing company does not.
Correct Answer: B) A manufacturing company has direct materials (inventory), but a service
company does not.
Rationale: Manufacturing companies create physical products, which requires them to
purchase and account for raw materials as inventory (a product cost). Service companies
provide intangible services and do not have inventory of physical goods to sell.
Question 5
A company had sales of $500,000 in 2022. It projects a 15% increase in sales for 2023. What are
the forecasted sales for 2023?
A) $515,000
B) $575,000
C) $75,000
D) $425,000
Correct Answer: B) $575,000
Rationale: To calculate the forecasted sales, multiply the previous year's sales by (1 + growth
rate). $500,000 * 1.15 = $575,000.
Question 6
A company's sales for 2023 are $220,000, which represents a 10% increase over 2022 sales.
What were the sales for 2022?
A) $200,000
,B) $198,000
C) $242,000
D) $210,000
Correct Answer: A) $200,000
Rationale: To find the previous year's sales, divide the current year's sales by (1 + growth
rate). $220,.10 = $200,000.
Question 7
The first step in creating a projected income statement based on a historical income statement
and a sales growth forecast is to:
A) Calculate the new sales figure.
B) Convert the historical income statement into a common-size income statement.
C) Multiply historical expenses by the growth rate.
D) Determine the projected net income.
Correct Answer: B) Convert the historical income statement into a common-size income
statement.
Rationale: Converting the historical statement to a common-size statement (expressing each
line item as a percentage of sales) allows you to apply those same percentages to the newly
forecasted sales figure, making it the foundational first step.
Question 8
What is the primary role of the U.S. Securities and Exchange Commission (SEC)?
A) To set interest rates for the U.S. economy.
B) To insure bank deposits.
C) To regulate U.S. stock exchanges and ensure a fair information environment for investors.
D) To provide legal advice to public companies.
Correct Answer: C) To regulate U.S. stock exchanges and ensure a fair information
environment for investors.
Rationale: The SEC's main mission is to protect investors, maintain fair, orderly, and efficient
markets, and facilitate capital formation. It achieves this by requiring public companies to
disclose meaningful financial and other information to the public.
, Question 9
Which legislative act requires public companies to file annual audited financial statements
(Form 10-K)?
A) The Securities Act of 1933
B) The Securities Act of 1934
C) The Sarbanes-Oxley Act of 2002
D) The Glass-Steagall Act
Correct Answer: B) The Securities Act of 1934
Rationale: The Securities Act of 1934 created the SEC and established the ongoing reporting
requirements for public companies, including the annual 10-K, quarterly 10-Q, and other
periodic reports.
Question 10
The Sarbanes-Oxley Act (SOX) was enacted in response to:
A) The stock market crash of 1929.
B) Massive corporate frauds in the late 1990s and early 2000s.
C) The 2008 financial crisis.
D) The rise of internet-based trading.
Correct Answer: B) Massive corporate frauds in the late 1990s and early 2000s.
Rationale: SOX was a direct congressional response to major accounting scandals at
companies like Enron and WorldCom, and it significantly strengthened corporate governance
and financial reporting regulations.
Question 11
What is the primary advantage of Activity-Based Costing (ABC) over traditional costing systems?
A) It is less expensive and time-consuming to implement.
B) It provides a more accurate allocation of overhead costs to products.
C) It is required by Generally Accepted Accounting Principles (GAAP) for external reporting.
D) It only uses a single, plant-wide overhead rate.
Correct Answer: B) It provides a more accurate allocation of overhead costs to products.
Rationale: ABC uses multiple cost drivers to assign overhead costs based on the actual
ANSWERS / ALREADY GRADED A+(REAL DEAL)
Question 1
On a classified balance sheet, assets are typically listed in what order?
A) From largest to smallest dollar value.
B) From smallest to largest dollar value.
C) In order of liquidity.
D) In alphabetical order.
Correct Answer: C) In order of liquidity.
Rationale: Assets on a balance sheet are listed based on how quickly they can be converted
into cash. This is known as the order of liquidity. Cash is listed first, followed by short-term
investments, accounts receivable, inventory, and then long-term assets.
Question 2
Which of the following assets would be listed first on a balance sheet?
A) Inventory
B) Accounts Receivable
C) Cash
D) Property, Plant, and Equipment
Correct Answer: C) Cash
Rationale: Cash is the most liquid asset, as it is already in its most spendable form. Therefore,
it is always the first asset listed on a balance sheet.
Question 3
In which section of the balance sheet would you find Treasury Stock?
A) Current Assets
B) Long-Term Liabilities
C) Stockholders' Equity
D) Current Liabilities
Correct Answer: C) Stockholders' Equity
Rationale: Treasury Stock is a contra-equity account, meaning it reduces total stockholders'
,equity. It represents shares of the company's own stock that it has repurchased from the open
market.
Question 4
What is the primary difference in the cost structure between a manufacturing company and a
service company?
A) A service company has direct labor, but a manufacturing company does not.
B) A manufacturing company has direct materials (inventory), but a service company does not.
C) A manufacturing company has administrative costs, but a service company does not.
D) A service company has overhead costs, but a manufacturing company does not.
Correct Answer: B) A manufacturing company has direct materials (inventory), but a service
company does not.
Rationale: Manufacturing companies create physical products, which requires them to
purchase and account for raw materials as inventory (a product cost). Service companies
provide intangible services and do not have inventory of physical goods to sell.
Question 5
A company had sales of $500,000 in 2022. It projects a 15% increase in sales for 2023. What are
the forecasted sales for 2023?
A) $515,000
B) $575,000
C) $75,000
D) $425,000
Correct Answer: B) $575,000
Rationale: To calculate the forecasted sales, multiply the previous year's sales by (1 + growth
rate). $500,000 * 1.15 = $575,000.
Question 6
A company's sales for 2023 are $220,000, which represents a 10% increase over 2022 sales.
What were the sales for 2022?
A) $200,000
,B) $198,000
C) $242,000
D) $210,000
Correct Answer: A) $200,000
Rationale: To find the previous year's sales, divide the current year's sales by (1 + growth
rate). $220,.10 = $200,000.
Question 7
The first step in creating a projected income statement based on a historical income statement
and a sales growth forecast is to:
A) Calculate the new sales figure.
B) Convert the historical income statement into a common-size income statement.
C) Multiply historical expenses by the growth rate.
D) Determine the projected net income.
Correct Answer: B) Convert the historical income statement into a common-size income
statement.
Rationale: Converting the historical statement to a common-size statement (expressing each
line item as a percentage of sales) allows you to apply those same percentages to the newly
forecasted sales figure, making it the foundational first step.
Question 8
What is the primary role of the U.S. Securities and Exchange Commission (SEC)?
A) To set interest rates for the U.S. economy.
B) To insure bank deposits.
C) To regulate U.S. stock exchanges and ensure a fair information environment for investors.
D) To provide legal advice to public companies.
Correct Answer: C) To regulate U.S. stock exchanges and ensure a fair information
environment for investors.
Rationale: The SEC's main mission is to protect investors, maintain fair, orderly, and efficient
markets, and facilitate capital formation. It achieves this by requiring public companies to
disclose meaningful financial and other information to the public.
, Question 9
Which legislative act requires public companies to file annual audited financial statements
(Form 10-K)?
A) The Securities Act of 1933
B) The Securities Act of 1934
C) The Sarbanes-Oxley Act of 2002
D) The Glass-Steagall Act
Correct Answer: B) The Securities Act of 1934
Rationale: The Securities Act of 1934 created the SEC and established the ongoing reporting
requirements for public companies, including the annual 10-K, quarterly 10-Q, and other
periodic reports.
Question 10
The Sarbanes-Oxley Act (SOX) was enacted in response to:
A) The stock market crash of 1929.
B) Massive corporate frauds in the late 1990s and early 2000s.
C) The 2008 financial crisis.
D) The rise of internet-based trading.
Correct Answer: B) Massive corporate frauds in the late 1990s and early 2000s.
Rationale: SOX was a direct congressional response to major accounting scandals at
companies like Enron and WorldCom, and it significantly strengthened corporate governance
and financial reporting regulations.
Question 11
What is the primary advantage of Activity-Based Costing (ABC) over traditional costing systems?
A) It is less expensive and time-consuming to implement.
B) It provides a more accurate allocation of overhead costs to products.
C) It is required by Generally Accepted Accounting Principles (GAAP) for external reporting.
D) It only uses a single, plant-wide overhead rate.
Correct Answer: B) It provides a more accurate allocation of overhead costs to products.
Rationale: ABC uses multiple cost drivers to assign overhead costs based on the actual
