WGU C213 ACCOUNTING FOR DECISION MAKERS

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WGU C213 ACCOUNTING FOR DECISION MAKERS

OBJECTIVE & PRE ASSESSMENT EXAM STUDY GUIDE

QUESTIONS AND VERIFIED ANSWERS / A+ GRADE

• What does accounting focus on

ANS: The impact a business's activities have on

its overall financial performance

• Which report summarizes cash collections and cash expenditures from operating,

investing, and financing activities over a period of time

ANS: Statement of cash flows

• Which users would have a primary concern with an organization's ability to provide

healthcare benefits

ANS: Employees

• Which benefit does a corporation gain by following Generally Accepted Ac- counting

Principles (GAPP) ANS: An increase in its compatibility to other companies 1 / 4

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• Which body regulates a certified public accounting firm's audit practices when

the firm is auditing a large publicly traded company

ANS: The Public Com- pany Accounting Oversight Board (PACOB)

• What has had the most significant impact on Accounting practices

ANS: Infor- mation technology

• What two items of information are revealed on the balance sheet

ANS: Owner- ship and Debt

• Which term is defined as the residual in the net assets of a company

ANS: Own- ers equity

• Which situation should result in revenue recognition on the income state- ment for

the year ending 12/31/14 if the firm is using accrual accounting ANS: 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

ANS: Cash from financing activities

• Where would an investor find a summary of a company's significant ac-

counting policies

ANS: In the notes to financial statements 2 / 4

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• Which assurance does an external audit report provide for its readers

ANS: -

The company's financial statements fairly reflect its financial position

13. Information that can be verified:

ANS:Reliable

14. Information having to do with the matter at hand:

ANS: Relevant

15. Information that is important enough to make a difference:

ANS: Material

16. Information related to recognizing losses as they occur:

ANS: Conservatism

• What is consistent with a continual decline in gross profit if the firm's cost of goods

sold remains the same

ANS: Continual decrease in sales

• Which form of debt should be reported in the long-term liability category?-

ANS:: Notes payable expected to be paid in 18 months 3 / 4

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• Which values affect the measurement of net income

ANS: Operating expenses

& Ordinary gains and losses

• Which items' subtotals are included in a multi-step income statement

ANS: -

Gross profit & Income from operations

• What is a common category in a statement of cash flows

ANS: Cash from investing activities

• Which cash flow category would include "cash received from investors"?-

: Cash from financing activities

• Which item is an investing activity

ANS: Cash payments for purchase of plant assets

• What impact does the sale of equipment have on the statement of cash flows

ANS: Increase in cash from investing activities

• What is known about the direct and indirect methods of preparing state- ments

of cash flow ANS: The indirect method is more popular among large U.S. companies

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