WGU C213 Final Exam Accounting for Decision Makers

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WGU C213 Final Exam Accounting for Decision Makers Questions and Answers

• Which of the following ratios is used to measure the profit earned on each

dollar invested in a firm ANS Return on equity

• Which of the following transactions could increase a firm's current ratio

ANS - Payment of accounts payable

• What ratio is used to measure a firm's liquidity ANS Current ratio

• Which of the following ratios is calculated using only balance sheet num-

bers ANS Current Ratio

• Which of the following below generally is the most useful in analyzing

companies of different sizes ANS Common-sized financial statement

• In a common-size income statement, each item on the statement is ex-

pressed as a percentage of: ANS Revenue

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• In a common-size balance sheet, using the percent of sales method, each

item on the balance sheet is typically expressed as a percentage of ANS:

Sales Revenue

8. When using common-size statements: ANS Data may be selected for the

same business as of different dates, or for two or more businesses as of the same date

• Which of the following ratios is used to measure a firm's leverage ANS

Assets / Equity

• Which of the following is included in the DuPont framework ANS A

measure of:

Efficiency Leverage Profitability

• Which cash flow ratio reflects a company's ability to finance its capital

expansion through cash from operations ANS Cash flow adequacy

• In general, most companies have significant noncash expenses that re-

duce net income and also cause the cash flow-to-net income ratio to be:

ANS - Greater than 1

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• The particular analytical measures chosen to analyze a company may be

influenced by all BUT which one of the following ANS Product quality or service effectiveness

• Which one of these is NOT one of the benchmarking problems that arises

when analyzing financial statements ANS All of these are benchmarking

problems:

Reported financial statement numbers may actually be a measurement of different 3 / 4

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things Companies that are being compared may be conglomerates Not all companies use the same accounting practices

• Which of the following statements is true about disagreements in the

financial statements of a company ANS Disagreements result when different people arrive at different conclusions based on the same set of facts.

• Which of the following statements is true about errors in the financial

statements of a company ANS Errors are not intentional and when detected are immediately corrected.

• Which of the following is NOT a reason for problems occurring in the

financial statements ANS Safeguards

• Which one of the following errors causes net income to be understated?-

: Failure to record revenue earned but not billed

• If the total amount for Rent Expense is inadvertently posted to Prepaid

Rent at the end of the year, what will be the effect on the year-end financial statements ANS Assets will be overstated

• If a company does NOT record accrued wages expense at the end of

the year, how does this affect the year-end financial statements ANS Overstates owner's equity

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