WGU C213 OA 2024 ACCOUNTING FOR DECISION
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Where would an investor find a summary of a company's significant accounting policies? - ANSWER-In the notes to the financial statements
A furniture company using accrual accounting purchased 20 sofas in November 2011, In December 2011, 8 of the sofas were sold to customers. The customers all signed contracts agreeing to pay half the amount owed in February 2012 and the remaining half in March 2012. At the time of sale, the company was reasonably sure the customers would pay the amount owed.In which month should advertising costs be expended? - ANSWER-November 2011
On May 1, 2011, a company using accrual accounting purchased equipment costing $500,000. It expects the equipment to have a useful life of five years. At the time of purchase, the company also purchased a one-year insurance policy on this equipment, which cost $6,000.How much insurance expense should the company have recognized of the year ending in 2011? - ANSWER-$4,000
What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000 was based on a 22% increase? - ANSWER-$153,279
What does accounting focus on? - ANSWER-The impact a business's activities have on it's overall financial performance 1 / 4
Which report summarizes cash collections and cash expenditures from operating, investing, and financing activities over a period of time? - ANSWER-Statement of cash flows
Which users would have a primary concern with an organization's ability to provide healthcare benefits? - ANSWER-Employees
Which benefit does a corporation gain by following Generally Accepted Accounting Principals (GAAP)? - ANSWER-An increase in its comparability to other companies
Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large publicly traded company? - ANSWER-The FASB
What has had the most significant impact on accounting practices? - ANSWER- Information Technology
What two items of information are revealed on the balance sheet? - ANSWER- Debt, Ownership
What are two common reasons for managers to manipulate reported earnings? - ANSWER-They are preparing to qualify for a bank loan.They are feeling pressured to meet internal sales goals.
Which term is defined as the residual interest in the net assets of a company? - ANSWER-Owner's equity
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A corporation has total liabilities of $300 million, total owner's equity of $100 million, and current assets of $50 million. What is the value of the firm's long-term assets? - ANSWER- $350 million
Which situation should result in revenue recognition on the income statement for the year ending 12/31/14 if the firm is using accrual-basis accounting? - ANSWER-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? - ANSWER-Cash flows from financing activities
What does it mean if a company has a debt ratio of 101.5%? - ANSWER-The company has 1.5% more total liabilities that total assets
Which assurances does an external audit report provide for its readers? - ANSWER-The company's financial statements fairly reflects its financial position
What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the same? - ANSWER-Continual decrease in sales
Which formula yields a cash time interest earned ratio of 11? - ANSWER-Cash before interest and taxes of $11,000/cash paid for interest of $1,000
Which form of debt should be reported in the long-term liability category? - ANSWER-Notes payable expected to be paid in 18 months
Which two values affect the measurement of net income? - ANSWER-Dividend paid, operating expenses 3 / 4
Which two items subtotals are included in a multi-step income statement? - ANSWER-gross profit, income from operations
What is a common category in a statement of cash flows? - ANSWER-Cash from investing activities
Which cash flow category would include cash received from investors? - ANSWER-Cash from financing activities
Which item is an investing activity? - ANSWER-Cash payments for purchase of plant assests
What impact does the sale of equipment have on the statement of cash flows? - ANSWER-Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements of cash flow? - ANSWER-The indirect method is more popular among large US companies
Which two examples represent financial statement errors? - ANSWER-The accounting dept. miscalculates the payroll tax due at year-end, resulting in an inaccurate liability.The accountant unintentionally records amounts as revenue that were prepaid by customers but not yet earned.
Which internal control is intended to ensure that a company does not mistakenly pay a supplier for an invoice that includes more items than were actually received?
- ANSWER-The inventory department counts and inspects items as received and
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forwards the receiving record to accounts payable