WGU D774
Objective Assessment
Introduction to Business Accounting
Pass on the first attempt.
This comprehensive resource includes:
❖ full version of the Objective Assessment Exam
❖ 70 Actual Exam Questions & Verified Answers
❖ Multiple-choice & Expert Verified Explanation
❖ designed to help you ace the exam.
❖ Anyone who needs clear, concise guidance to pass
,### 1. What is contained in Securities and Exchange Commission
Form 10-K?
A) Quarterly earnings report
B) Annual audited financial statements
C) Internal managerial reports
D) Tax filings
Correct Answer: B) Annual audited financial statements
Expert Rationale:
Form 10-K contains comprehensive audited financial information and
disclosures about a publicly traded company’s financial health, required by
the SEC to protect investors.
---
### 2. Why would a company's employees be directly interested in the
company's income statement?
A) To determine the company’s liquidity crisis status only
B) To assess the current profitability, performance, and liquidity of the
company
C) To calculate dividends they will receive
D) To prepare their tax returns
Correct Answer: B) To assess the current profitability, performance, and
liquidity of the company
Expert Rationale:
Employees rely on the income statement to gauge company stability and
growth prospects, which impact job security and potential for raises or
bonuses.
,---
### 3. Which information is contained in the reported amount of net
income?
A) Revenues minus dividends
B) The amount by which expenses exceed revenues
C) The amount by which revenues exceed expenses
D) Cash inflows minus cash outflows
Correct Answer: C) The amount by which revenues exceed expenses
Expert Rationale:
Net income represents the residual earnings after all operating costs,
expenses, and taxes—essential for assessing profitability.
---
### 4. Which measurement is highlighted in the multi-step format for
the income statement?
A) Gross profit
B) Operating income
C) Net sales
D) Cash balance
Correct Answer: B) Operating income
Expert Rationale:
The multi-step income statement separates operating revenues and
expenses from non-operating items, emphasizing operating income as a
key profitability metric before interest and taxes.
---
, ### 5. Which label refers to the costs of buying or making the
products a company sells?
A) Operating expenses
B) Cost of sales
C) Administrative expenses
D) Selling expenses
Correct Answer: B) Cost of sales
Expert Rationale:
Cost of sales (or cost of goods sold) reflects the direct costs attributable to
the production or purchase of goods sold during the period.
---
### 6. Which item is listed first on the income statement?
A) Net income
B) Expenses
C) Revenues
D) Cost of goods sold
Correct Answer: C) Revenues
Expert Rationale:
Income statements start with revenues (sales) earned, which serve as the
basis for calculating subsequent line items like gross profit and net income.
### 7. Who performs external audits of financial statements?
A) Internal accountants
B) Certified Public Accountant (CPA)
Objective Assessment
Introduction to Business Accounting
Pass on the first attempt.
This comprehensive resource includes:
❖ full version of the Objective Assessment Exam
❖ 70 Actual Exam Questions & Verified Answers
❖ Multiple-choice & Expert Verified Explanation
❖ designed to help you ace the exam.
❖ Anyone who needs clear, concise guidance to pass
,### 1. What is contained in Securities and Exchange Commission
Form 10-K?
A) Quarterly earnings report
B) Annual audited financial statements
C) Internal managerial reports
D) Tax filings
Correct Answer: B) Annual audited financial statements
Expert Rationale:
Form 10-K contains comprehensive audited financial information and
disclosures about a publicly traded company’s financial health, required by
the SEC to protect investors.
---
### 2. Why would a company's employees be directly interested in the
company's income statement?
A) To determine the company’s liquidity crisis status only
B) To assess the current profitability, performance, and liquidity of the
company
C) To calculate dividends they will receive
D) To prepare their tax returns
Correct Answer: B) To assess the current profitability, performance, and
liquidity of the company
Expert Rationale:
Employees rely on the income statement to gauge company stability and
growth prospects, which impact job security and potential for raises or
bonuses.
,---
### 3. Which information is contained in the reported amount of net
income?
A) Revenues minus dividends
B) The amount by which expenses exceed revenues
C) The amount by which revenues exceed expenses
D) Cash inflows minus cash outflows
Correct Answer: C) The amount by which revenues exceed expenses
Expert Rationale:
Net income represents the residual earnings after all operating costs,
expenses, and taxes—essential for assessing profitability.
---
### 4. Which measurement is highlighted in the multi-step format for
the income statement?
A) Gross profit
B) Operating income
C) Net sales
D) Cash balance
Correct Answer: B) Operating income
Expert Rationale:
The multi-step income statement separates operating revenues and
expenses from non-operating items, emphasizing operating income as a
key profitability metric before interest and taxes.
---
, ### 5. Which label refers to the costs of buying or making the
products a company sells?
A) Operating expenses
B) Cost of sales
C) Administrative expenses
D) Selling expenses
Correct Answer: B) Cost of sales
Expert Rationale:
Cost of sales (or cost of goods sold) reflects the direct costs attributable to
the production or purchase of goods sold during the period.
---
### 6. Which item is listed first on the income statement?
A) Net income
B) Expenses
C) Revenues
D) Cost of goods sold
Correct Answer: C) Revenues
Expert Rationale:
Income statements start with revenues (sales) earned, which serve as the
basis for calculating subsequent line items like gross profit and net income.
### 7. Who performs external audits of financial statements?
A) Internal accountants
B) Certified Public Accountant (CPA)
