WGU C214 Chapter 2 Question and answers verified to pass 2025/2026
1.Accounting is backward-
looking and risk
free.
2.Finance is
forward-looking
and in-volves
3. Cash accounting offers a superior method of analyzing Correct Answer:
massive
False
uncertainty.
a company. (True or False)
While the
cumbersome nature of
accrual account-ing
may cause cash ac-
counting to look
attractive, the truth is
that cash ac-counting
is not a good way to
track firm operations.
The movement of
cash in and out of
the firm dur-ing a
period can lead to a
highly biased view of
the firm.
4. Cash Accounting A system in which
revenue and expenses
are count-ed as they
are actually re-ceived.
Cash accounting: cash in
= revenue; cash out
= ex-pense
,5. Accural Accounting A type of accounting
that recognizes
incomes when they
are earned and ex-
, WGU C214 Chapter 2
penses when they are in-
curred, rather than
when they are
received or paid.
Accrual accounting: Rev-
enues are
recognized when
the earnings process
is complete; ex-
penses are
6. In the accounting world, we use the terms
"matched" to
accrual accounting and accounting
recognized
interchangeably
revenues
GAAP
7. The income statement is the most easily interpreted of False
the basic financial statements. (True or False)
Gross Profit.
Earnings
Before Taxes
8. The basic equation of an income
statement is:
Revenues - liabilities = net income
Assets - expenses = net income
Revenues - expenses = net income
Revenue - net income = liabilities
9. Revenues minus cost of goods sold is:
, The income statement is usually regarded as the most diflcult
to analyze and interpret.
Revenues - expenses = net income
Gross Profit.
1.Accounting is backward-
looking and risk
free.
2.Finance is
forward-looking
and in-volves
3. Cash accounting offers a superior method of analyzing Correct Answer:
massive
False
uncertainty.
a company. (True or False)
While the
cumbersome nature of
accrual account-ing
may cause cash ac-
counting to look
attractive, the truth is
that cash ac-counting
is not a good way to
track firm operations.
The movement of
cash in and out of
the firm dur-ing a
period can lead to a
highly biased view of
the firm.
4. Cash Accounting A system in which
revenue and expenses
are count-ed as they
are actually re-ceived.
Cash accounting: cash in
= revenue; cash out
= ex-pense
,5. Accural Accounting A type of accounting
that recognizes
incomes when they
are earned and ex-
, WGU C214 Chapter 2
penses when they are in-
curred, rather than
when they are
received or paid.
Accrual accounting: Rev-
enues are
recognized when
the earnings process
is complete; ex-
penses are
6. In the accounting world, we use the terms
"matched" to
accrual accounting and accounting
recognized
interchangeably
revenues
GAAP
7. The income statement is the most easily interpreted of False
the basic financial statements. (True or False)
Gross Profit.
Earnings
Before Taxes
8. The basic equation of an income
statement is:
Revenues - liabilities = net income
Assets - expenses = net income
Revenues - expenses = net income
Revenue - net income = liabilities
9. Revenues minus cost of goods sold is:
, The income statement is usually regarded as the most diflcult
to analyze and interpret.
Revenues - expenses = net income
Gross Profit.
