WGU C213 PRE-ASSESSMENT -
ACCOUNTING FOR DECISION
MAKERS PVAC QUESTIONS &
VERIFIED ANSWERS
What does accounting focus on? - Correct Answer ✔✔ 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? - Correct Answer ✔✔
Statement of cash flows
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - Correct Answer ✔✔ Employees
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - Correct Answer ✔✔ The Public Company
Accounting Oversight Board (PCAOB)
What has had the most significant impact on accounting practices? - Correct Answer
✔✔ Information technology
What two items of information are revealed on the balance sheet?
Choose 2 answers - Correct Answer ✔✔ Ownership.
Debt
Which term is defined as the residual interest in the net assets of a company? - Correct
Answer ✔✔ Owners' equity
A corporation has total liabilities of $300 million, total owners' equity of $100 million, and
current assets of $50 million.
What is the value of the firm's long-term assets? - Correct 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? - Correct 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? - Correct Answer ✔✔ Cash flows
from financing activities
Where would an investor find a summary of a company's significant accounting
policies? - Correct Answer ✔✔ In the notes to financial statements
Which assurance does an external audit report provide for its readers? - Correct Answer
✔✔ The company's financial statements fairly reflect its financial position
Reliable - Correct Answer ✔✔ Information that can be verified
Relevant - Correct Answer ✔✔ Information having to do with the matter at hand
Material - Correct Answer ✔✔ Information that is important enough to make a difference
Conservatism - Correct Answer ✔✔ Information related to recognizing losses as they
occur
steps in the decision cycle - Correct Answer ✔✔ 1 Prepare financial statements.
2 Analyze financial statements.
3 Gather information.
4 Make decision.
5 Implement decision
Partial financial information for a company is as follows:
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
Total liabilities $48,561
Stockholders' equity $10,158
Sales $46,997
Net Income $ 3,761
Market value of shares $41,316
What is the price-earnings (PE) ratio for this company? - Correct Answer ✔✔ 11.0
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - Correct Answer ✔✔ Continual decrease in sales
Which two cash flow adequacy ratios represent a cash cow? - Correct Answer ✔✔
$6,991/$5,486. $5,220/$1,875.
Which formula yields a cash times interest earned ratio of 11? - Correct Answer ✔✔
Cash before interest and taxes of $11,000 / cash paid for interest of $1,000
ACCOUNTING FOR DECISION
MAKERS PVAC QUESTIONS &
VERIFIED ANSWERS
What does accounting focus on? - Correct Answer ✔✔ 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? - Correct Answer ✔✔
Statement of cash flows
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - Correct Answer ✔✔ Employees
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - Correct Answer ✔✔ The Public Company
Accounting Oversight Board (PCAOB)
What has had the most significant impact on accounting practices? - Correct Answer
✔✔ Information technology
What two items of information are revealed on the balance sheet?
Choose 2 answers - Correct Answer ✔✔ Ownership.
Debt
Which term is defined as the residual interest in the net assets of a company? - Correct
Answer ✔✔ Owners' equity
A corporation has total liabilities of $300 million, total owners' equity of $100 million, and
current assets of $50 million.
What is the value of the firm's long-term assets? - Correct 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? - Correct 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? - Correct Answer ✔✔ Cash flows
from financing activities
Where would an investor find a summary of a company's significant accounting
policies? - Correct Answer ✔✔ In the notes to financial statements
Which assurance does an external audit report provide for its readers? - Correct Answer
✔✔ The company's financial statements fairly reflect its financial position
Reliable - Correct Answer ✔✔ Information that can be verified
Relevant - Correct Answer ✔✔ Information having to do with the matter at hand
Material - Correct Answer ✔✔ Information that is important enough to make a difference
Conservatism - Correct Answer ✔✔ Information related to recognizing losses as they
occur
steps in the decision cycle - Correct Answer ✔✔ 1 Prepare financial statements.
2 Analyze financial statements.
3 Gather information.
4 Make decision.
5 Implement decision
Partial financial information for a company is as follows:
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
Total liabilities $48,561
Stockholders' equity $10,158
Sales $46,997
Net Income $ 3,761
Market value of shares $41,316
What is the price-earnings (PE) ratio for this company? - Correct Answer ✔✔ 11.0
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - Correct Answer ✔✔ Continual decrease in sales
Which two cash flow adequacy ratios represent a cash cow? - Correct Answer ✔✔
$6,991/$5,486. $5,220/$1,875.
Which formula yields a cash times interest earned ratio of 11? - Correct Answer ✔✔
Cash before interest and taxes of $11,000 / cash paid for interest of $1,000
