WGU C213 ACCOUNTING FOR DECISION MAKERS FINAL
EXAM 2026/2027 | Latest Version | Questions & Verified
Answers 100% Correct | Pass Guaranteed - A+ Graded
[Section 1: Accounting Foundations & The Accounting Cycle
(Questions 1-12)]
Question 1
Which of the following best describes the primary purpose of accounting information?
A. To maximize stock price for all publicly traded companies
B. To provide quantitative financial information about economic entities that is useful
for decision making by external and internal users [CORRECT]
C. To ensure that all businesses pay the minimum amount of taxes legally required
D. To guarantee that companies will never experience financial losses
Rationale: The primary purpose of accounting is to provide useful financial information
to both internal users (managers, employees) and external users (investors, creditors,
regulators) for economic decision making. This aligns with the conceptual framework
established by FASB and GAAP. Option A is incorrect because accounting does not
maximize stock price; it reports financial position. Option C confuses accounting with
tax planning. Option D is impossible as accounting reports reality, not guarantees
outcomes.
Correct Answer: B
,Question 2
Under GAAP, which organization is primarily responsible for establishing accounting
standards for public companies in the United States?
A. The Internal Revenue Service (IRS)
B. The Securities and Exchange Commission (SEC)
C. The Financial Accounting Standards Board (FASB) [CORRECT]
D. The American Institute of Certified Public Accountants (AICPA)
Rationale: The FASB is the independent, private-sector body designated by the SEC to
establish and improve financial accounting and reporting standards (GAAP) for public
companies. While the SEC has statutory authority and oversight (Option B), it delegates
standard-setting to FASB. The IRS (Option A) administers tax law, not financial reporting
standards. The AICPA (Option D) sets professional ethics and auditing standards but
does not establish GAAP.
Correct Answer: C
Question 3
Which of the following correctly represents the fundamental accounting equation?
A. Assets + Liabilities = Owner's Equity
B. Assets = Liabilities + Owner's Equity [CORRECT]
C. Assets + Owner's Equity = Liabilities
D. Liabilities = Assets + Owner's Equity
Rationale: The fundamental accounting equation states that Assets = Liabilities +
Owner's Equity, reflecting that a company's resources (assets) are financed by either
creditors (liabilities) or owners (equity). This equation must always remain in balance
after every transaction. Options A, C, and D mathematically rearrange the equation
,incorrectly and violate the double-entry accounting system where total debits must
equal total credits.
Correct Answer: B
Question 4
A company purchases office equipment for $15,000 cash. What is the effect on the
accounting equation?
A. Assets increase by $15,000; liabilities increase by $15,000
B. Assets decrease by $15,000; equity decreases by $15,000
C. Total assets remain unchanged; one asset increases and another decreases
[CORRECT]
D. Assets increase by $15,000; equity increases by $15,000
Rationale: Purchasing equipment for cash is an exchange of one asset (Cash) for
another asset (Equipment). Cash decreases by $15,000 while Equipment increases by
$15,000, leaving total assets unchanged with no impact on liabilities or equity. This
demonstrates the dual-aspect concept of double-entry accounting. Options A and D
incorrectly suggest an increase in total assets. Option B incorrectly suggests an
expense recognition that did not occur.
Correct Answer: C
Question 5
Which of the following accounts normally has a debit balance?
A. Accounts Payable
B. Unearned Revenue
C. Accumulated Depreciation
, D. Prepaid Insurance [CORRECT]
Rationale: Prepaid Insurance is an asset account, and all asset accounts normally carry
debit balances. Accounts Payable (Option A) and Unearned Revenue (Option B) are
liability accounts with normal credit balances. Accumulated Depreciation (Option C) is a
contra-asset account with a normal credit balance that reduces the book value of fixed
assets. Under GAAP, assets = debits, liabilities = credits, equity = credits, revenues =
credits, expenses = debits, and dividends = debits.
Correct Answer: D
Question 6
On December 31, a company has earned $4,200 of revenue that has not yet been billed
to the customer. What is the correct adjusting journal entry?
A. Debit Cash $4,200; Credit Revenue $4,200
B. Debit Accounts Receivable $4,200; Credit Revenue $4,200 [CORRECT]
C. Debit Revenue $4,200; Credit Accounts Receivable $4,200
D. Debit Unearned Revenue $4,200; Credit Revenue $4,200
Rationale: This is an accrued revenue adjustment under the revenue recognition
principle (ASC 606). The company has earned revenue but has not yet recorded it or
billed the customer. The correct entry debits Accounts Receivable (asset increases) and
credits Revenue (equity increases via retained earnings). Option A is incorrect because
cash was not received. Option C reverses the debit/credit rules. Option D applies to
unearned revenue that has been earned, not accrued revenue.
Correct Answer: B
Question 7
EXAM 2026/2027 | Latest Version | Questions & Verified
Answers 100% Correct | Pass Guaranteed - A+ Graded
[Section 1: Accounting Foundations & The Accounting Cycle
(Questions 1-12)]
Question 1
Which of the following best describes the primary purpose of accounting information?
A. To maximize stock price for all publicly traded companies
B. To provide quantitative financial information about economic entities that is useful
for decision making by external and internal users [CORRECT]
C. To ensure that all businesses pay the minimum amount of taxes legally required
D. To guarantee that companies will never experience financial losses
Rationale: The primary purpose of accounting is to provide useful financial information
to both internal users (managers, employees) and external users (investors, creditors,
regulators) for economic decision making. This aligns with the conceptual framework
established by FASB and GAAP. Option A is incorrect because accounting does not
maximize stock price; it reports financial position. Option C confuses accounting with
tax planning. Option D is impossible as accounting reports reality, not guarantees
outcomes.
Correct Answer: B
,Question 2
Under GAAP, which organization is primarily responsible for establishing accounting
standards for public companies in the United States?
A. The Internal Revenue Service (IRS)
B. The Securities and Exchange Commission (SEC)
C. The Financial Accounting Standards Board (FASB) [CORRECT]
D. The American Institute of Certified Public Accountants (AICPA)
Rationale: The FASB is the independent, private-sector body designated by the SEC to
establish and improve financial accounting and reporting standards (GAAP) for public
companies. While the SEC has statutory authority and oversight (Option B), it delegates
standard-setting to FASB. The IRS (Option A) administers tax law, not financial reporting
standards. The AICPA (Option D) sets professional ethics and auditing standards but
does not establish GAAP.
Correct Answer: C
Question 3
Which of the following correctly represents the fundamental accounting equation?
A. Assets + Liabilities = Owner's Equity
B. Assets = Liabilities + Owner's Equity [CORRECT]
C. Assets + Owner's Equity = Liabilities
D. Liabilities = Assets + Owner's Equity
Rationale: The fundamental accounting equation states that Assets = Liabilities +
Owner's Equity, reflecting that a company's resources (assets) are financed by either
creditors (liabilities) or owners (equity). This equation must always remain in balance
after every transaction. Options A, C, and D mathematically rearrange the equation
,incorrectly and violate the double-entry accounting system where total debits must
equal total credits.
Correct Answer: B
Question 4
A company purchases office equipment for $15,000 cash. What is the effect on the
accounting equation?
A. Assets increase by $15,000; liabilities increase by $15,000
B. Assets decrease by $15,000; equity decreases by $15,000
C. Total assets remain unchanged; one asset increases and another decreases
[CORRECT]
D. Assets increase by $15,000; equity increases by $15,000
Rationale: Purchasing equipment for cash is an exchange of one asset (Cash) for
another asset (Equipment). Cash decreases by $15,000 while Equipment increases by
$15,000, leaving total assets unchanged with no impact on liabilities or equity. This
demonstrates the dual-aspect concept of double-entry accounting. Options A and D
incorrectly suggest an increase in total assets. Option B incorrectly suggests an
expense recognition that did not occur.
Correct Answer: C
Question 5
Which of the following accounts normally has a debit balance?
A. Accounts Payable
B. Unearned Revenue
C. Accumulated Depreciation
, D. Prepaid Insurance [CORRECT]
Rationale: Prepaid Insurance is an asset account, and all asset accounts normally carry
debit balances. Accounts Payable (Option A) and Unearned Revenue (Option B) are
liability accounts with normal credit balances. Accumulated Depreciation (Option C) is a
contra-asset account with a normal credit balance that reduces the book value of fixed
assets. Under GAAP, assets = debits, liabilities = credits, equity = credits, revenues =
credits, expenses = debits, and dividends = debits.
Correct Answer: D
Question 6
On December 31, a company has earned $4,200 of revenue that has not yet been billed
to the customer. What is the correct adjusting journal entry?
A. Debit Cash $4,200; Credit Revenue $4,200
B. Debit Accounts Receivable $4,200; Credit Revenue $4,200 [CORRECT]
C. Debit Revenue $4,200; Credit Accounts Receivable $4,200
D. Debit Unearned Revenue $4,200; Credit Revenue $4,200
Rationale: This is an accrued revenue adjustment under the revenue recognition
principle (ASC 606). The company has earned revenue but has not yet recorded it or
billed the customer. The correct entry debits Accounts Receivable (asset increases) and
credits Revenue (equity increases via retained earnings). Option A is incorrect because
cash was not received. Option C reverses the debit/credit rules. Option D applies to
unearned revenue that has been earned, not accrued revenue.
Correct Answer: B
Question 7
