WGU C213 Accounting For Decision
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Financial Statements & Accounting Basics (1-15)
1. Which financial statement reports a company’s financial position at a
specific point in time?
A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Statement of Retained Earnings
Rationale: The balance sheet shows assets, liabilities, and equity as of a
specific date. The income statement covers a period.
2. Net income is computed as:
A) Assets – Liabilities
B) Revenues – Expenses
C) Cash inflows – Cash outflows
D) Equity + Liabilities
Rationale: Net income (or loss) is the difference between revenues
earned and expenses incurred during a period, per accrual accounting.
,3. Which of the following is an operating activity on the statement of
cash flows?
A) Purchase of equipment
B) Issuance of common stock
C) Cash received from customers
D) Payment of a long-term note
Rationale: Operating activities include cash effects of transactions that
enter into net income – e.g., cash sales or collections from customers.
4. A company has total assets
of 500,000𝑎𝑛𝑑𝑡𝑜𝑡𝑎𝑙𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠𝑜𝑓200,000. What is total equity?
A) 700,000 ∗∗ 𝐵)300,000**
C) 200, 000𝐷)500,000
Rationale: Assets = Liabilities + Equity → Equity = 500,000–200,000
= $300,000.
5. Accrual accounting records revenue when:
A) It is earned, regardless of cash receipt
B) Cash is received
C) The customer orders the product
D) The invoice is printed
Rationale: The revenue recognition principle states revenue is
recognized when performance obligation is satisfied, not necessarily
when cash is received.
6. The Statement of Retained Earnings shows:
A) Cash dividends declared and net income
B) Beginning retained earnings + net income – dividends = ending
retained earnings
C) Changes in equity from owner investments
D) Both A and B
, Rationale: It reconciles beginning and ending retained earnings using
net income and dividends.
7. Which account is classified as a current asset?
A) Patent
B) Accounts Receivable
C) Equipment
D) Trademark
Rationale: Current assets are cash or assets expected to be converted to
cash within one year; accounts receivable fit that definition.
8. Depreciation expense is recorded to:
A) Increase the value of fixed assets
B) Allocate the cost of a long-term asset over its useful life
C) Provide cash for replacement of assets
D) Reduce tax liability only
Rationale: Depreciation matches the expense of using an asset with the
revenue it helps generate.
9. Which financial statement ,,,ANSWER,,,s: “How much cash did the
company generate from its operations?”
A) Balance Sheet
B) Income Statement
C) Statement of Cash Flows
D) Statement of Changes in Equity
Rationale: The operating activities section of the cash flow statement
shows cash generated or used by core operations.
10. A company’s beginning retained earnings
is 100,000. 𝑁𝑒𝑡𝑖𝑛𝑐𝑜𝑚𝑒𝑓𝑜𝑟𝑡ℎ𝑒𝑦𝑒𝑎𝑟𝑖𝑠30,000 and dividends paid
are 10,000. 𝐸𝑛𝑑𝑖𝑛𝑔𝑟𝑒𝑡𝑎𝑖𝑛𝑒𝑑𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠𝑖𝑠: 𝐴)140,000
Makers Final Exam Update: Questions &
Answers (Verified Answers), 100 %
Guaranteed Pass
Financial Statements & Accounting Basics (1-15)
1. Which financial statement reports a company’s financial position at a
specific point in time?
A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Statement of Retained Earnings
Rationale: The balance sheet shows assets, liabilities, and equity as of a
specific date. The income statement covers a period.
2. Net income is computed as:
A) Assets – Liabilities
B) Revenues – Expenses
C) Cash inflows – Cash outflows
D) Equity + Liabilities
Rationale: Net income (or loss) is the difference between revenues
earned and expenses incurred during a period, per accrual accounting.
,3. Which of the following is an operating activity on the statement of
cash flows?
A) Purchase of equipment
B) Issuance of common stock
C) Cash received from customers
D) Payment of a long-term note
Rationale: Operating activities include cash effects of transactions that
enter into net income – e.g., cash sales or collections from customers.
4. A company has total assets
of 500,000𝑎𝑛𝑑𝑡𝑜𝑡𝑎𝑙𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠𝑜𝑓200,000. What is total equity?
A) 700,000 ∗∗ 𝐵)300,000**
C) 200, 000𝐷)500,000
Rationale: Assets = Liabilities + Equity → Equity = 500,000–200,000
= $300,000.
5. Accrual accounting records revenue when:
A) It is earned, regardless of cash receipt
B) Cash is received
C) The customer orders the product
D) The invoice is printed
Rationale: The revenue recognition principle states revenue is
recognized when performance obligation is satisfied, not necessarily
when cash is received.
6. The Statement of Retained Earnings shows:
A) Cash dividends declared and net income
B) Beginning retained earnings + net income – dividends = ending
retained earnings
C) Changes in equity from owner investments
D) Both A and B
, Rationale: It reconciles beginning and ending retained earnings using
net income and dividends.
7. Which account is classified as a current asset?
A) Patent
B) Accounts Receivable
C) Equipment
D) Trademark
Rationale: Current assets are cash or assets expected to be converted to
cash within one year; accounts receivable fit that definition.
8. Depreciation expense is recorded to:
A) Increase the value of fixed assets
B) Allocate the cost of a long-term asset over its useful life
C) Provide cash for replacement of assets
D) Reduce tax liability only
Rationale: Depreciation matches the expense of using an asset with the
revenue it helps generate.
9. Which financial statement ,,,ANSWER,,,s: “How much cash did the
company generate from its operations?”
A) Balance Sheet
B) Income Statement
C) Statement of Cash Flows
D) Statement of Changes in Equity
Rationale: The operating activities section of the cash flow statement
shows cash generated or used by core operations.
10. A company’s beginning retained earnings
is 100,000. 𝑁𝑒𝑡𝑖𝑛𝑐𝑜𝑚𝑒𝑓𝑜𝑟𝑡ℎ𝑒𝑦𝑒𝑎𝑟𝑖𝑠30,000 and dividends paid
are 10,000. 𝐸𝑛𝑑𝑖𝑛𝑔𝑟𝑒𝑡𝑎𝑖𝑛𝑒𝑑𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠𝑖𝑠: 𝐴)140,000
