WGU C213 Accounting for Decision Makers Objective
Assessment Question Bank (Latest 2026/2027 Edition) –
Questions, Answers & Detailed Rationales
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SECTION 1: FINANCIAL STATEMENT ANALYSIS AND INTERPRETATION
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Question 1
A manufacturing company's balance sheet shows current assets of $450,000 and
current liabilities of $300,000. The controller is analyzing liquidity position for an
upcoming loan application. What is the company's current ratio, and what does it
indicate?
A. 0.67, indicating potential liquidity problems
B. 1.50, indicating adequate short-term liquidity
C. 2.25, indicating excessive liquidity that may reduce profitability
D. 0.75, indicating the company relies heavily on long-term financing
Correct Answer:
B — 1.50, indicating adequate short-term liquidity
Rationale:
The current ratio is calculated as current assets divided by current liabilities ($450,000 /
$300,000 = 1.50). A ratio of 1.50 indicates the company has $1.50 in current assets for
every $1.00 in current liabilities, suggesting adequate short-term liquidity. Option A
reverses the calculation; option C uses incorrect figures; option D is mathematically
incorrect and misinterprets the ratio's meaning.
Question 2
,A retail corporation reports net income of $2.4 million, preferred dividends of $400,000,
and 800,000 weighted-average common shares outstanding. The financial analyst
needs to calculate earnings per share for the annual report. What is the correct diluted
EPS?
A. $3.00 per share
B. $2.50 per share
C. $2.00 per share
D. $3.50 per share
Correct Answer:
B — $2.50 per share
Rationale:
Basic EPS is calculated as (Net Income - Preferred Dividends) / Weighted-Average
Common Shares = ($2,400,000 - $400,000) / 800,000 = $2.50 per share. Option A
incorrectly uses total net income without subtracting preferred dividends; option C
subtracts preferred dividends twice; option D adds preferred dividends instead of
subtracting them.
Question 3
An electronics firm's income statement shows sales revenue of $5,000,000, cost of
goods sold of $3,200,000, and operating expenses of $1,100,000. The CFO wants to
evaluate operational efficiency before expanding into new markets. What is the
company's operating margin?
A. 14.0%
B. 36.0%
C. 22.0%
D. 78.0%
Correct Answer:
A — 14.0%
,Rationale:
Operating margin is calculated as (Sales - COGS - Operating Expenses) / Sales =
($5,000,000 - $3,200,000 - $1,100,000) / $5,000,000 = $700,000 / $5,000,000 = 14.0%.
Option B is the gross margin; option C is the operating income as a percentage of COGS;
option D incorrectly calculates remaining revenue percentage.
Question 4
A company's statement of cash flows shows operating cash flow of $850,000, investing
cash flow of ($400,000), and financing cash flow of ($200,000). The beginning cash
balance was $150,000. What is the ending cash balance?
A. $1,200,000
B. $400,000
C. $250,000
D. $600,000
Correct Answer:
B — $400,000
Rationale:
Ending cash balance equals beginning balance plus the sum of all cash flows: $150,000
+ $850,000 - $400,000 - $200,000 = $400,000. Option A adds all amounts without
considering outflows as negative; option C only adds operating and financing flows;
option D miscalculates by adding investing outflow.
Question 5
A hospitality group's balance sheet reports total assets of $12,000,000 and total
liabilities of $7,200,000. The board of directors is assessing financial leverage for a
proposed acquisition. What is the debt-to-assets ratio?
A. 0.40 or 40%
B. 0.60 or 60%
, C. 1.67 or 167%
D. 0.67 or 67%
Correct Answer:
B — 0.60 or 60%
Rationale:
The debt-to-assets ratio is calculated as Total Liabilities / Total Assets = $7,200,000 /
$12,000,000 = 0.60 or 60%. Option A is the equity ratio; option C is the debt-to-equity
ratio; option D incorrectly adjusts the calculation.
Question 6
An automotive parts supplier reports accounts receivable of $680,000 and annual credit
sales of $4,080,000. The credit manager wants to evaluate collection efficiency. What is
the accounts receivable turnover ratio?
A. 5.0 times
B. 6.0 times
C. 0.17 times
D. 8.5 times
Correct Answer:
B — 6.0 times
Rationale:
Accounts receivable turnover is calculated as Annual Credit Sales / Average Accounts
Receivable = $4,080,000 / $680,000 = 6.0 times. Option A uses total sales instead of
credit sales; option C inverts the calculation; option D uses an incorrect denominator.
Question 7
Assessment Question Bank (Latest 2026/2027 Edition) –
Questions, Answers & Detailed Rationales
──────────────────────────────
SECTION 1: FINANCIAL STATEMENT ANALYSIS AND INTERPRETATION
──────────────────────────────
Question 1
A manufacturing company's balance sheet shows current assets of $450,000 and
current liabilities of $300,000. The controller is analyzing liquidity position for an
upcoming loan application. What is the company's current ratio, and what does it
indicate?
A. 0.67, indicating potential liquidity problems
B. 1.50, indicating adequate short-term liquidity
C. 2.25, indicating excessive liquidity that may reduce profitability
D. 0.75, indicating the company relies heavily on long-term financing
Correct Answer:
B — 1.50, indicating adequate short-term liquidity
Rationale:
The current ratio is calculated as current assets divided by current liabilities ($450,000 /
$300,000 = 1.50). A ratio of 1.50 indicates the company has $1.50 in current assets for
every $1.00 in current liabilities, suggesting adequate short-term liquidity. Option A
reverses the calculation; option C uses incorrect figures; option D is mathematically
incorrect and misinterprets the ratio's meaning.
Question 2
,A retail corporation reports net income of $2.4 million, preferred dividends of $400,000,
and 800,000 weighted-average common shares outstanding. The financial analyst
needs to calculate earnings per share for the annual report. What is the correct diluted
EPS?
A. $3.00 per share
B. $2.50 per share
C. $2.00 per share
D. $3.50 per share
Correct Answer:
B — $2.50 per share
Rationale:
Basic EPS is calculated as (Net Income - Preferred Dividends) / Weighted-Average
Common Shares = ($2,400,000 - $400,000) / 800,000 = $2.50 per share. Option A
incorrectly uses total net income without subtracting preferred dividends; option C
subtracts preferred dividends twice; option D adds preferred dividends instead of
subtracting them.
Question 3
An electronics firm's income statement shows sales revenue of $5,000,000, cost of
goods sold of $3,200,000, and operating expenses of $1,100,000. The CFO wants to
evaluate operational efficiency before expanding into new markets. What is the
company's operating margin?
A. 14.0%
B. 36.0%
C. 22.0%
D. 78.0%
Correct Answer:
A — 14.0%
,Rationale:
Operating margin is calculated as (Sales - COGS - Operating Expenses) / Sales =
($5,000,000 - $3,200,000 - $1,100,000) / $5,000,000 = $700,000 / $5,000,000 = 14.0%.
Option B is the gross margin; option C is the operating income as a percentage of COGS;
option D incorrectly calculates remaining revenue percentage.
Question 4
A company's statement of cash flows shows operating cash flow of $850,000, investing
cash flow of ($400,000), and financing cash flow of ($200,000). The beginning cash
balance was $150,000. What is the ending cash balance?
A. $1,200,000
B. $400,000
C. $250,000
D. $600,000
Correct Answer:
B — $400,000
Rationale:
Ending cash balance equals beginning balance plus the sum of all cash flows: $150,000
+ $850,000 - $400,000 - $200,000 = $400,000. Option A adds all amounts without
considering outflows as negative; option C only adds operating and financing flows;
option D miscalculates by adding investing outflow.
Question 5
A hospitality group's balance sheet reports total assets of $12,000,000 and total
liabilities of $7,200,000. The board of directors is assessing financial leverage for a
proposed acquisition. What is the debt-to-assets ratio?
A. 0.40 or 40%
B. 0.60 or 60%
, C. 1.67 or 167%
D. 0.67 or 67%
Correct Answer:
B — 0.60 or 60%
Rationale:
The debt-to-assets ratio is calculated as Total Liabilities / Total Assets = $7,200,000 /
$12,000,000 = 0.60 or 60%. Option A is the equity ratio; option C is the debt-to-equity
ratio; option D incorrectly adjusts the calculation.
Question 6
An automotive parts supplier reports accounts receivable of $680,000 and annual credit
sales of $4,080,000. The credit manager wants to evaluate collection efficiency. What is
the accounts receivable turnover ratio?
A. 5.0 times
B. 6.0 times
C. 0.17 times
D. 8.5 times
Correct Answer:
B — 6.0 times
Rationale:
Accounts receivable turnover is calculated as Annual Credit Sales / Average Accounts
Receivable = $4,080,000 / $680,000 = 6.0 times. Option A uses total sales instead of
credit sales; option C inverts the calculation; option D uses an incorrect denominator.
Question 7
