WGU C213 Accounting for Decision Makers Exam Question Bank
(Latest 2026/2027 Edition) – 100% Correct Questions, Answers &
Detailed Rationales Western Governors University
Total Questions: 50
Time Allowed: 90 Minutes
Passing Score: Competency-Based
Instructions: Select the BEST answer for each question based on accounting principles,
GAAP standards, and managerial accounting concepts.
SECTION 1: FINANCIAL ANALYSIS
Questions 1-20
Q1
A company's balance sheet at December 31, 2026, shows total assets of $850,000 and
total liabilities of $320,000. What is the company's total stockholders' equity at that
date?
A) $1,170,000
B) $530,000
C) $320,000
D) $850,000
,Answer: B
Rationales:
● A: This incorrectly adds assets and liabilities instead of subtracting, violating the
fundamental accounting equation.
● B: Using the accounting equation Assets = Liabilities + Equity, equity equals
$850,000 − $320,000 = $530,000, which correctly represents the owners' residual
claim.
● C: This equals total liabilities, not equity; it ignores the relationship between
assets, liabilities, and equity in the accounting equation.
● D: This equals total assets, not equity; assets are financed by both creditors and
owners, not owners alone.
Q2
A company reports revenues of $450,000 and expenses of $275,000 for the fiscal year
ended June 30, 2026. The company paid $40,000 in dividends during the year. What is
the company's net income for the period?
A) $135,000
B) $175,000
C) $215,000
D) $450,000
Answer: B
Rationales:
● A: This incorrectly subtracts dividends from net income ($175,000 − $40,000),
but dividends are distributions of profit, not expenses deducted to calculate net
income.
● B: Net income equals revenues minus expenses ($450,000 − $275,000 =
$175,000); dividends are not included in the income statement calculation.
, ● C: This incorrectly adds dividends to the difference between revenues and
expenses, treating dividends as if they increase rather than decrease retained
earnings.
● D: This equals total revenues, ignoring all expenses and failing to apply the basic
income statement formula.
Q3
Which financial statement provides information about 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
Answer: C
Rationales:
● A: The income statement reports financial performance over a period of time, not
position at a point in time.
● B: The statement of cash flows reports cash movements during a period, not
financial position at a specific date.
● C: The balance sheet presents assets, liabilities, and equity at a specific date,
providing a snapshot of financial position.
● D: The statement of retained earnings explains changes in retained earnings over
a period, not position at a point in time.
Q4
, A company using accrual accounting provides services to a client in December 2026 but
does not receive payment until January 2027. Under the revenue recognition principle,
when should the company recognize the revenue?
A) January 2027, when cash is received
B) December 2026, when the services are performed
C) Over the 12 months following service delivery
D) When the invoice is mailed to the client
Answer: B
Rationales:
● A: Cash basis accounting recognizes revenue upon receipt, but accrual
accounting requires recognition when earned, not when cash is received.
● B: Under accrual accounting and the revenue recognition principle, revenue is
recognized when earned (services performed), regardless of cash collection
timing.
● C: Revenue from completed services is not deferred over future periods unless it
represents an unearned revenue obligation, which is not the case here.
● D: Mailing an invoice is an administrative act that does not determine when
revenue is earned under GAAP revenue recognition criteria.
Q5
A company has the following account balances at year-end: Cash $45,000, Accounts
Receivable $60,000, Inventory $85,000, Prepaid Insurance $10,000, Accounts Payable
$35,000, and Salaries Payable $15,000. What is the company's current ratio?
A) 2.00
B) 3.25
C) 4.00
D) 5.00
(Latest 2026/2027 Edition) – 100% Correct Questions, Answers &
Detailed Rationales Western Governors University
Total Questions: 50
Time Allowed: 90 Minutes
Passing Score: Competency-Based
Instructions: Select the BEST answer for each question based on accounting principles,
GAAP standards, and managerial accounting concepts.
SECTION 1: FINANCIAL ANALYSIS
Questions 1-20
Q1
A company's balance sheet at December 31, 2026, shows total assets of $850,000 and
total liabilities of $320,000. What is the company's total stockholders' equity at that
date?
A) $1,170,000
B) $530,000
C) $320,000
D) $850,000
,Answer: B
Rationales:
● A: This incorrectly adds assets and liabilities instead of subtracting, violating the
fundamental accounting equation.
● B: Using the accounting equation Assets = Liabilities + Equity, equity equals
$850,000 − $320,000 = $530,000, which correctly represents the owners' residual
claim.
● C: This equals total liabilities, not equity; it ignores the relationship between
assets, liabilities, and equity in the accounting equation.
● D: This equals total assets, not equity; assets are financed by both creditors and
owners, not owners alone.
Q2
A company reports revenues of $450,000 and expenses of $275,000 for the fiscal year
ended June 30, 2026. The company paid $40,000 in dividends during the year. What is
the company's net income for the period?
A) $135,000
B) $175,000
C) $215,000
D) $450,000
Answer: B
Rationales:
● A: This incorrectly subtracts dividends from net income ($175,000 − $40,000),
but dividends are distributions of profit, not expenses deducted to calculate net
income.
● B: Net income equals revenues minus expenses ($450,000 − $275,000 =
$175,000); dividends are not included in the income statement calculation.
, ● C: This incorrectly adds dividends to the difference between revenues and
expenses, treating dividends as if they increase rather than decrease retained
earnings.
● D: This equals total revenues, ignoring all expenses and failing to apply the basic
income statement formula.
Q3
Which financial statement provides information about 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
Answer: C
Rationales:
● A: The income statement reports financial performance over a period of time, not
position at a point in time.
● B: The statement of cash flows reports cash movements during a period, not
financial position at a specific date.
● C: The balance sheet presents assets, liabilities, and equity at a specific date,
providing a snapshot of financial position.
● D: The statement of retained earnings explains changes in retained earnings over
a period, not position at a point in time.
Q4
, A company using accrual accounting provides services to a client in December 2026 but
does not receive payment until January 2027. Under the revenue recognition principle,
when should the company recognize the revenue?
A) January 2027, when cash is received
B) December 2026, when the services are performed
C) Over the 12 months following service delivery
D) When the invoice is mailed to the client
Answer: B
Rationales:
● A: Cash basis accounting recognizes revenue upon receipt, but accrual
accounting requires recognition when earned, not when cash is received.
● B: Under accrual accounting and the revenue recognition principle, revenue is
recognized when earned (services performed), regardless of cash collection
timing.
● C: Revenue from completed services is not deferred over future periods unless it
represents an unearned revenue obligation, which is not the case here.
● D: Mailing an invoice is an administrative act that does not determine when
revenue is earned under GAAP revenue recognition criteria.
Q5
A company has the following account balances at year-end: Cash $45,000, Accounts
Receivable $60,000, Inventory $85,000, Prepaid Insurance $10,000, Accounts Payable
$35,000, and Salaries Payable $15,000. What is the company's current ratio?
A) 2.00
B) 3.25
C) 4.00
D) 5.00
