WGU C213 Pre-assessment (Accounting) 2022/2023

WGU C213 Pre-assessment (Accounting) 2022/2023 What does accounting focus on? - The impact a business's activities have on its relationships with customers - The impact a business's activities have on the environment. - The impact a business's activities have on its public image. - The impact a business's activities have on its overall financial performance. Ans- The impact a business's activities on its overall financial performance. Which report summarizes cash collections and cash expenditures from operating, investing, and financing activities over a period of time? - Cash receipts and disbursements sheet - Cash flow schedule - Summary of cash receipts - Statement of cash flows Ans- Statement of cash flows Which users would have a primary concern with an organization's ability to provide healthcare benefits? - Competitors - Employees - Vendors - Suppliers Ans- Employees Which benefit does a corporation gain by following Generally Accepted Accounting Principles (GAAP)? - A decrease in its income tax obligations - A decrease in the amount of net income it reports - An increase in its comparability to other companies - An increase in the amount of assets it reports Ans- An increase in its comparability to other companies. Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large publicly traded company? - The Public Company Accounting Oversight Board (PCAOB) - The Financial Accounting Standards Board (FASB) - Another certified public accounting firm (CPA) - The Internal Revenue Service (IRS) Ans- The Public Company Accounting Oversight Board (PCAOB) What has had the most significant impact on accounting practices? Ans- Information technology What two items of information are revealed on the balance sheet? Ans- Ownership and Debt Which term is defined as the residual interest in the net assets of a company? Ans- Owners' equity A corporation has a 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? Ans- $350 Million. Combine the liabilities with assets. 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? Ans- 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? Ans- Cash flows from financing activities Where would an investor find a summary of a company's significant accounting policies? Ans- In the notes to financial statements Which assurance does an external audit report provide for its readers? - The company will be a good credit risk - The company will generate net income. - The company's financial statements fairly reflect its financial position. - The company will generate positive cash flows Ans- The company's financial statements fairly reflect its financial position Order the steps in the decision cycle from first to last: Gather information, prepare financial statements, analyze financial statements, make decision, and implement decision. Ans- Prepare financial statements, analyze financial statements, gather information, make decision, and 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? Ans- 11.0 Market value of shares/net income What does it mean if a company has a debt ratio of 101.5%? Ans- The company has 1.5% more total liabilities than total assets. What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the same? - Continual decrease in salaries - Continual increase in interest - Continual increase in taxes - Continual decrease in sales Ans- Continual decrease in sales Which two cash flow adequacy ratios represent a cash cow?: - 4,510/4932, - 6,991/5,486, - 8,091/9374, - 5220/1875, - or 7589/9210. Ans- 6,991/5,486 and 5,220/1,875 Which formula yields a cash time interest earned ratio of 11? - Cash before interest and taxes of $11,000 / cash paid for income taxes of $1,000 - Cash before interest and taxes of $11,000 / cash paid for interest of $1,000 - Cash before interest and taxes of $11,000 / cash from operations of $1,000 - Cash before interest and taxes of $11,000 / cash paid for acquisitions of $1,000 Ans- Cash before interest and taxes of $11,000/cash paid for interest of $1,000. Which form of debt should be reported in the long-term liability category? - Unearned revenue that will be earned in 9 months. - Notes payable expected to be paid in 18 months. - Accounts payable due in 30 days. - Salaries payable due in 2 weeks Ans- Notes payable expected to be paid in 18 months In January of year 1, a company began doing business as a corporation in order to sell technologyrelated accessories and services. During its first month of operations, the following events occurred: - January 1 The corporation received $1,000,000 in cash in exchange for stock issued to stockholders. - January 3 The corporation borrowed $250,000 from bank. The loan is a four-year loan with an interest rate of 12 percent, payable each year on January 1 beginning in year 2. - January 5 The corporation purchased equipment to be used in the business for $200,000 cash. - January 8 The corporation purchased inventory costing $200,000 by paying $120,000 in cash. The remainder was put on credit accounts with suppliers. - January 15 The corporation hired five employees. Each employee will be paid $1,000 at the end of each month. - January 30 The corporation paid $6,000 cash for a one-year insurance policy. The policy period will begin on February 1, year 1. What will be the impact of the January 5 event on the company's balance sheet on that date? AnsEquipment will increase 200,000 and cash will decrease 200,000 In January of year 1, a company began doing business as a corporation in order to sell technologyrelated accessories and services. During its first month of operations, the following events occurred: - January 1 The corporation received $1,000,000 in cash in exchange for stock issued to stockholders. - January 3 The corporation borrowed $250,000 from bank. The loan is a four-year loan with an interest rate of 12 percent, payable each year on January 1 beginning in year 2. - January 5 The corporation purchased equipment to be used in the business for $200,000 cash. - January 8 The corporation purchased inventory costing $200,000 by paying $120,000 in cash. The remainder was put on credit accounts with suppliers. - January 15 The corporation hired five employees. Each employee will be paid $1,000 at the end of each month. - January 30 The corporation paid $6,000 cash for a one-year insurance policy. The policy period will begin on February 1, year 1. What will be the impact of the January 31 event on the company's balance sheet on that date? AnsPrepaid insurance will increase 6,000 and cash will decrease 6,000 Which two values affect the measurement of net income? - Dividends paid - Stockholder contributions - Operating expenses - Ordinary gains and losses Ans- Operating expenses and ordinary gains and losses Which two items' subtotals are included in a multi-step income statement? - Gross profit - Total assets - Current Liabilities - Income from operations Ans- Gross profit and income from operations A furniture company using accrual accounting purchased 20 sofas in November 2011. In December 2011, 8 of the 20 sofas were sold to customers. The customers all signed contracts agreeing to pay half the amount owed in February 2012 and the remaining half in March 2012. At the time of sale, the company was reasonably sure the customers would pay the amount owed. The furniture company pays its salespeople a commission on each sofa sold, with commissions for December 2011 sales paid in January 2012. The furniture company paid $3,000 for advertising that ran in the local newspaper in November 2011. In which month should advertising costs be expensed? Ans- November 2011 In January of year 1, a company began doing business as a corporation in order to sell technologyrelated accessories and services. During its first month of operations, it focused on obtaining the financing needed to start its operations. In February of year 1, the company sold inventory costing $25,000 for $75,000 cash. In February of year 1, the company provided technology-related services worth $10,000. Customers paid a total of $4,000 in cash for these services and promised to pay the remainder the following month. What will be the total impact of these services provided on the company's balance sheet other than an increase in cash of $4,000? Ans- Accounts receivable will increase 6,000 and retained earnings will increase 10,000. What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000 was based on a 22% increase? -228,140 -182,975 -153,279 -145,860 Ans- 153,279. 153,279 x .22 = 33,721. 153,279 + 33,721 = 187,000. What is is a common category in a statement of cash flows? - Cash from planning activities - Cash from production activities - Cash from marketing activities - Cash from investing activities Ans- Cash from investing activities Which cash flow category would include "cash received from investors"? - Cash from financing activities - Cash from charitable activities - Cash from investing activities - Cash from sponsoring activities Ans- Cash from financing activities Which item is an investing activity - Cash receipts from dividend revenue - Cash receipts from issuance of stock - Cash payments for dividends - Cash payments for purchase of plant assets Ans- Cash payments for purchase of plant assets What impact does the sale of equipment have on the statement of cash flows? - Increase in cash from investing activities - Increase in cash from operating activities - Increase in cash from financing activities - Decrease in cash from operating activities Ans- An increase in cash from investing activities What is known about the direct and indirect methods of preparing statements of cash flows? - The direct method is more popular among large US companies - The indirect method is more popular among large US companies - Both methods have the same popularity among large US companies - Neither method is very popular among large US companies Ans- The indirect method is more popular among large U.S. companies. A company's statement of cash flows includes the following cash transactions: Sales 1,250,000 Inventory Purchase -750,000 Property and Equipment Purchase -270,000 Interest Payment on Long-Term Debt -25,000 Payment of Wages -315,000 Payment of Rent -40,000 Borrowing Long-Term Debt 200,000 Payment of Cash Dividends -15,000 Repurchase of Treasury Stock -40,000 Total Cash Flows -5,000 Assuming the company uses US GAAP standards, what is the total cash flow from financing activities? $175,000 $160,000 $145,000 $120,000 Ans- 145,000. 200,000 - 15,000 - 40,000 = 145,000. Which two examples represent financial statement errors? Choose 2 answer