WGU C213 PA & OA Exam Study Guide 2025-2026 / Verified Prep
Material with Comprehensive Answers
Western Governors University
The impact a business's activities have on its overall financial performance
What does accounting focus on?
Statement of cash flows
Which report summarizes cash collections and cash expenditures from operating, investing, and financing
activities over a period of time?
Employees
Which users would have a primary concern with an organization's ability to provide healthcare benefits?
An increase in its compatibility to other companies
Which benefit does a corporation gain by following Generally Accepted Accounting Principles (GAPP)?
The Public Company Accounting Oversight Board (PACOB)
Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large
publicly traded company?
Information technology
What has had the most significant impact on Accounting practices?
Ownership and Debt
What two items of information are revealed on the balance sheet?
Owners equity
Which term is defined as the residual in the net assets of a company?
In 2014, a company provides services to a customer for which cash will be collected the next year (2015).
Which situation should result in revenue recognition on the income statement for the year ending 12/31/14 if the
firm is using accrual accounting?
Cash from financing activities
Which category on the statement of cash flows summarizes cash receipts and payments to owners and creditors
of the company?
In the notes to financial statements
Where would an investor find a summary of a company's significant accounting policies?
The company's financial statements fairly reflect its financial position
,Which assurance does an external audit report provide for its readers?
Reliable
Information that can be verified
Relevant
Information having to do with the matter at hand
Material
Information that is important enough to make a difference
Conservatism
Information related to recognizing losses as they occur
Continual decrease in sales
What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the same?
Notes payable expected to be paid in 18 months
Which form of debt should be reported in the long-term liability category?
Operating expenses &
Ordinary gains and losses
Which values affect the measurement of net income?
Gross profit &
Income from operations
Which items' subtotals are included in a multi-step income statement?
Cash from investing activities
What is a common category in a statement of cash flows?
Cash from financing activities
Which cash flow category would include "cash received from investors"?
Cash payments for purchase of plant assets
Which item is an investing activity?
Increase in cash from investing activities
What impact does the sale of equipment have on the statement of cash flows?
The indirect method is more popular among large U.S. companies
What is known about the direct and indirect methods of preparing statements of cash flow?
, The inventory department counts and inspects items as received and forwards the receiving record to
accounts payable.
Which internal control is intended to ensure that a company does not mistakenly pay a supplier for an invoice
that includes more items than were actually received?
Pressure to meet internal sales goals &
Preparing to qualify for a bank loan
What are common reasons for managers to manipulate reported earnings?
Firms must not provide certain non-audit services to audit clients, such as management functions or legal
services. &
Firms must report to and be retained by the audit committee rather than the CFO or other company
management.
Which requirements must accounting firms that audit public companies meet under the Sarbanes-Oxley Act?
They search for and investigate fraud.
&
They review financial records and internal controls.
Which actions do internal auditors perform to assist in maintaining the integrity of financial statements?
They ensure that financial statement users are provided with reliable information to use in decision
making
What is a significant role of the U.S. Securities and Exchange Commission (SEC) in financial reporting?
A better insight for management so a business can perform more effectively
&
A competitive edge to a business by providing its managers with the detailed data needed to make
decisions
What does management accounting provide?
Management accounting is used primarily for internal planning, control, and evaluation.
How does management accounting differ from financial accounting?
Inventory
Which account is seen on the balance sheet of a manufacturing company but not on the balance sheet of a
service-oriented company?
Differential cost
What is a cost that will change in the future based upon the decision made?
Administrative expenses &
Material with Comprehensive Answers
Western Governors University
The impact a business's activities have on its overall financial performance
What does accounting focus on?
Statement of cash flows
Which report summarizes cash collections and cash expenditures from operating, investing, and financing
activities over a period of time?
Employees
Which users would have a primary concern with an organization's ability to provide healthcare benefits?
An increase in its compatibility to other companies
Which benefit does a corporation gain by following Generally Accepted Accounting Principles (GAPP)?
The Public Company Accounting Oversight Board (PACOB)
Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large
publicly traded company?
Information technology
What has had the most significant impact on Accounting practices?
Ownership and Debt
What two items of information are revealed on the balance sheet?
Owners equity
Which term is defined as the residual in the net assets of a company?
In 2014, a company provides services to a customer for which cash will be collected the next year (2015).
Which situation should result in revenue recognition on the income statement for the year ending 12/31/14 if the
firm is using accrual accounting?
Cash from financing activities
Which category on the statement of cash flows summarizes cash receipts and payments to owners and creditors
of the company?
In the notes to financial statements
Where would an investor find a summary of a company's significant accounting policies?
The company's financial statements fairly reflect its financial position
,Which assurance does an external audit report provide for its readers?
Reliable
Information that can be verified
Relevant
Information having to do with the matter at hand
Material
Information that is important enough to make a difference
Conservatism
Information related to recognizing losses as they occur
Continual decrease in sales
What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the same?
Notes payable expected to be paid in 18 months
Which form of debt should be reported in the long-term liability category?
Operating expenses &
Ordinary gains and losses
Which values affect the measurement of net income?
Gross profit &
Income from operations
Which items' subtotals are included in a multi-step income statement?
Cash from investing activities
What is a common category in a statement of cash flows?
Cash from financing activities
Which cash flow category would include "cash received from investors"?
Cash payments for purchase of plant assets
Which item is an investing activity?
Increase in cash from investing activities
What impact does the sale of equipment have on the statement of cash flows?
The indirect method is more popular among large U.S. companies
What is known about the direct and indirect methods of preparing statements of cash flow?
, The inventory department counts and inspects items as received and forwards the receiving record to
accounts payable.
Which internal control is intended to ensure that a company does not mistakenly pay a supplier for an invoice
that includes more items than were actually received?
Pressure to meet internal sales goals &
Preparing to qualify for a bank loan
What are common reasons for managers to manipulate reported earnings?
Firms must not provide certain non-audit services to audit clients, such as management functions or legal
services. &
Firms must report to and be retained by the audit committee rather than the CFO or other company
management.
Which requirements must accounting firms that audit public companies meet under the Sarbanes-Oxley Act?
They search for and investigate fraud.
&
They review financial records and internal controls.
Which actions do internal auditors perform to assist in maintaining the integrity of financial statements?
They ensure that financial statement users are provided with reliable information to use in decision
making
What is a significant role of the U.S. Securities and Exchange Commission (SEC) in financial reporting?
A better insight for management so a business can perform more effectively
&
A competitive edge to a business by providing its managers with the detailed data needed to make
decisions
What does management accounting provide?
Management accounting is used primarily for internal planning, control, and evaluation.
How does management accounting differ from financial accounting?
Inventory
Which account is seen on the balance sheet of a manufacturing company but not on the balance sheet of a
service-oriented company?
Differential cost
What is a cost that will change in the future based upon the decision made?
Administrative expenses &
