WGU C214 Chapter 2 Exam 72 Questions with
Verified Answers
backward-looking and risk free. - CORRECT ANSWER Accounting is
forward-looking and involves massive uncertainty. - CORRECT ANSWER Finance is
Correct Answer: False
While the cumbersome nature of accrual accounting may cause cash accounting
to look attractive, the truth is that cash accounting is not a good way to track firm
operations. The movement of cash in and out of the firm during a period can lead
to a highly biased view of the firm. - CORRECT ANSWER Cash accounting offers a
superior method of analyzing a company. (True or False)
A system in which revenue and expenses are counted as they are actually
received.
Cash accounting: cash in = revenue; cash out = expense - CORRECT ANSWER Cash
Accounting
A type of accounting that recognizes incomes when they are earned and expenses
when they are incurred, rather than when they are received or paid.
,Accrual accounting: Revenues are recognized when the earnings process is
complete; expenses are "matched" to recognized revenues - CORRECT ANSWER
Accural Accounting
GAAP - CORRECT ANSWER In the accounting world, we use the terms accrual
accounting and __________ accounting interchangeably
False
The income statement is usually regarded as the most difficult to analyze and
interpret. - CORRECT ANSWER The income statement is the most easily
interpreted of the basic financial statements. (True or False)
Revenues - expenses = net income - CORRECT ANSWER The basic equation of an
income statement is:
Revenues - liabilities = net income
Assets - expenses = net income
Revenues - expenses = net income
Revenue - net income = liabilities
Gross Profit. - CORRECT ANSWER Revenues minus cost of goods sold is:
Gross Profit.
Earnings Before Taxes
, Operating Profit
Net Income
Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit - CORRECT ANSWER EBIT (operating profit)
Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit
- Interest Expenses
= EBT - CORRECT ANSWER EBT
Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit
- Interest Expenses
Verified Answers
backward-looking and risk free. - CORRECT ANSWER Accounting is
forward-looking and involves massive uncertainty. - CORRECT ANSWER Finance is
Correct Answer: False
While the cumbersome nature of accrual accounting may cause cash accounting
to look attractive, the truth is that cash accounting is not a good way to track firm
operations. The movement of cash in and out of the firm during a period can lead
to a highly biased view of the firm. - CORRECT ANSWER Cash accounting offers a
superior method of analyzing a company. (True or False)
A system in which revenue and expenses are counted as they are actually
received.
Cash accounting: cash in = revenue; cash out = expense - CORRECT ANSWER Cash
Accounting
A type of accounting that recognizes incomes when they are earned and expenses
when they are incurred, rather than when they are received or paid.
,Accrual accounting: Revenues are recognized when the earnings process is
complete; expenses are "matched" to recognized revenues - CORRECT ANSWER
Accural Accounting
GAAP - CORRECT ANSWER In the accounting world, we use the terms accrual
accounting and __________ accounting interchangeably
False
The income statement is usually regarded as the most difficult to analyze and
interpret. - CORRECT ANSWER The income statement is the most easily
interpreted of the basic financial statements. (True or False)
Revenues - expenses = net income - CORRECT ANSWER The basic equation of an
income statement is:
Revenues - liabilities = net income
Assets - expenses = net income
Revenues - expenses = net income
Revenue - net income = liabilities
Gross Profit. - CORRECT ANSWER Revenues minus cost of goods sold is:
Gross Profit.
Earnings Before Taxes
, Operating Profit
Net Income
Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit - CORRECT ANSWER EBIT (operating profit)
Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit
- Interest Expenses
= EBT - CORRECT ANSWER EBT
Revenues
- COGS
= Gross Profit
- Operating Expenses
= EBIT/Operating Profit
- Interest Expenses
