WGU D196 Pre Assessment
Questions and Answers
1. What is the effect of a company's accounting department maintaining high
ethical standards?
The company can hire fewer accountants to do the same amount of work.The
company's accounting information will decrease in value.
The company can report more favorable results in its financial statements. The
company's accounting information will increase in value. ANSWER : The company's
accounting information will increase in value.
2. Why might employees be interested in their company's financial account-ing
information?
Financial statement data are used to record long term liabilities. Financial
statement data provide item-by-item product cost information.Financial
statement data provide detailed internal budget information.
Financial statement data are often used in determining employee bonuses.-
ANSWER : Financial statement data are often used in determining employee bonuses.
3. Which group establishes financial accounting rules in the United States?
American Institute of Certified Public Accountants (AICPA)
Financial Accounting Standards Board (FASB)
International Accounting Standards Board (IASB)
Internal Revenue Service (IRS) ANSWER : Financial Accounting Standards Board
(FASB)
,4. Which report is one of the three primary financial statements?
Statement of the accounting cycle
Statement of management accounting
Statement of cash flows
Statement of stakeholder funds ANSWER : Statement of cash flows
5. A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equa-tion?
Assets decrease by $5,000; expenses increase by $5,000.
Assets increase by $5,000; expenses increase by $5,000.
Assets decrease by $5,000; revenues increase by $5,000.
Assets decrease by $5,000; liabilities increase by $5,000. ANSWER : Assets
decrease by
$5,000; expenses increase by $5,000.
6. What is a transaction?
A type of commonly used accounting softwareA
category of merchandiser or retailer
Two parties exchanging something of value
, An example of an online business document ANSWER : Two parties exchanging
some-thing of value
7. A company borrowed $80,000 cash from a bank.
How does this transaction affect the accounting equation of the borrowing
company?
Assets increase by $80,000; owners' equity increases by $80,000.
Assets increase by $80,000; liabilities decrease by $80,000.
Assets increase by $80,000; liabilities increase by $80,000.
Assets increase by $80,000; revenues increase by $80,000. ANSWER : Assets
increaseby $80,000; liabilities increase by $80,000.
8. What is the impact of expenses on the accounting equation?
Expenses increase owners' equity.
Expenses decrease liabilities.
Expenses decrease owners' equity.
Expenses increase liabilities. ANSWER : Expenses decrease owners' equity.
9. Which type of account are accounts payable and notes payable both
examples of?
Liability
Asset
Expense
Equity ANSWER : Liability
10. What is the purpose of the financial accounting cycle?
To collect confidential information for management to use as a competitivetool
To turn information about transactions into financial statements
Questions and Answers
1. What is the effect of a company's accounting department maintaining high
ethical standards?
The company can hire fewer accountants to do the same amount of work.The
company's accounting information will decrease in value.
The company can report more favorable results in its financial statements. The
company's accounting information will increase in value. ANSWER : The company's
accounting information will increase in value.
2. Why might employees be interested in their company's financial account-ing
information?
Financial statement data are used to record long term liabilities. Financial
statement data provide item-by-item product cost information.Financial
statement data provide detailed internal budget information.
Financial statement data are often used in determining employee bonuses.-
ANSWER : Financial statement data are often used in determining employee bonuses.
3. Which group establishes financial accounting rules in the United States?
American Institute of Certified Public Accountants (AICPA)
Financial Accounting Standards Board (FASB)
International Accounting Standards Board (IASB)
Internal Revenue Service (IRS) ANSWER : Financial Accounting Standards Board
(FASB)
,4. Which report is one of the three primary financial statements?
Statement of the accounting cycle
Statement of management accounting
Statement of cash flows
Statement of stakeholder funds ANSWER : Statement of cash flows
5. A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equa-tion?
Assets decrease by $5,000; expenses increase by $5,000.
Assets increase by $5,000; expenses increase by $5,000.
Assets decrease by $5,000; revenues increase by $5,000.
Assets decrease by $5,000; liabilities increase by $5,000. ANSWER : Assets
decrease by
$5,000; expenses increase by $5,000.
6. What is a transaction?
A type of commonly used accounting softwareA
category of merchandiser or retailer
Two parties exchanging something of value
, An example of an online business document ANSWER : Two parties exchanging
some-thing of value
7. A company borrowed $80,000 cash from a bank.
How does this transaction affect the accounting equation of the borrowing
company?
Assets increase by $80,000; owners' equity increases by $80,000.
Assets increase by $80,000; liabilities decrease by $80,000.
Assets increase by $80,000; liabilities increase by $80,000.
Assets increase by $80,000; revenues increase by $80,000. ANSWER : Assets
increaseby $80,000; liabilities increase by $80,000.
8. What is the impact of expenses on the accounting equation?
Expenses increase owners' equity.
Expenses decrease liabilities.
Expenses decrease owners' equity.
Expenses increase liabilities. ANSWER : Expenses decrease owners' equity.
9. Which type of account are accounts payable and notes payable both
examples of?
Liability
Asset
Expense
Equity ANSWER : Liability
10. What is the purpose of the financial accounting cycle?
To collect confidential information for management to use as a competitivetool
To turn information about transactions into financial statements
