WGU C213 ACCOUNTING FOR DECISION MAKERS
EXAM QUESTIONS AND CORRECT VERIFIED
ANSWERS WITH RATIONALES
100% GUARANTEED PASS!!
<LATEST VERSION>
Question 1
A company reports the following for the year:
Revenue: $820,000
Cost of Goods Sold: $500,000
Operating Expenses: $210,000
What is the company’s operating income?
A. $110,000
B. $320,000
C. $210,000
D. $610,000
Correct Answer: A
Rationale:
Operating income = Revenue − COGS − Operating Expenses
= 820,000 − 500,000 − 210,000 = 110,000
,Question 2
Which financial statement is most useful for evaluating a company’s liquidity?
A. Income statement
B. Statement of retained earnings
C. Balance sheet
D. Statement of cash flows
Correct Answer: C
Rationale:
Liquidity focuses on the ability to meet short-term obligations, which is assessed
using current assets and current liabilities found on the balance sheet.
Question 3
A company’s current ratio decreased from 2.1 to 1.4 over one year. Which
interpretation is most appropriate?
A. Profitability has improved
B. Liquidity has weakened
C. Long-term solvency has improved
D. Asset turnover has increased
Correct Answer: B
Rationale:
A declining current ratio indicates reduced short-term liquidity and less ability to
cover current obligations.
Question 4
Which cost is considered a fixed cost within the relevant range?
A. Direct materials
B. Sales commissions
C. Factory rent
D. Shipping expense
,Correct Answer: C
Rationale:
Factory rent remains constant regardless of production volume, making it a fixed
cost within the relevant range.
Question 5
A company sells a product for $75 per unit. Variable cost per unit is $45, and total
fixed costs are $180,000. What is the break-even point in units?
A. 2,400
B. 3,000
C. 4,000
D. 6,000
Correct Answer: C
Rationale:
Contribution margin per unit = 75 − 45 = 30
Break-even units = 180,000 ÷ 30 = 4,000 units
Question 6
Which action would most likely increase contribution margin?
A. Increasing fixed costs
B. Decreasing selling price
C. Reducing variable costs per unit
D. Increasing depreciation expense
Correct Answer: C
Rationale:
Contribution margin equals selling price minus variable costs. Reducing variable
costs increases contribution margin.
, Question 7
Management is deciding whether to accept a special order priced below normal
sales price but above variable cost. Which factor is most relevant?
A. Allocation of fixed overhead
B. Impact on existing sales
C. Book value of inventory
D. Historical cost of equipment
Correct Answer: B
Rationale:
The key concern is whether the special order will cannibalize existing sales or
create capacity issues.
Question 8
Which account is increased with a debit?
A. Revenue
B. Accounts payable
C. Accumulated depreciation
D. Equipment
Correct Answer: D
Rationale:
Assets such as equipment increase with debits under the rules of double-entry
accounting.
Question 9
A company reports net income of $120,000 and depreciation expense of $35,000.
Assuming no other adjustments, operating cash flow is:
A. $85,000
B. $120,000
EXAM QUESTIONS AND CORRECT VERIFIED
ANSWERS WITH RATIONALES
100% GUARANTEED PASS!!
<LATEST VERSION>
Question 1
A company reports the following for the year:
Revenue: $820,000
Cost of Goods Sold: $500,000
Operating Expenses: $210,000
What is the company’s operating income?
A. $110,000
B. $320,000
C. $210,000
D. $610,000
Correct Answer: A
Rationale:
Operating income = Revenue − COGS − Operating Expenses
= 820,000 − 500,000 − 210,000 = 110,000
,Question 2
Which financial statement is most useful for evaluating a company’s liquidity?
A. Income statement
B. Statement of retained earnings
C. Balance sheet
D. Statement of cash flows
Correct Answer: C
Rationale:
Liquidity focuses on the ability to meet short-term obligations, which is assessed
using current assets and current liabilities found on the balance sheet.
Question 3
A company’s current ratio decreased from 2.1 to 1.4 over one year. Which
interpretation is most appropriate?
A. Profitability has improved
B. Liquidity has weakened
C. Long-term solvency has improved
D. Asset turnover has increased
Correct Answer: B
Rationale:
A declining current ratio indicates reduced short-term liquidity and less ability to
cover current obligations.
Question 4
Which cost is considered a fixed cost within the relevant range?
A. Direct materials
B. Sales commissions
C. Factory rent
D. Shipping expense
,Correct Answer: C
Rationale:
Factory rent remains constant regardless of production volume, making it a fixed
cost within the relevant range.
Question 5
A company sells a product for $75 per unit. Variable cost per unit is $45, and total
fixed costs are $180,000. What is the break-even point in units?
A. 2,400
B. 3,000
C. 4,000
D. 6,000
Correct Answer: C
Rationale:
Contribution margin per unit = 75 − 45 = 30
Break-even units = 180,000 ÷ 30 = 4,000 units
Question 6
Which action would most likely increase contribution margin?
A. Increasing fixed costs
B. Decreasing selling price
C. Reducing variable costs per unit
D. Increasing depreciation expense
Correct Answer: C
Rationale:
Contribution margin equals selling price minus variable costs. Reducing variable
costs increases contribution margin.
, Question 7
Management is deciding whether to accept a special order priced below normal
sales price but above variable cost. Which factor is most relevant?
A. Allocation of fixed overhead
B. Impact on existing sales
C. Book value of inventory
D. Historical cost of equipment
Correct Answer: B
Rationale:
The key concern is whether the special order will cannibalize existing sales or
create capacity issues.
Question 8
Which account is increased with a debit?
A. Revenue
B. Accounts payable
C. Accumulated depreciation
D. Equipment
Correct Answer: D
Rationale:
Assets such as equipment increase with debits under the rules of double-entry
accounting.
Question 9
A company reports net income of $120,000 and depreciation expense of $35,000.
Assuming no other adjustments, operating cash flow is:
A. $85,000
B. $120,000
