WGU C213 ACCOUNTING UPDATED EXAM PAPER 2026
QUESTIONS AND ANSWERS SURE A+
✔✔Assets = Liabilities + Owners' Equity - ✔✔What is the accounting equation?
✔✔By order of liquidity - ✔✔In what order are assets typically listed on the balance
sheet?
✔✔Current and Long-term - ✔✔Liabilities are divided into which 2 categories on the
balance sheet?
✔✔states that the financial results of an economic entity should be reported separately
from the financial results of other entities, even though all those entities may be
controlled by the same person - ✔✔What is the entity concept?
✔✔(revenues-expense= net income) - ✔✔Equation to calculate net income
✔✔When work has been done and collectability of cash can be reasonably assured -
✔✔According to accounting rules, when should revenue be recognized?
✔✔Operating activities - ✔✔those activities that comprise the day-to-day operations of a
business.
✔✔Investing activities - ✔✔The purchase and sale of long-term assets such as land and
equipment are known as _______________.
✔✔Financing activities - ✔✔those activities through which cash is obtained from, or
repaid to, creditors and investors
✔✔information on the accounting assumptions used in preparing the statements and
supplemental information not included in the statements themselves - ✔✔What
information do the notes to accounting statements provide?
✔✔1. Summary of accounting policy
2. Additional info about summary totals
3. Disclosure of info not included in summary
4. Supplemental disclosure required by FASB or SEC - ✔✔What are the 4 general
types of accounting notes?
✔✔Conservatism - ✔✔the practice of recognizing all losses but not recognizing gains
until they are certain
✔✔Materiality - ✔✔the concept that weighs whether a certain dollar amount is large
enough to make a difference to anyone
, ✔✔Articulation - ✔✔the idea that the three primary financial statements are interrelated
✔✔Debt Ratio
Total Liabilities/
Total Assets - ✔✔Percentage of funds needed to purchase assets that were obtained
through borrowing
✔✔Current Ratio
Current Assets/
Current Liabilities - ✔✔Measure of liquidity; number of times current assets could cover
current liabilities
✔✔Return on Sales Ratio
Net Income/
Sales - ✔✔Number of pennies earned during the year on each dollar of sales
✔✔Asset Turnover
Sales/
Total Assets - ✔✔Number of dollars of sales during the year generated by each dollar of
assets
✔✔Return on Equity
Net Income/
Stockholder's Equity - ✔✔Number of pennies earned during the year on each dollar
invested
✔✔Price-earnings Ratio
Market Value of Shares/
Net Income - ✔✔Amount investors are willing to pay for each dollar of earnings;
indication of growth potential
✔✔1) to predict a company's future profitability and cash flows
2) to identify and improve potential problem areas - ✔✔What are the two main purposes
of financial statement analysis?
✔✔financial ratios - ✔✔relationships between two financial statement numbers and are
often used in analyzing and describing a company's performance
QUESTIONS AND ANSWERS SURE A+
✔✔Assets = Liabilities + Owners' Equity - ✔✔What is the accounting equation?
✔✔By order of liquidity - ✔✔In what order are assets typically listed on the balance
sheet?
✔✔Current and Long-term - ✔✔Liabilities are divided into which 2 categories on the
balance sheet?
✔✔states that the financial results of an economic entity should be reported separately
from the financial results of other entities, even though all those entities may be
controlled by the same person - ✔✔What is the entity concept?
✔✔(revenues-expense= net income) - ✔✔Equation to calculate net income
✔✔When work has been done and collectability of cash can be reasonably assured -
✔✔According to accounting rules, when should revenue be recognized?
✔✔Operating activities - ✔✔those activities that comprise the day-to-day operations of a
business.
✔✔Investing activities - ✔✔The purchase and sale of long-term assets such as land and
equipment are known as _______________.
✔✔Financing activities - ✔✔those activities through which cash is obtained from, or
repaid to, creditors and investors
✔✔information on the accounting assumptions used in preparing the statements and
supplemental information not included in the statements themselves - ✔✔What
information do the notes to accounting statements provide?
✔✔1. Summary of accounting policy
2. Additional info about summary totals
3. Disclosure of info not included in summary
4. Supplemental disclosure required by FASB or SEC - ✔✔What are the 4 general
types of accounting notes?
✔✔Conservatism - ✔✔the practice of recognizing all losses but not recognizing gains
until they are certain
✔✔Materiality - ✔✔the concept that weighs whether a certain dollar amount is large
enough to make a difference to anyone
, ✔✔Articulation - ✔✔the idea that the three primary financial statements are interrelated
✔✔Debt Ratio
Total Liabilities/
Total Assets - ✔✔Percentage of funds needed to purchase assets that were obtained
through borrowing
✔✔Current Ratio
Current Assets/
Current Liabilities - ✔✔Measure of liquidity; number of times current assets could cover
current liabilities
✔✔Return on Sales Ratio
Net Income/
Sales - ✔✔Number of pennies earned during the year on each dollar of sales
✔✔Asset Turnover
Sales/
Total Assets - ✔✔Number of dollars of sales during the year generated by each dollar of
assets
✔✔Return on Equity
Net Income/
Stockholder's Equity - ✔✔Number of pennies earned during the year on each dollar
invested
✔✔Price-earnings Ratio
Market Value of Shares/
Net Income - ✔✔Amount investors are willing to pay for each dollar of earnings;
indication of growth potential
✔✔1) to predict a company's future profitability and cash flows
2) to identify and improve potential problem areas - ✔✔What are the two main purposes
of financial statement analysis?
✔✔financial ratios - ✔✔relationships between two financial statement numbers and are
often used in analyzing and describing a company's performance
