WGU C213 ACCOUNTING STUDY 2026 EXAM GUIDED
QUESTIONS AND ANSWERS SURE A+
✔✔Comprehensive Income - ✔✔net income plus or minus adjustments for changes in
company wealth stemming from changes in certain exchange rates, interest rates, or
financial instruments' values
✔✔Gains, Losses, Revenues, and Expenses - ✔✔What are the 4 primary item
categories listed on the income statement?
✔✔selling goods, providing services, Earning interest by providing loans - ✔✔What are
some common business activities that generate revenue?
✔✔cost of goods sold; selling, general, and administrative expense, depreciation
expense, income tax expense, and interest expense - ✔✔What are the key expense
items commonly found on the income statement?
✔✔External - ✔✔Do gains/losses reported on the income statement arise from internal
or external activities?
✔✔Income from discontinued operations and extraordinary items - ✔✔Which items are
considered "below-the-line" items?
✔✔Earnings per Share (EPS) - ✔✔the amount of net income associated with each
share of stock
✔✔When value has been delivered to customers (typically only after the required work
has been performed and after the collection of cash is reasonably assured) - ✔✔When
should revenue be recognized on an income statement?
✔✔matching - ✔✔the concept that states that an expense should be recognized in the
same period in which the revenue it was used to generate is recognized
✔✔Balance Sheet - ✔✔Which of the following financial statements reports a company's
resources, obligations, and owner's equity?
✔✔Income Statement - ✔✔Which of the following financial statements reports the
excess of a company's revenues over its expenses?
✔✔Management - ✔✔Which of the following is NOT an external user of financial
information?
✔✔International Accounting Standards Board (IASB) - ✔✔The organization that
develops worldwide accounting standards is the
, ✔✔It identifies a company's assets and liabilities as of a specific date. - ✔✔Which of the
following is true of the balance sheet?
✔✔The idea that businesses must be accounted for as though they will exist at least for
the foreseeable future is the - ✔✔Going concern concept
✔✔Income Statement - ✔✔The financial statement that presents a summary of the
revenues and expenses of a business for a specific period of time, such as a month or a
year, is called a(n)
✔✔Price-Earnings Ratio - ✔✔Which of the following ratios represents an indication of
investors' expectations concerning a firm's growth potential?
✔✔Current Ratio - ✔✔Which of the following ratios is calculated using only balance
sheet numbers?
✔✔Return on Sales - ✔✔Which of the following ratios is calculated using only income
statement numbers?
✔✔11. Selected information for Isaac Company is as follows:
o Common stock $1,200,000
o Additional paid-in capital $500,000
o Retained earnings $740,000
o Sales revenue for year $1,830,000
o Net income for year $480,000
Isaac's return on equity, rounded to the nearest percentage point, is - ✔✔20%
✔✔Which of the following is NOT a situation when it would be important to analyze cash
flow information because net income is NOT giving an accurate portrayal of the
economic performance of the company? - ✔✔When a company has a negative
operating cash flow
✔✔Cash flow‐to‐net income - ✔✔Which cash flow ratio reflects the extent to which
accrual accounting adjustments and assumptions have been included in net income?
✔✔Greater than 1 - ✔✔In general, most companies have significant noncash expenses
that reduce net income and also cause the cash flow-to-net income ratio to be
✔✔Inventory - ✔✔Which of the following usually is NOT considered to be an owners'
equity account?
✔✔Equipment - ✔✔Which of the following accounts would NOT be considered a current
asset?
QUESTIONS AND ANSWERS SURE A+
✔✔Comprehensive Income - ✔✔net income plus or minus adjustments for changes in
company wealth stemming from changes in certain exchange rates, interest rates, or
financial instruments' values
✔✔Gains, Losses, Revenues, and Expenses - ✔✔What are the 4 primary item
categories listed on the income statement?
✔✔selling goods, providing services, Earning interest by providing loans - ✔✔What are
some common business activities that generate revenue?
✔✔cost of goods sold; selling, general, and administrative expense, depreciation
expense, income tax expense, and interest expense - ✔✔What are the key expense
items commonly found on the income statement?
✔✔External - ✔✔Do gains/losses reported on the income statement arise from internal
or external activities?
✔✔Income from discontinued operations and extraordinary items - ✔✔Which items are
considered "below-the-line" items?
✔✔Earnings per Share (EPS) - ✔✔the amount of net income associated with each
share of stock
✔✔When value has been delivered to customers (typically only after the required work
has been performed and after the collection of cash is reasonably assured) - ✔✔When
should revenue be recognized on an income statement?
✔✔matching - ✔✔the concept that states that an expense should be recognized in the
same period in which the revenue it was used to generate is recognized
✔✔Balance Sheet - ✔✔Which of the following financial statements reports a company's
resources, obligations, and owner's equity?
✔✔Income Statement - ✔✔Which of the following financial statements reports the
excess of a company's revenues over its expenses?
✔✔Management - ✔✔Which of the following is NOT an external user of financial
information?
✔✔International Accounting Standards Board (IASB) - ✔✔The organization that
develops worldwide accounting standards is the
, ✔✔It identifies a company's assets and liabilities as of a specific date. - ✔✔Which of the
following is true of the balance sheet?
✔✔The idea that businesses must be accounted for as though they will exist at least for
the foreseeable future is the - ✔✔Going concern concept
✔✔Income Statement - ✔✔The financial statement that presents a summary of the
revenues and expenses of a business for a specific period of time, such as a month or a
year, is called a(n)
✔✔Price-Earnings Ratio - ✔✔Which of the following ratios represents an indication of
investors' expectations concerning a firm's growth potential?
✔✔Current Ratio - ✔✔Which of the following ratios is calculated using only balance
sheet numbers?
✔✔Return on Sales - ✔✔Which of the following ratios is calculated using only income
statement numbers?
✔✔11. Selected information for Isaac Company is as follows:
o Common stock $1,200,000
o Additional paid-in capital $500,000
o Retained earnings $740,000
o Sales revenue for year $1,830,000
o Net income for year $480,000
Isaac's return on equity, rounded to the nearest percentage point, is - ✔✔20%
✔✔Which of the following is NOT a situation when it would be important to analyze cash
flow information because net income is NOT giving an accurate portrayal of the
economic performance of the company? - ✔✔When a company has a negative
operating cash flow
✔✔Cash flow‐to‐net income - ✔✔Which cash flow ratio reflects the extent to which
accrual accounting adjustments and assumptions have been included in net income?
✔✔Greater than 1 - ✔✔In general, most companies have significant noncash expenses
that reduce net income and also cause the cash flow-to-net income ratio to be
✔✔Inventory - ✔✔Which of the following usually is NOT considered to be an owners'
equity account?
✔✔Equipment - ✔✔Which of the following accounts would NOT be considered a current
asset?
