WGU D196-PRINCIPLES OF FINANCIAL &
MANAGERIAL ACCOUNTING QUESTIONS AND
VERIFIED ANSWERS LATEST 2024 TEST (100%
CORRECT) GRADE A+
Which group uses financial information to evaluate whether a company will be able to
repay a loan?
Lenders
Which of the primary financial statements reports the resources, obligations, and owner's
equity of a company?
Balance sheet
Accounting plays a vital role in the decision-making process. Which action is the first step
in the decision-making process?
Identify the issue
The money that a company needs to buy its land, pay its employees, and buy its supplies is
called capital. What are the potential sources of capital for a business?
Investors, creditors, and retained business earnings
Which primary area of accounting generates reports for internal users?
Management accounting
True or False: Accountants measure and communicate the results of business activities.
True
What is the role of the IASB in regulating accounting standards?
Establish international accounting standards
What group of people make up the FASB?
People from a variety of business-related backgrounds
What is the role of the GASB in setting accounting standards?
The GASB is a private-sector organization that establishes accounting and financial reporting
standards for U.S. state and local governments.
In what way do accountants have an economic incentive to conduct themselves ethically?
The value of the information produced by accountants is related to the confidence that users have
in the reliability of that information.
How is it possible for an accountant to intentionally deceive financial statement users and
yet still technically be in compliance with generally accepted accounting principles
(GAAP)?
There is flexibility inherent in the assumptions underlying the preparation of financial
statements.
Your boss approaches you with a concerning letter from the IRS and asks you to explain
the role of the IRS in regulating accounting standards. Based on the role of the IRS, what
could be the problem detailed in the letter?
The company has not filed its taxes in accordance with the law.
Anika is considering investing in a tech company that is known for developing smart home
appliances. Before investing, Anika first wants to ensure that the company's past financial
,performance has been satisfactory and that the company manages its cash flows well. What
type of accounting information would provide this evidence for Anika?
Financial reports
Alliah Company just released its public accounting data for 20X9. Which user of
accounting information will monitor this data to ensure that the company is providing
sufficient information for investors?
Government agencies
A new product line manager approaches the accounting department in order to understand
the past performance of the product line he has been asked to manage in the future. Which
role of accounting involves obtaining and using financial information to determine the
financial health and performance of a business or product line?
Evaluation
You read in the newspaper that a local company you are familiar with has been found
guilty in court of publishing financial statements that are false and misleading to users of
those financial statements. In this situation, what could the American Institute of Certified
Public Accountants (AICPA) do in response to the accountants who were found guilty of
unethical conduct in accounting practices?
Implement professional sanctions
What is the correct summary sequence in the accounting cycle?
Analyze, Record, Summarize, Prepare
Business documents, such as a sales invoice, a purchase order, or a check stub, are an
important part of the accounting process. From an accounting cycle standpoint, what is
purpose of business documents?
To confirm that a transaction has occurred
What is the purpose of the financial accounting cycle?
To turn transactions into financial statements and provide useful financial information for
decision makers
What is a transaction in accounting?
An interaction in which two parties exchange something of value
In the context of the financial accounting cycle, what is the definition of an account?
A specific accounting record that provides an efficient way to categorize similar types of
transactions
What is an arm's-length transaction?
An exchange between two independent parties
Which event represents a transaction recorded as part of the financial accounting cycle?
The sale of a product for cash or on account
A company sells a product to a customer on account. Which part(s) of the accounting
equation does this particular transaction change?
Both assets and owners' equity
What is an example of an internal transaction?
An employee is transferred from one department to another.
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
, What is the first step of the financial accounting cycle that Oliver will perform?
Analyze transactions
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
Which item is a liability?
Mortgage
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
Which of the items listed should Oliver record as an external transaction?
Purchases of inventory from suppliers
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
After Oliver records each transaction, how should he ensure that the accounting equation
remains in balance?
Add up the balances in all of the asset accounts and compare them to the sum of all the liability
and owners' equity accounts
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
After determining the company's financial position, Oliver recommends that the company
borrow money from the bank for the next accounting period. What is the effect of
borrowing money from the bank for the next accounting period on the company's books?
Cash (an asset) and a liability account both increase.
Which account is an example of a liability?
Accounts payable
Which of the primary financial statements reports the amount of cash collected and paid
out by a company?
Statement of cash flows
What is the name for the authoritative set of accounting standards in the United States?
GAAP
Which statement is a correct description of the IASB?
It establishes international accounting standards
Which action is part of the financial accounting cycle?
Summarizing financial information in financial statements
MANAGERIAL ACCOUNTING QUESTIONS AND
VERIFIED ANSWERS LATEST 2024 TEST (100%
CORRECT) GRADE A+
Which group uses financial information to evaluate whether a company will be able to
repay a loan?
Lenders
Which of the primary financial statements reports the resources, obligations, and owner's
equity of a company?
Balance sheet
Accounting plays a vital role in the decision-making process. Which action is the first step
in the decision-making process?
Identify the issue
The money that a company needs to buy its land, pay its employees, and buy its supplies is
called capital. What are the potential sources of capital for a business?
Investors, creditors, and retained business earnings
Which primary area of accounting generates reports for internal users?
Management accounting
True or False: Accountants measure and communicate the results of business activities.
True
What is the role of the IASB in regulating accounting standards?
Establish international accounting standards
What group of people make up the FASB?
People from a variety of business-related backgrounds
What is the role of the GASB in setting accounting standards?
The GASB is a private-sector organization that establishes accounting and financial reporting
standards for U.S. state and local governments.
In what way do accountants have an economic incentive to conduct themselves ethically?
The value of the information produced by accountants is related to the confidence that users have
in the reliability of that information.
How is it possible for an accountant to intentionally deceive financial statement users and
yet still technically be in compliance with generally accepted accounting principles
(GAAP)?
There is flexibility inherent in the assumptions underlying the preparation of financial
statements.
Your boss approaches you with a concerning letter from the IRS and asks you to explain
the role of the IRS in regulating accounting standards. Based on the role of the IRS, what
could be the problem detailed in the letter?
The company has not filed its taxes in accordance with the law.
Anika is considering investing in a tech company that is known for developing smart home
appliances. Before investing, Anika first wants to ensure that the company's past financial
,performance has been satisfactory and that the company manages its cash flows well. What
type of accounting information would provide this evidence for Anika?
Financial reports
Alliah Company just released its public accounting data for 20X9. Which user of
accounting information will monitor this data to ensure that the company is providing
sufficient information for investors?
Government agencies
A new product line manager approaches the accounting department in order to understand
the past performance of the product line he has been asked to manage in the future. Which
role of accounting involves obtaining and using financial information to determine the
financial health and performance of a business or product line?
Evaluation
You read in the newspaper that a local company you are familiar with has been found
guilty in court of publishing financial statements that are false and misleading to users of
those financial statements. In this situation, what could the American Institute of Certified
Public Accountants (AICPA) do in response to the accountants who were found guilty of
unethical conduct in accounting practices?
Implement professional sanctions
What is the correct summary sequence in the accounting cycle?
Analyze, Record, Summarize, Prepare
Business documents, such as a sales invoice, a purchase order, or a check stub, are an
important part of the accounting process. From an accounting cycle standpoint, what is
purpose of business documents?
To confirm that a transaction has occurred
What is the purpose of the financial accounting cycle?
To turn transactions into financial statements and provide useful financial information for
decision makers
What is a transaction in accounting?
An interaction in which two parties exchange something of value
In the context of the financial accounting cycle, what is the definition of an account?
A specific accounting record that provides an efficient way to categorize similar types of
transactions
What is an arm's-length transaction?
An exchange between two independent parties
Which event represents a transaction recorded as part of the financial accounting cycle?
The sale of a product for cash or on account
A company sells a product to a customer on account. Which part(s) of the accounting
equation does this particular transaction change?
Both assets and owners' equity
What is an example of an internal transaction?
An employee is transferred from one department to another.
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
, What is the first step of the financial accounting cycle that Oliver will perform?
Analyze transactions
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
Which item is a liability?
Mortgage
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
Which of the items listed should Oliver record as an external transaction?
Purchases of inventory from suppliers
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
After Oliver records each transaction, how should he ensure that the accounting equation
remains in balance?
Add up the balances in all of the asset accounts and compare them to the sum of all the liability
and owners' equity accounts
Oliver is an accountant for a restaurant supply business that sells dishes, table linens, and
food preparation equipment to restaurants. In preparing the January financial statements
for the company, Oliver must consider all of the financial events that occurred during the
month, including purchases from vendors, sales to customers, and other transactions.
After determining the company's financial position, Oliver recommends that the company
borrow money from the bank for the next accounting period. What is the effect of
borrowing money from the bank for the next accounting period on the company's books?
Cash (an asset) and a liability account both increase.
Which account is an example of a liability?
Accounts payable
Which of the primary financial statements reports the amount of cash collected and paid
out by a company?
Statement of cash flows
What is the name for the authoritative set of accounting standards in the United States?
GAAP
Which statement is a correct description of the IASB?
It establishes international accounting standards
Which action is part of the financial accounting cycle?
Summarizing financial information in financial statements
