WGU C213 PA & OA Study Guide
2022/2023
1. Which of the following is the most correct definition of
accounting(answer) A system for providing
... [Show More] quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions
2. What is NOT typically true of accounting information(answer) The information relates to future time periods.
3. Which is NOT a key component of the definition of accounting(answer) Qualitative
4. What is true about the double-entry system of bookkeeping(answer) It was devel- oped in the 1300s 1400s in Italy.
5. Businesses use accounting systems to: Analyze transactions; Handle rou- tine bookkeeping tasks; Evaluate performance and health of the business.
6. What is not a function of accounting(answer) Executing sales transactions for organizations
7. What is NOT one of the three primary financial statements(answer) Statement of retained earnings
8. Generally accepted accounting principles are: Developed by accounting rule makers
9. The initials GAAP stand for: Generally Accepted Accounting Principles
10. The current standard-setting board for accounting in the private sector is the: Financial Accounting Standards Board (FASB)
11. Which of the following organizations has specific legal authority to es- tablish accounting standards for publicly held companies(answer) Securities and Exchange Commission (SEC)
12. Which is NOT a service typically provided by large public accounting firms(answer) Making management decisions
13. The organization that develops worldwide accounting standards is the: -
International Accounting Standards Board (IASB)
14. The initials CPA stand for: Certified Public Accountant
15. Which of the following financial statements reports a company's re- sources, obligations, and owner's equity(answer) Balance sheet
16. Which of the following financial statements reports the excess of a company's revenues over its expenses(answer) Income statement
17. Which of the following financial statements reports the amount of cash collected and paid out by a company(answer) Statement of cash flows
18. The emphasis in financial accounting is on which of the following exter- nal user groups(answer) Investors and creditors
19. The primary internal group that uses accounting information is: Manage- ment
20. Internal reports are generally used by: Management
21. Which of the following is NOT an external user of financial information?-
: Management
22. Which of the following is NOT true of the Financial Accounting Standards Board (FASB)(answer) It is a government agency
23. Which of the following is NOT a service typically provided by large public accounting firms(answer) Making management decisions
24. Standards established by the International Accounting Standards Board are referred to as: International Financial Accounting Standards
25. Which of the following is NOT a reason for the integration of worldwide accounting standards(answer) the theoretical necessity of a common set of accounting standards
26. The International Accounting Standards Board (IASB) is charged with developing worldwide accounting practices: True
27. With the current state of information technology, investors outside a com- pany are now allowed access to a company's internal database of financial information and do their own customized analysis of a firm's performance.-
: False
28. Increased federal oversight of the audit process resulted from the pas- sage of the following act of Congress: Sarbanes-Oxley Act
29. Steps in the decision cycle from first (1) to last (5): Prepare financial statements
Analyze financial statements
Gather information
Make decision
Implement decision
30. What is the price-earnings (PE) ratio for this company?
Partial financial information for a company is as follows:
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
Total liabilities $48,561
Stockholders' equity $10,158
Sales $46,997
Net Income $ 3,761
Market value of shares $41,316: 11.0
31. What does it mean if a company has a debt ratio of 101.5%(answer) The company has 1.5% more total liabilities than total assets.
32. What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the same(answer) Continual decrease in sales
33. Which two cash flow adequacy ratios represent a cash cow(answer) - $6,991/$5,486 & $5,220/$1,875
34. What two items of information are revealed on the balance sheet(answer) Own- ership & Debt
35. Which term is defined as the residual interest in the net assets of a company(answer) Owners' equity
36. A corporation has total liabilities of $300 million, total owners' equity of $100 million, and current assets of $50 million. What is the value of the firm's long-term assets(answer) $350 million
37. Which situation should result in revenue recognition on the income statement for the year ending 12/31/14 if the firm is using accrual-basis accounting(answer) In 2014, a company provides services to a customer for which cash will be collected the next year (2015).
38. Which category on the statement of cash flows summarizes cash receipts and payments to owners and creditors of the company(answer) Cash flows from financing activities
39. Cash flows from financing activities: In the notes to financial statements
40. Which assurance does an external audit report provide for its readers?-
: The company's financial statements fairly reflect its financial position
41. Information that can be verified: Reliable
42. Information having to do with the matter at hand: Relevant
43. Information that is important enough to make a difference: Material
44. Information related to recognizing losses as they occur: Conservatism
45. Which form of debt should be reported in the long-term liability catego- ry: Notes payable expected to be paid in 18 months
46. What will be the impact of the January 5 event on the company's balance sheet on that date given the following:
January 5 The corporation purchased equipment to be used in the business for $200,000 cash.: Equipment will increase $200,000, and cash will decrease $200,000.
47. Which two values affect the measurement of net income: Operating ex- penses & Ordinary gains and losses
48. Which two items' subtotals are included in a multi-step income statement- : Gross profit & Income from operations
49. Given the following, which month should advertising costs be expensed by a company using accural based accounting: The furniture company paid $3,000 for advertising that ran in the local newspaper in November 2011.: - November 2011
50. How much insurance expense should a company using accrual based accounting have recognized for the year ending in 2011 given the following: Purchased equipment costing $500,000; useful life five year; purchased a one-year insurance poli [Show Less]