WGU MBA PROGRAM C213 ACCOUNTING OA EXAM 2 LATEST
VERSIONS ACTUAL EXAM 200 QUESTIONS AND CORRECT
DETAILED ANSWERS WITH RATIONALES
What does accounting focus on? - ANSWER: The impact a business's activities have
on it's overall financial performance
Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time? - ANSWER: Statement of
cash flows
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - ANSWER: Employees
Which benefit does a corporation gain by following Generally Accepted Accounting
Principals (GAAP)? - ANSWER: An increase in its comparability to other companies
Which body regulates a certified public accounting firm's audit practices when the
firm is auditing a large publicly traded company? - ANSWER: The FASB
What has had the most significant impact on accounting practices? - ANSWER:
Information Technology
What two items of information are revealed on the balance sheet? - ANSWER: Debt,
Ownership
Which term is defined as the residual interest in the net assets of a company? -
ANSWER: Owner's equity
A corporation has total liabilities of $300 million, total owner's equity of $100
million, and current assets of $50 million. What is the value of the firm's long-term
assets? - ANSWER: $350 million
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)
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
Where would an investor find a summary of a company's significant accounting
policies? - ANSWER: In the notes to the financial statements
, What does it mean if a company has a debt ratio of 101.5%? - ANSWER: The
company has 1.5% more total liabilities that total assets
Which assurances does an external audit report provide for its readers? - ANSWER:
The company's financial statements fairly reflects its financial position
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
Which formula yields a cash time interest earned ratio of 11? - ANSWER: Cash before
interest and taxes of $11,000/cash paid for interest of $1,000
Which form of debt should be reported in the long-term liability category? -
ANSWER: Notes payable expected to be paid in 18 months
Which two values affect the measurement of net income? - ANSWER: Dividend paid,
operating expenses
Which two items subtotals are included in a multi-step income statement? -
ANSWER: gross profit, income from operations
A furniture company using accrual accounting purchased 20 sofas in November
2011, In December 2011, 8 of the sofas were sold to customers. The customers all
signed contracts agreeing to pay half the amount owed in February 2012 and the
remaining half in March 2012. At the time of sale, the company was reasonably sure
the customers would pay the amount owed.
In which month should advertising costs be expended? - ANSWER: November 2011
On May 1, 2011, a company using accural accounting purchased equipment costing
$500,000. It expects the equipment to have a useful life of five years. At the time of
purchase, the company also purchased a one-year insurance policy on this
equipment, which cost $6,000.
How much insurance expense should the company have recognized of the year
ending in 2011? - ANSWER: $4,000
What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000
was based on a 22% increase? - ANSWER: $153,279
What is a common category in a statement of cash flows? - ANSWER: Cash from
investing activities
Which cash flow category would include cash received from investors? - ANSWER:
Cash from financing activites
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