WGU C213 Focused on Financial Statements In Depth Review Study Aid and Accurate Scoring Criteria Latest Version 2024/2025
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Course
WGU C213 Accounting for Decision Makers
Institution
WGU C213 Accounting For Decision Makers
WGU C213 Focused on Financial Statements In Depth Review Study Aid and Accurate Scoring Criteria Latest Version 2024/2025
The board of directors - Correct Answer The audit committee
The internal control structure of a company is a system of policies and procedures established to
Ensure acc...
WGU C213 Focused on Financial
Statements In Depth Review Study
Aid and Accurate Scoring Criteria
Latest Version 2024/2025
The board of directors - Correct Answer The audit committee
The internal control structure of a company is a system of
policies and procedures established to
Ensure accurate accounting records
Safeguard assets
All of these are correct
Promote operational efficiency - Correct Answer All of these are
correct
Which of the following categories of control activities is NOT
considered a preventative control?
Adequate segregation of duties
Proper procedures for authorization
Independent checks on performance
Physical control over assets and records - Correct Answer
Independent checks on performance
The purpose of the audit committee within an organization is to
- Examine the financial statements to determine if they are free
from material misstatement
,- Be responsible for the external and internal auditors
- Regulate the internal control system
- Monitor operating results and financial records - Correct
Answer Be responsible for the external and internal auditors
Which of the following is an example of a proper procedure of
authorization?
- John, a clerk, is authorized to perform transactions as large as
$5,000 but must maintain authorization from Andrea to perform
larger transactions.
- Every evening, Shellie makes a back-up file of all transactions
recorded in the computer that day, burns the back-up file onto a
CD and then locks the CD into a fire-proof vault for the night.
- Greg is in charge of recording receipt of payments made to
accounts receivable, while Susan is in charge of making deposits
to the bank.
- Every year, Doug is required to take one full week of vacation
time. - Correct Answer John, a clerk, is authorized to perform
transactions as large as $5,000 but must maintain authorization
from Andrea to perform larger transactions.
Control activities can be defined as
- The members of a company's board of directors who are
responsible for dealing with the external and internal auditors.
- The lines of authority and responsibility within a company.
- The policies and procedures used by management to meet their
objectives.
- The actions, policies, and procedures that reflect the overall
attitudes of top management about control. - Correct Answer
,The policies and procedures used by management to meet their
objectives.
Which of the following is an example of an independent check on
performance?
- Every year, Doug is required to take one full week of vacation
time.
- Greg is in charge of recording receipt of payments made to
accounts receivable, while Susan is in charge of making deposits
to the bank.
- John, a clerk, is authorized to perform transactions as large as
$5,000 but must maintain authorization from Andrea to perform
larger transactions.
- Every evening, Shellie makes a back-up file of all transactions
recorded in the computer that day, burns the back-up file onto a
CD and then locks the CD into a fire-proof vault for the night. -
Correct Answer Every year, Doug is required to take one full
week of vacation time.
Earnings management - Correct Answer the strategic choice of
accounting estimates and judgements in order to meet pre-
determined financial statement targets
Reasons for earnings management - Correct Answer • Meet
internal targets (bonus threshold)
• Meet external expectations (analyst expectations)
• Income smoothing (stability vs. volatility)
• Window dressing for an IPO or a loan (cleaning business and
financial statements up)
- managers subject to an earnings-based bonus plan are more
likely to manage earnings upward if they are close to the bonus
threshold
- if you violate a loan covenant, you are in technical violation of
the loan conditions
Meet external expectations - Correct Answer missing analyst
expectations by a penny per share can cause a company's stock
price to drop by many dollars per share
- if you violate a loan covenant, you are in technical violation of
the loan conditions
- business press reports, public relation problems, PANIC
income smoothing - Correct Answer The practice of carefully
timing the recognition of revenues and expenses to even out the
amount of reported earnings from one year to the next
stability vs. volatility
- perceived riskiness
window dressing for an IPO or a loan - Correct Answer net
income is an extremely important input into the determination of
the IPO price (initial public offering)
- the IPO price is very important to the founders because this is
how much they get for their work un starting up the company
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