WGU C213 ACCOUNTING CHAPTER 8 Practice Exam Questions and Approved Answers 2023/2024

WGU C213 ACCOUNTING CHAPTER 8 Practice Exam Questions and Approved Answers 2023/2024 Which of the following groups on the earnings management continuum are always considered ethical? o Aggressive accounting and fraudulent reporting o Deceptive accounting and savvy transaction timing o There is not a clear definition as to which of these are ethical and which are not o Savvy transaction timing and aggressive accounting - Correct Answer There is not a clear definition as to which of these are ethical and which are not As William is preparing the end of year financial statements, he has been asked to review the accrual judgments and estimates to see if the originally calculated net loss can be changed to a net profit. This is an example of o Window dressing o Meeting internal targets o Income smoothing o Meeting external expectations - Correct Answer Meeting external expectations Earnings management through deceptive accounting is best exemplified by o Timing transactions such that large one-time gains and losses occur in the same quarter. o Capitalizing as assets expenditures that have no future economic benefit. o Changing the interest rate used in accounting for leases without describing the change in the notes to the financial statements. o Changing the useful life of a depreciable asset and fully disclosing it in the notes. - Correct Answer Changing the interest rate used in accounting for leases without describing the change in the notes to the financial statements Which of the following items of the earnings management continuum is in the correct order? o strategic matching, change in methods or estimates with little of no disclosure, fictitious transactions, change in methods or estimates with full disclosure, non-GAAP accounting o strategic matching, change in methods or estimates with full disclosure, change in methods or estimates with little or no disclosures, non-GAAP accounting, fictitious transactions o change in methods or estimates with full disclosure, non-GAAP accounting, fictitious transactions, strategic matching, change in methods or estimates with little or no disclosure o non-GAAP accounting, change in methods or estimates with little or no disclosure, strategic matching, fictitious transactions, change in methods or estimates with full disclosure - Correct Answer strategic matching, change in methods or estimates with full disclosure, change in methods or estimates with little or no disclosures, non-GAAP accounting, fictitious transactions The Public Company Accounting Oversight Board o Conducts inspections of accounting firms o Establishes requirements for entry into the CPA profession o Reviews tax returns of public companies o Enforces compliance with the Foreign Corrupt Practices Act - Correct Answer Conducts inspections of accounting firms The Sarbanes-Oxley Act establishes o Constraints on auditors o Constraints on company management o All of these are correct o Independent oversight of auditors - Correct Answer All of these are correct