WGU C213 Questions and Answers with Complete Solutions

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WGU C213 Questions and Answers with Complete Solutions Accounting ✔✔A system of providing "quantitative information, primarily financial in nature, about economic entities that is intended to b... e useful in making economic decisions." Balance Sheet ✔✔Document which reports the resources of a company (the assets), the company's obligations (the liabilities), and the owners' equity, which represents how much money has been invested in the company by its owners. American Institute of Certified Public Accountants (AICPA) ✔✔The professional organization of certified public accountants in the United States. Bookkeeping ✔✔The preservation of a systematic, quantitative record of an activity. Certified Public Accountant ✔✔A person who has taken a minimum number of college-level accounting classes, has passed the dreaded CPA exam, and has met other requirements set by his or her state. Financial Accounting ✔✔The name given to accounting information provided for and used by external users. Financial Accounting Standards Board (FASB) ✔✔Private, non-profit body that sets accounting standards in the United States. Financial Statements ✔✔The three primary financial information documents: the balance sheet, income statement, and statement of cash flows. Income Statement ✔✔This document reports the amount of net income earned by a company during a period, with annual and quarterly income statements being the most common. Internal Revenue Service (IRS) ✔✔The government agency responsible for tax collection and tax law enforcement. International Accounting Standards Board (IASB) ✔✔An independent, international body formed to develop worldwide accounting standards. International Financial Reporting Standards (IFRS) ✔✔The accounting standards produced by the IASB. Managerial Accounting ✔✔The name given to accounting systems designed for internal users. Public Company Accounting Oversight Board (PCAOB) ✔✔A private, non-profit organization that effectively serves as an arm of the SEC in registering, inspecting, and disciplining the auditors of all publicly traded companies. Statement of Cash Flows ✔✔This document reports the amount of cash collected and paid out by a company in the following three types of activities: operating, investing, and financing. Accounting Equation ✔✔Assets = Liabilities + Owners' Equity Accumulated Other Comprehensive Income ✔✔The source of these increased assets Assets ✔✔Assets are the firm's economic resources, formally defined as "probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events What does accounting focus on? ✔✔The impact a business's activities have on its overall financial performance Which report summarizes cash collections and cash expenditures from operating, investing, and financing activities over a period of time? ✔✔Statement of cash flows Which users would have a primary concern with an organization's ability to provide healthcare benefits? ✔✔Employees Which benefit does a corporation gain by following Generally Accepted Accounting Principles (GAAP)? ✔✔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? ✔✔The Public Company Accounting Oversight Board (PCAOB) What has had the most significant impact on accounting practices? ✔✔Information technology What two items of information are revealed on the balance sheet? ✔✔Ownership, Debt Which term is defined as the residual interest in the net assets of a company? ✔✔Owners' equity 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? ✔✔$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? ✔✔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? ✔✔Cash flows from financing activities Where would an investor find a summary of a company's significant accounting policies? ✔✔In the notes to financial statements Which assurance does an external audit report provide for its readers? ✔✔The company's financial statements fairly reflect its financial position Match each accounting term with its definition. ✔✔Reliable = Information that can be verified Relevant = Information having to do with the matter at hand Material = Information that is important enough to make a difference Conservatism = Information related to recognizing losses as they occur Order the steps in the decision cycle from first (1) to last (5). ✔✔1. Prepare financial statements 2.Analyze financial statements 3.Gather information 4. Make decision 5. Implement decision 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 What is the price-earnings (PE) ratio for this company? ✔✔11.0 What does it mean if a company has a debt ratio of 101.5%? ✔✔The company has 1.5% more total liabilities than total assets. What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the same? ✔✔Continual decrease in sales Which two cash flow adequacy ratios represent a cash cow? ✔✔$6,991/$5,486 $5,220/$1,875 Which formula yields a cash times interest earned ratio of 11? ✔✔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? ✔✔Notes payable expected to be paid in 18 months Which two values affect the measu [Show More]

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