WGU C213 PA & OA Study Guide

The impact a business's activities have on its overall financial performance - ANSWER What does accounting focus on? Statement of cash flows - ANSWER Which report summarizes cash collections and cash expenditures from ...

The impact a business's activities have on its overall financial performance - ANSWER What does accounting focus on? Statement of cash flows - ANSWER Which report summarizes cash collections and cash expenditures from operating, investing, and financing activities over a period of time? Employees - ANSWER Which users would have a primary concern with an organization's ability to provide healthcare benefits? An increase in its compatibility to other companies - ANSWER Which benefit does a corporation gain by following Generally Accepted Accounting Principles (GAPP)? The Public Company Accounting Oversight Board (PACOB) - ANSWER Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large publicly traded company? Information technology - ANSWER What has had the most significant impact on Accounting practices? Ownership and Debt - ANSWER What two items of information are revealed on the balance sheet? Owners equity - ANSWER Which term is defined as the residual in the net assets of a company? In 2014, a company provides services to a customer for which cash will be collected the next year (2015). - ANSWER Which situation should result in revenue recognition on the income statement for the year ending 12/31/14 if the firm is using accrual accounting? Cash from financing activities - ANSWER Which category on the statement of cash flows summarizes cash receipts and payments to owners and creditors of the company? In the notes to financial statements - ANSWER Where would an investor find a summary of a company's significant accounting policies? The company's financial statements fairly reflect its financial position - ANSWER Which assurance does an external audit report provide for its readers? Reliable - ANSWER Information that can be verified Relevant - ANSWER Information having to do with the matter at hand Material - ANSWER Information that is important enough to make a difference Conservatism - ANSWER Information related to recognizing losses as they occur Continual decrease in sales - ANSWER What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the same? Notes payable expected to be paid in 18 months - ANSWER Which form of debt should be reported in the long-term liability category? Operating expenses & Ordinary gains and losses - ANSWER Which values affect the measurement of net income? Gross profit & Income from operations - ANSWER Which items' subtotals are included in a multi-step income statement? Cash from investing activities - ANSWER What is a common category in a statement of cash flows? Cash from financing activities - ANSWER Which cash flow category would include "cash received from investors"? Cash payments for purchase of plant assets - ANSWER Which item is an investing activity? Increase in cash from investing activities - ANSWER What impact does the sale of equipment have on the statement of cash flows? The indirect method is more popular among large U.S. companies - ANSWER What is known about the direct and indirect methods of preparing statements of cash flow? The inventory department counts and inspects items as received and forwards the receiving record to accounts payable. - ANSWER Which internal control is intended to ensure that a company does not mistakenly pay a supplier for an invoice that includes more items than were actually received? Pressure to meet internal sales goals & Preparing to qualify for a bank loan - ANSWER What are common reasons for managers to manipulate reported earnings? Firms must not provide certain non-audit services to audit clients, such as management functions or legal services. & Firms must report to and be retained by the audit committee rather than the CFO or other company management. - ANSWER Which requirements must accounting firms that audit public companies meet under the Sarbanes-Oxley Act? They search for and investigate fraud. & They review financial records and internal controls. - ANSWER Which actions do internal auditors perform to assist in maintaining the integrity of financial statements? They ensure that financial statement users are provided with reliable information to use in decision making - ANSWER What is a significant role of the U.S. Securities and Exchange Commission (SEC) in financial reporting? A better insight for management so a business can perform more effectively & A competitive edge to a business by providing its managers with the detailed data needed to make decisions - ANSWER What does management accounting provide? Management accounting is used primarily for internal planning, control, and evaluation. - ANSWER How does management accounting differ from financial accounting? Inventory - ANSWER Which account is seen on the balance sheet of a manufacturing company but not on the balance sheet of a service-oriented company? Differential cost - ANSWER What is a cost that will change in the future based upon the decision made? Administrative expenses & Selling expenses - ANSWER Which are examples are period costs? Salary cost of the receptionist Advertising cost - ANSWER A company manufactures custom-built wooden bookshelves. Which two costs would the company classify as period costs? Answer Choices: Wood cost, Salary cost of the craftsperson, Salary cost of the receptionist, Advertising cost To guide the resolution to possible ethical dilemmas that the managerial accountant may encounter - ANSWER What role do ethical standards have in management accounting? Direct labor costs Overhead costs - ANSWER Which two costs are included when calculating inventory costs? A company produces five different products. The products are highly differentiated and have significantly different demands for their use of overhead costs. - ANSWER In which scenario would activity-based costing be more appropriate than traditional costing? Batch-level activities - ANSWER Which category of ABC activities are machine setup and material movement costs associated with? The number of race participants and spectators - ANSWER The director of a marathon race wants to assign the cost of having police officers along the race route to manage crowd control. Which consideration is an appropriate cost driver? The price of Product B should be increased. - ANSWER Company A calculated the following information under traditional and activity-based costing for the production and sale of 1,000 units of Product B: Traditional ABC Sales $100,000 $100,000 Cost of goods sold $70,000 $110,000 Gross margin $30,000 ($10,000) Which decision should be made about the selling price of Product B? Profits Cash - ANSWER Which two concepts are studied in cost-volume-profit analysis? Total fixed costs will stay the same. Fixed costs per unit will decrease. - ANSWER What are two impacts on costs as sales volume increases? Credit limits were increased for all customers - ANSWER A company is experiencing an increase in their bad debt expense. Which change in credit policy would cause this increase? Overstates owner's equity - ANSWER If a company does NOT record accrued wages expense at the end of the year, how does this affect the year-end financial statements? Overstates assets - ANSWER Failure to record the used portion of supplies on hand during the month has the following effect on the financial statements prepared at the end of the month Safeguards - ANSWER Which of the following is NOT a reason for problems occurring in the financial statements? Failure to record depreciation expense - ANSWER Which one of the following errors causes net income to be overstated? Understatement of total assets and total liabilities - ANSWER Recording the payment of an accounts payable twice will result in? Earnings management - ANSWER Which of the following is NOT one of the major safeguards in the financial reporting process? Make sure a company only records profitable transactions - ANSWER Which of the following is NOT an objective of the accounting system? Describe in detail the internal controls of the company - ANSWER The Sarbanes-Oxley act requires that an internal control report be included in every company's annual report. Which one of the following is NOT one of the requirements of the internal control report? The Securities and Exchange Commissions regulations are followed - ANSWER Which of the following is NOT one of the major concerns of most company's have when they are designing internal controls? Auditing system - ANSWER Which of the following is NOT one of the five basic categories of internal control? Timing transactions so that large one-time gains and losses occur in the same quarter. - ANSWER Earnings management through strategic matching is exemplified by Changing the useful life of a depreciable asset and fully disclosing it in the notes - ANSWER Earnings management through aggressive accounting is best exemplified by Recording expenses as assets - ANSWER Which of the following typically involves the use of non-GAAP accounting? Changing the interest rate used in accounting for leases without describing the change in the notes to financial statements. - ANSWER Earnings management through deceptive accounting is best exemplified by Make loans to executive officers and directors - ANSWER Which of the following does Sarbanes-Oxley NOT require management to do? Audit committee - ANSWER According to Sarbanes-Oxley who are auditors required to report to and be retained by? Conducts inspections of accounting firms - ANSWER The public accounting oversight board Opinions about the reliability of internal controls - ANSWER According to Sarbanes-Oxley, which one of the following services is an accounting firm permitted to provide to its audit client? Enforce compliance with the Foreign Corrupt Practices Act - ANSWER The public accounting oversight board is NOT required to Generally Accepted Auditing Standards - ANSWER Which of the following required CPA's to provide reasonable assurance that significant fraud or misstatement is NOT present in financial statements? Confirmation - ANSWER Which of the following audit processes is primarily used by external auditors and not by internal auditors? Certified Public Accountant - ANSWER What is the most common professional designation for external auditors? Prepare the primary financial statements - ANSWER Which of the following activities would internal auditors NOT typically perform in a large company? Analytical procedures - ANSWER Which of the following audit processes attempts to identify areas that may deserve attention by using te