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WGU Accounting for Decision Makers C213 VAC2 Sample Questions:

1. Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large, publicly traded company?

A) The Public Company Accounting Oversight Board (PCAOB)
B) The Internal Revenue Service (IRS)
C) The Financial Accounting Standards Advisory Council (FASAC)
D) The Financial Accounting Standards Board (FASB)

2. Which two procedures do external auditors use to gain confidence in the quality of a company's financial reporting processes?
Choose 2 answers.

A) They obtain confirmations from third parties the company does business with
B) They examine records to support balances and transactions
C) They perform a marketing analysis to determine demand for the company's products or services
D) They conduct a customer satisfaction survey
E) They poll the public regarding the company's external image

3. In January of Year 1, a company began doing business as a corporation in order to sell technology-related accessories and services. During its first month of operations, the following events occurred:
January 1
The corporation received $900,000 in cash in exchange for stock issued to stockholders.
January 3
The corporation borrowed $250,000 from a bank. The loan is a four-year loan with an interest rate of 12%, payable each year on January 1 beginning in Year 2.
January 5
The corporation purchased equipment to be used in the business for $200,000 cash.
January 8
The corporation purchased inventory costing $200,000 by paying $120,000 in cash. The remainder was put on credit accounts with suppliers.
January 15
The corporation hired five employees. Each employee will be paid $1,000 at the end of each month.
January 30
The corporation paid $6,000 cash for a one-year insurance policy. The policy period will begin on February 1, Year 1.
What will be the impact of the January 1 event on the company's balance sheet on that date, along with an increase to cash of $900,000?

A) Stockholders' equity will increase by $900,000
B) Loan payable will increase by $900,000
C) Retained earnings will increase by $900,000
D) Investments will increase by $900,000

4. A company manufactures leather products and has recently switched to the activity-based costing (ABC) method. It needs to determine the cost of its leather wallets. The company is already aware of its DM and DL costs.
What is the first step to calculating the cost of the product?

A) Identify overhead cost activities
B) Calculate G & A
C) Assign overhead costs
D) Double check the DM & DL calculations

5. What can be determined when a firm performs an external audit of a company's financial statements?

A) Whether a company's financial statements indicate that the company has to pay income taxes
B) Whether a company's financial statements indicate it made a profit
C) Whether a company's financial statements fairly reflect its financial position
D) Whether a company's financial statements were prepared by a trained bookkeeper

Solutions: