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WGU Accounting for Decision Makers C213 VAC2 Sample Questions:

1. Which technique describes the practice of incurring debt but fully paying the debt over time?

A) Liability deferral
B) Accounting management
C) Profit control
D) Income smoothing

2. 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) Assign overhead costs
C) Calculate G & A
D) Double check the DM & DL calculations

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

4. During the year, a company purchased goods on a credit basis for its supplies of $750.
What would be the impact on the accounting equation and financial statement?

A) Increase in assets by $750 and decrease in liability by $750
B) Increase in assets by $750 and increase in liability by $750
C) Decrease in assets by $750 and increase in liability by $750
D) Decrease in assets by $750 and decrease in liability by $750

5. The following list provides partial financial information for a company.
Financial Category | 20X3 | 20X2
Net income | $3,540 | ?
Cash from operations | $4,417 | ?
Cash paid for capital expenditures | $5,613 | ?
Cash paid for acquisitions | $5,964 | ?
Cash paid for interest | $2,782 | ?
Cash paid for income taxes | $2,860 | ?
What is the cash flow to net income ratio for this company in 20X2?

A) -0.01
B) 1.35
C) 2.45
D) 1.80

Solutions: