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WGU Accounting for Decision Makers C213 VAC2 Sample Questions:

1. 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) Loan payable will increase by $900,000
D) Retained earnings will increase by $900,000

2. Which information does a balance sheet provide about a company?

A) Revenues and expenses for a period of time
B) Assets and liabilities for a specific point in time
C) Cash collections and cash expenditures for a period of time
D) Cash collections and cash expenditures at a specific point in time

3. Which two item subtotals are included in a multi-step income statement?
Choose 2 answers.

A) Income from operations
B) Total assets
C) Gross profit
D) Current liabilities

4. What are the costs associated with two or more business units called?

A) Direct costs
B) Product costs
C) Indirect costs
D) Variable costs

5. What can be deduced when a company has an asset turnover of 0.95?

A) The company was able to generate $0.95 in liabilities for each dollar in assets
B) The company was able to generate $0.95 in profit for each dollar in assets
C) The company was able to generate $0.95 in sales for each dollar in assets
D) The company was able to generate $0.95 in equity for each dollar in assets

Solutions: