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WGU Accounting for Decision Makers C213 VAC2 Sample Questions:

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

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

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

3. Which two costs would be used to calculate inventory overhead?
Choose 2 answers.

A) Production employee benefits
B) Administrative office electricity costs
C) Factory electricity costs
D) Administrative employee benefits

4. 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) Investments will increase by $900,000
C) Retained earnings will increase by $900,000
D) Loan payable will increase by $900,000

5. Which source of cash is the best indicator of a firm's viability as an ongoing concern?

A) Cash from investing activities
B) Cash from production activities
C) Cash from financing activities
D) Cash from operating activities

Solutions: