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WGU Accounting for Decision Makers C213 VAC2 Sample Questions:

1. Which act was implemented as a result of the corporate scandals at companies such as Enron and WorldCom?

A) Auditing Accountability Act
B) Securities Exchange Act
C) Corporate Accountability Act
D) Sarbanes-Oxley Act

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

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

3. What does it mean if a company has a debt ratio of 101.5%?

A) The company has 1.5% more total liabilities than gross sales
B) The company has 1.5% more total liabilities than total assets
C) The company has 1.5% more current liabilities than current assets
D) The company has 1.5% more total liabilities than net income

4. A company allocates overhead based on the number of shoes produced.
The company estimates the following costs and shoe production for the upcoming year:
Estimated total overhead = $1,250,000
Estimated number of shoes = 4,000,000
Actual overhead = $1,350,000
Actual number of shoes = 4,100,000
What is the predetermined overhead rate?

A) $0.313
B) $0.375
C) $0.343
D) $0.329

5. 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

Solutions: