Exam Questions Grade A

WGU C213 – Accounting for Decision Makers Objective Assessment | Verified Exam Questions | Grade A | 2025/2026

Section 1: Introduction

This document provides verified exam questions from WGU C213, covering managerial accounting, financial statements, ratios, budgeting, and break-even analysis. Ideal for decision-making in business environments.

Section 2: Exam Questions and Answers

• What is the primary purpose of managerial accounting?
• Prepare tax returns
• Provide financial reports for external stakeholders
• Assist managers in internal decision-making
• Ensure compliance with SEC regulations

Correct Answer: C. Assist managers in internal decision-making

Rationale: Managerial accounting focuses on providing data for internal planning, controlling, and decision-making.

• Which financial statement shows a company’s financial position at a specific

point in time?

• Income statement
• Balance sheet
• Statement of cash flows
• Statement of retained earnings

Correct Answer: B. Balance sheet

Rationale: The balance sheet reports assets, liabilities, and equity at a specific date.

• What does the current ratio measure?
• Long-term solvency
• Short-term liquidity
• Profitability
• Operational efficiency

Correct Answer: B. Short-term liquidity

Rationale: Current ratio (current assets ÷ current liabilities) assesses ability to pay short-term obligations.

• A company has $500,000 in sales, $300,000 in variable costs, and $100,000 in

fixed costs. What is the contribution margin?

A. $100,000

B. $200,000

C. $400,000

D. $500,000

Correct Answer: B. $200,000

Rationale: Contribution margin = Sales ($500,000) – Variable costs ($300,000) =

$200,000. 1 / 2

• Which of the following is NOT a type of financial statement note?
• Significant accounting policies
• Supplementary information required by the IRS
• Disclosure of unrecognized information
• Additional information about summary totals

Correct Answer: B. Supplementary information required by the IRS

Rationale: Notes include policies, disclosures, and details, not IRS-specific

requirements.

• What is the break-even point in units if fixed costs are $50,000, selling price per

unit is $25, and variable cost per unit is $15?

• 2,000 units
• 3,333 units
• 5,000 units
• 10,000 units

Correct Answer: C. 5,000 units

Rationale: Break-even point = Fixed costs ÷ (Selling price – Variable cost) = $50,000 ÷ ($25 – $15) = 5,000 units.

• Which budgeting method starts from zero each period?
• Incremental budgeting
• Zero-based budgeting
• Flexible budgeting
• Static budgeting

Correct Answer: B. Zero-based budgeting

Rationale: Zero-based budgeting requires justifying all expenses anew each period.

• What does the debt-to-equity ratio indicate?
• Liquidity
• Profitability
• Leverage
• Efficiency

Correct Answer: C. Leverage

Rationale: Debt-to-equity ratio measures the proportion of debt to equity, indicating leverage.

• A company’s net income is $100,000, and total assets are $1,000,000. What is the

return on assets (ROA)?

• 5%

B. 10%

C. 15%

D. 20%

Correct Answer: B. 10%

Rationale: ROA = Net income ÷ Total assets = $100,000 ÷ $1,000,000 = 10%.

• Which of the following is an example of a cash flow from operating activities?
• Purchasing equipment
• Issuing stock
• Collecting accounts receivable
• Paying dividends

Correct Answer: C. Collecting accounts receivable

Rationale: Operating activities involve cash flows from core business operations.

• What is the purpose of the statement of cash flows?
• Show profitability
• Detail changes in cash position
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