WGU Accounting for Decision Makers C213 VAC2 : Accounting-for-Decision-Makers

Which balance sheet category reflects what a company owns that can be turned into cash or used to generate cash?

• A. Assets
• B. Owners' equity
• C. Liabilities
• D. Revenues

A company has projected the following sales for the spring quarter of a year:
April = $300,000
May = $325,000
June = $375,000
Cash is used to pay for 65% of all sales. The remainder is on credit.
The pattern for credit receivables collections is as follows:
* Month of sale = 60%
* Month after sale = 30%
* Second month after sale = 10%
What are the projected cash sales for all three months of the spring quarter?

• A. $350,000
• B. $195,000
• C. $650,000
• D. $105,000

Under the Sarbanes-Oxley Act, which requirement must an accounting firm that audits public companies meet?

• A. The firm cannot provide several nonaudit services such as internal audit outsourcing to its audit clients
• B. The firm cannot audit a company for more than five years
• C. The firm cannot be retained only by the CFO
• D. The firm cannot use any forms of advertising to obtain new audit clients

A company presently uses traditional volume-based costing to allocate overhead to its products.
The following table provides information on two of the company's products:
Product A
Product B
Selling price
$8
$12
Direct material
$2
$3
Direct labor
$1
$2
Applied overhead
$3
$4
Gross margin
$2
$3
Overhead that would be applied to Product A would increase to $8 per unit after identifying cost pools and cost drivers, and the overhead applied to Product B would drop to $2 per unit .
How would this change in the way overhead is allocated affect the selling price of both products?

• A. The price of neither product would change
• B. The price of Product A would decrease, and the price of Product B would increase
• C. The price of Product A would increase, and the price of Product B would decrease
• D. The price of Product A would increase, and the price of Product B would increase

A company budgeted the following purchases for raw materials:
January = $10,000
February = $20,000
March = $25,000
April = $22,000
May = $27,000
June = $30,000
July = $24,000
The company has a policy of paying for 40% of purchases in the month of the purchase, 35% in the month following the purchase, and 25% in the second month following the purchase.
What are the budgeted cash disbursements for May based on this information?

• A. $27,300
• B. $18,500
• C. $25,050
• D. $24,750