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Which technique describes the practice of incurring debt but fully paying the debt over time?
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B
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Explanation
The best answer is B. Liability deferral . Among the choices provided, this is the only option that relates to a liability-based arrangement in which an obligation is incurred and then settled over time. In accounting, debt that is taken on and repaid through scheduled installments is generally treated as a liability until it is extinguished through repayment. Repaying principal over time is commonly described in finance as amortization of debt principal , meaning the borrower fully pays the debt in installments over a period of time. The other options do not fit this meaning. Income smoothing refers to managing the pattern of reported earnings to reduce fluctuations between periods, not simply borrowing and repaying debt. “Profit control” and “accounting management” are not standard terms for the repayment of debt over time in basic accounting frameworks. Because the question asks for the option that best matches the idea of incurring debt and then paying it off over time, Liability deferral is the most appropriate answer from the choices given, even though “debt amortization” would be the more standard term in practice. |
Under the Sarbanes-Oxley Act, which requirement must an accounting firm that audits public companies meet?
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B
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Explanation
The correct answer is B . Section 201 of the Sarbanes-Oxley Act and related SEC rules prohibit registered public accounting firms from providing certain nonaudit services to their audit clients because those services could impair auditor independence. The SEC’s rulemaking specifically identifies prohibited services, including internal audit outsourcing , among other restricted nonaudit services. Option A is incorrect because SOX requires lead audit partner rotation , not mandatory rotation of the entire audit firm after five years. Option C is incorrect because SOX does not impose a blanket ban on advertising by audit firms. Option D is also incorrect because while the audit committee, not management alone, plays a central role in hiring and overseeing the external auditor, the statement as written is not the key audit-firm requirement highlighted by SOX in this context. The most specific and widely tested SOX requirement here is the prohibition on certain nonaudit services to audit clients. This rule protects objectivity by preventing the auditor from effectively reviewing its own consulting or internal audit work. Therefore, Option B is correct. |
How are activity-based costing systems different from traditional costing systems?
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C
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Explanation
The correct answer is C . Activity-based costing (ABC) is generally more precise than traditional costing when a company makes multiple products that consume overhead resources differently. ABC assigns overhead by identifying activities and using multiple cost drivers that better reflect how products actually use resources. Sources on ABC explain that it improves cost accuracy compared with traditional systems, especially in more complex production environments. Option A is incorrect because the statement is reversed. Traditional costing often uses a single volume-based driver such as labor hours or machine hours, while ABC commonly uses multiple cost drivers . Option B is incorrect because ABC is usually more time-consuming and expensive to administer, not less. Option D is also incorrect because ABC is especially useful when products are heterogeneous , meaning they differ in the amount and type of overhead resources they consume. Therefore, the key difference is that ABC gives a more precise assignment of overhead costs than traditional costing when multiple products are produced. That makes Option C the correct answer. |
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Find answers to the most common questions about the WGU Accounting-for-Decision-Makers exam, including what it is, how to prepare, and how it can boost your career.
The WGU Accounting-for-Decision-Makers certification is a globally-acknowledged credential that is awarded to candidates who pass this certification exam by obtaining the required passing score. This credential attests and validates the candidates' knowledge and hands-on skills in domains covered in the WGU Accounting-for-Decision-Makers certification syllabus. The WGU Accounting-for-Decision-Makers certified professionals with their verified proficiency and expertise are trusted and welcomed by hiring managers all over the world to perform leading roles in organizations. The success in WGU Accounting-for-Decision-Makers certification exam can be ensured only with a combination of clear knowledge on all exam domains and securing the required practical training. Like any other credential, WGU Accounting-for-Decision-Makers certification may require periodic renewal to stay current with new innovations in the concerned domains.