WGU D774 INTRODUCTION TO BUSINESS
ACCOUNTING EXAM TEST BANK 2026
COMPLETE QUESTIONS WITH PRACTICE
SOLUTION
◉ A business owns equipment that has a five-year useful life.
How should this equipment be classified in accounting? Answer:
Tangible asset
◉ Freedom Rock Bicycles would like to increase its cash balance to
prepare for upcoming business expenses. The company has
approached its shareholders who agreed to purchase $1,000,000 in
common stock.
How would this impact the balance sheet of Freedom Rock Bicycles?
Answer: The assets and shareholders' equity would increase.
◉ Which transaction would be a cash outflow from INVESTING
activities? Answer: Cash paid for the purchase of a building
◉ Which section of the statement of cash flows would show the
company can sustain its cash flow from the daily business activities?
Answer: Operating activities section
, ◉ Why is the statement of cash flows considered an essential
financial statement for investors and creditors when evaluating a
company's financial health? Answer: It shows the company's ability
to generate and use funds during a period.
◉ Which financial statement requires the balance sheet to be
completed first to ensure an account balance reconciles correctly?
Answer: Statement of cash flows
◉ Which statement explains the relationship between the income
statement and the statement of owners' equity assuming the income
statement shows a net income? Answer: The net income from the
income statement is used to increase the beginning owners' equity
balance on the statement of owners' equity.
◉ Variance Analysis is? Answer: Method businesses use to compare
budgeted figures to actual results and identify where adjustments
may be needed.
◉ Incremental and Zero-Based Budgeting Answer: Two different
approaches to budget creation, one that builds on past budgets and
one that starts fresh each cycle.
◉ Advantages to incremental budgeting? Answer: Simple & efficient,
stable & predictable, lower resistance to change
ACCOUNTING EXAM TEST BANK 2026
COMPLETE QUESTIONS WITH PRACTICE
SOLUTION
◉ A business owns equipment that has a five-year useful life.
How should this equipment be classified in accounting? Answer:
Tangible asset
◉ Freedom Rock Bicycles would like to increase its cash balance to
prepare for upcoming business expenses. The company has
approached its shareholders who agreed to purchase $1,000,000 in
common stock.
How would this impact the balance sheet of Freedom Rock Bicycles?
Answer: The assets and shareholders' equity would increase.
◉ Which transaction would be a cash outflow from INVESTING
activities? Answer: Cash paid for the purchase of a building
◉ Which section of the statement of cash flows would show the
company can sustain its cash flow from the daily business activities?
Answer: Operating activities section
, ◉ Why is the statement of cash flows considered an essential
financial statement for investors and creditors when evaluating a
company's financial health? Answer: It shows the company's ability
to generate and use funds during a period.
◉ Which financial statement requires the balance sheet to be
completed first to ensure an account balance reconciles correctly?
Answer: Statement of cash flows
◉ Which statement explains the relationship between the income
statement and the statement of owners' equity assuming the income
statement shows a net income? Answer: The net income from the
income statement is used to increase the beginning owners' equity
balance on the statement of owners' equity.
◉ Variance Analysis is? Answer: Method businesses use to compare
budgeted figures to actual results and identify where adjustments
may be needed.
◉ Incremental and Zero-Based Budgeting Answer: Two different
approaches to budget creation, one that builds on past budgets and
one that starts fresh each cycle.
◉ Advantages to incremental budgeting? Answer: Simple & efficient,
stable & predictable, lower resistance to change
