WGU D774 Introduction to Business
Accounting ACTUAL EXAM
2026/2027 | Introduction to Business
Accounting | Verified Q&A | Pass
Guaranteed - A+ Graded
[Competency 1: Accounting Equation & Financial Statements]
Q1: A company reports total assets of $450,000 and total liabilities of $180,000. What is the amount of
stockholders' equity? [C1]
A. $270,000 [CORRECT]
B. $630,000
C. $450,000
D. $180,000
Correct Answer: A
Rationale: This question aligns with Competency 1, Learning Objective 1.1 (Apply the accounting
equation). Using Assets = Liabilities + Equity, we calculate: $450,000 - $180,000 = $270,000. Option B
represents the error of adding liabilities to assets instead of subtracting. Option C simply restates total
assets. Option D restates total liabilities, confusing which element represents equity.
Q2: Which financial statement reports a company's financial position at a specific point in time? [C1]
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet [CORRECT]
D. Statement of Retained Earnings
Correct Answer: C
,Rationale: This question aligns with Competency 1, Learning Objective 1.3 (Identify the purpose and
structure of financial statements). The balance sheet presents assets, liabilities, and equity as of a
specific date. Option A reports financial performance over a period. Option B reports cash movements
over a period. Option D reports changes in retained earnings over a period, not position.
Q3: During its first year, Beta Corp. earned revenues of $85,000, incurred expenses of $62,000, and paid
dividends of $8,000. What is net income? [C1]
A. $15,000
B. $23,000 [CORRECT]
C. $31,000
D. $77,000
Correct Answer: B
Rationale: This question aligns with Competency 1, Learning Objective 1.2 (Calculate net income). Net
income = Revenues - Expenses = $85,000 - $62,000 = $23,000. Dividends are not an expense and do not
affect net income calculation. Option A incorrectly subtracts dividends ($85,000 - $62,000 - $8,000).
Option C adds expenses instead of subtracting. Option D subtracts expenses from revenues plus
dividends.
Q4: The statement of retained earnings shows beginning retained earnings of $45,000, net income of
$28,000, and dividends of $12,000. What is ending retained earnings? [C1]
A. $33,000
B. $61,000 [CORRECT]
C. $73,000
D. $85,000
Correct Answer: B
Rationale: This question aligns with Competency 1, Learning Objective 1.4 (Prepare the statement of
retained earnings). Ending RE = Beginning RE + Net Income - Dividends = $45,000 + $28,000 - $12,000 =
$61,000. Option A subtracts net income instead of adding. Option C adds dividends instead of
subtracting. Option D adds all three amounts together.
Q5: Which of the following accounts increases with a credit? [C1]
A. Cash
B. Accounts Receivable
, C. Equipment
D. Accounts Payable [CORRECT]
Correct Answer: D
Rationale: This question aligns with Competency 1, Learning Objective 1.5 (Apply debit/credit rules).
Liabilities increase with credits; Accounts Payable is a liability. Options A, B, and C are all asset accounts,
which increase with debits. Students often confuse liability and asset normal balances.
Q6: A company purchases equipment for $25,000 cash. How does this transaction affect the accounting
equation? [C1]
A. Assets increase $25,000; Liabilities increase $25,000
B. Assets decrease $25,000; Equity decreases $25,000
C. No change in total assets [CORRECT]
D. Assets increase $25,000; Equity increases $25,000
Correct Answer: C
Rationale: This question aligns with Competency 1, Learning Objective 1.1 (Analyze transaction effects
on the accounting equation). Equipment (asset) increases $25,000 while Cash (asset) decreases
$25,000—net effect on total assets is zero. Option A confuses this with a credit purchase. Option B
confuses this with an expense. Option D confuses this with revenue generation.
Q7: Which account would appear on the income statement? [C1]
A. Prepaid Insurance
B. Unearned Revenue
C. Salaries Expense [CORRECT]
D. Common Stock
Correct Answer: C
Rationale: This question aligns with Competency 1, Learning Objective 1.3 (Classify accounts by financial
statement). Expense accounts appear on the income statement. Option A is an asset (balance sheet).
Option B is a liability (balance sheet). Option D is equity (balance sheet). Students must distinguish
temporary (income statement) from permanent (balance sheet) accounts.
Q8: A company has beginning assets of $200,000, ending assets of $280,000, beginning liabilities of
$90,000, and ending liabilities of $120,000. If no additional stock was issued and dividends were
$15,000, what is net income? [C1]
Accounting ACTUAL EXAM
2026/2027 | Introduction to Business
Accounting | Verified Q&A | Pass
Guaranteed - A+ Graded
[Competency 1: Accounting Equation & Financial Statements]
Q1: A company reports total assets of $450,000 and total liabilities of $180,000. What is the amount of
stockholders' equity? [C1]
A. $270,000 [CORRECT]
B. $630,000
C. $450,000
D. $180,000
Correct Answer: A
Rationale: This question aligns with Competency 1, Learning Objective 1.1 (Apply the accounting
equation). Using Assets = Liabilities + Equity, we calculate: $450,000 - $180,000 = $270,000. Option B
represents the error of adding liabilities to assets instead of subtracting. Option C simply restates total
assets. Option D restates total liabilities, confusing which element represents equity.
Q2: Which financial statement reports a company's financial position at a specific point in time? [C1]
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet [CORRECT]
D. Statement of Retained Earnings
Correct Answer: C
,Rationale: This question aligns with Competency 1, Learning Objective 1.3 (Identify the purpose and
structure of financial statements). The balance sheet presents assets, liabilities, and equity as of a
specific date. Option A reports financial performance over a period. Option B reports cash movements
over a period. Option D reports changes in retained earnings over a period, not position.
Q3: During its first year, Beta Corp. earned revenues of $85,000, incurred expenses of $62,000, and paid
dividends of $8,000. What is net income? [C1]
A. $15,000
B. $23,000 [CORRECT]
C. $31,000
D. $77,000
Correct Answer: B
Rationale: This question aligns with Competency 1, Learning Objective 1.2 (Calculate net income). Net
income = Revenues - Expenses = $85,000 - $62,000 = $23,000. Dividends are not an expense and do not
affect net income calculation. Option A incorrectly subtracts dividends ($85,000 - $62,000 - $8,000).
Option C adds expenses instead of subtracting. Option D subtracts expenses from revenues plus
dividends.
Q4: The statement of retained earnings shows beginning retained earnings of $45,000, net income of
$28,000, and dividends of $12,000. What is ending retained earnings? [C1]
A. $33,000
B. $61,000 [CORRECT]
C. $73,000
D. $85,000
Correct Answer: B
Rationale: This question aligns with Competency 1, Learning Objective 1.4 (Prepare the statement of
retained earnings). Ending RE = Beginning RE + Net Income - Dividends = $45,000 + $28,000 - $12,000 =
$61,000. Option A subtracts net income instead of adding. Option C adds dividends instead of
subtracting. Option D adds all three amounts together.
Q5: Which of the following accounts increases with a credit? [C1]
A. Cash
B. Accounts Receivable
, C. Equipment
D. Accounts Payable [CORRECT]
Correct Answer: D
Rationale: This question aligns with Competency 1, Learning Objective 1.5 (Apply debit/credit rules).
Liabilities increase with credits; Accounts Payable is a liability. Options A, B, and C are all asset accounts,
which increase with debits. Students often confuse liability and asset normal balances.
Q6: A company purchases equipment for $25,000 cash. How does this transaction affect the accounting
equation? [C1]
A. Assets increase $25,000; Liabilities increase $25,000
B. Assets decrease $25,000; Equity decreases $25,000
C. No change in total assets [CORRECT]
D. Assets increase $25,000; Equity increases $25,000
Correct Answer: C
Rationale: This question aligns with Competency 1, Learning Objective 1.1 (Analyze transaction effects
on the accounting equation). Equipment (asset) increases $25,000 while Cash (asset) decreases
$25,000—net effect on total assets is zero. Option A confuses this with a credit purchase. Option B
confuses this with an expense. Option D confuses this with revenue generation.
Q7: Which account would appear on the income statement? [C1]
A. Prepaid Insurance
B. Unearned Revenue
C. Salaries Expense [CORRECT]
D. Common Stock
Correct Answer: C
Rationale: This question aligns with Competency 1, Learning Objective 1.3 (Classify accounts by financial
statement). Expense accounts appear on the income statement. Option A is an asset (balance sheet).
Option B is a liability (balance sheet). Option D is equity (balance sheet). Students must distinguish
temporary (income statement) from permanent (balance sheet) accounts.
Q8: A company has beginning assets of $200,000, ending assets of $280,000, beginning liabilities of
$90,000, and ending liabilities of $120,000. If no additional stock was issued and dividends were
$15,000, what is net income? [C1]
