WGU | D774
OBJECTIVE ASSESSMENT - EXAM
WGU D774 Intro to
Business Accounting
Exam Bank (Objective
Assessment) Update,
Questions & Answers
(Verified Answers) ||
Complete A+ Guide
2026/2027
D774 | Intro to Business Accounting
75 100%
QUESTIONS VERIFIED ANSWERS EDITION
TOPICS COVERED
Double-Entry Bookkeeping Revenue and Expense Recognition
Adjusting and Closing Entries Operating, Investing, and Financing Activities
Asset Valuation and Depreciation Financial Statement Analysis
COVER PAGE - 1
, | WGU D774 Intro to Business Accounting Exam Bank (Objective Assessment) Update, Questions & Answers (Verified Answers)
Q1 Question 1 of 75
A small business owner records a transaction by increasing Cash and decreasing
Accounts Receivable. Which of the following describes the economic event that
occurred?
A. A customer made a payment on an outstanding invoice.
B. The business purchased equipment using cash.
C. A service was provided to a customer on credit.
D. The owner invested additional personal funds into the business.
Correct Answer: A
Rationale:
Increasing Cash (debit) and decreasing Accounts Receivable (credit) indicates that a
customer has paid off a balance they previously owed. This transaction converts one asset
into another without changing total assets.
Q2 Question 2 of 75
A bookkeeper is reviewing the trial balance and notices that a utility bill received but not
yet paid was completely omitted. How will this omission affect the financial statements?
A. Assets will be understated and liabilities will be overstated.
B. Expenses will be understated and liabilities will be understated.
C. Net income will be understated and equity will be overstated.
D. Revenue will be overstated and assets will be understated.
Correct Answer: B
Rationale:
An unpaid utility bill is an accrued expense. Omission means the expense wasn't recorded
(understated) and the liability (Accounts Payable) wasn't recorded (understated).
o to Business Accounting Exam Bank (Objective Assessment) Update, Questions & Answers (Verified Answers) || Complete A+ Guide 2026/2027 -- 2026/2027 | Passing Scor
, Q3 Question 3 of 75
A company uses the accrual basis of accounting and receives $5,000 in advance for a
six-month service contract starting in November. If the company's fiscal year ends on
December 31, how much revenue should be recognized in the current year?
A. $833
B. $1,667
C. $2,500
D. $5,000
Correct Answer: B
Rationale:
Under accrual accounting, revenue is earned over time. Two months (November and
December) of the six-month contract have passed, so ($5,) * 2 = $1,666.67, rounded
to $1,667.
Q4 Question 4 of 75
During the month of June, a company purchased $1,200 of office supplies on account.
By the end of the month, a physical count shows $400 of supplies still on hand. What is
the correct adjusting entry at June 30?
A. Debit Supplies $400; Credit Supplies Expense $400
B. Debit Supplies Expense $1,200; Credit Supplies $1,200
C. Debit Supplies Expense $800; Credit Supplies $800
D. Debit Accounts Payable $800; Credit Supplies $800
Correct Answer: C
Rationale:
The amount used is $1,200 - $400 = $800. The adjusting entry must move the cost of the
consumed supplies from the asset account (Supplies) to the expense account (Supplies
Expense).
o to Business Accounting Exam Bank (Objective Assessment) Update, Questions & Answers (Verified Answers) || Complete A+ Guide 2026/2027 -- 2026/2027 | Passing Scor
, Q5 Question 5 of 75
A firm records a $2,000 payment for an insurance policy that covers the next 12 months
as an expense immediately. What is the impact of this error on the end-of-period
Balance Sheet?
A. Assets and Equity are both understated.
B. Liabilities are overstated and Equity is understated.
C. Assets are overstated and Liabilities are understated.
D. Net Income and Assets are both overstated.
Correct Answer: A
Rationale:
By expensing the full amount, the firm fails to record a Prepaid Insurance asset. This
understates assets and also understates net income (and thus equity) for the period.
Q6 Question 6 of 75
Which of the following accounts is considered a 'permanent' or 'real' account that is not
closed at the end of the accounting period?
A. Dividends
B. Service Revenue
C. Accumulated Depreciation
D. Rent Expense
Correct Answer: C
Rationale:
Accumulated Depreciation is a contra-asset account and appears on the Balance Sheet.
Balance sheet accounts are permanent, whereas revenue, expense, and dividend accounts
are temporary and closed annually.
o to Business Accounting Exam Bank (Objective Assessment) Update, Questions & Answers (Verified Answers) || Complete A+ Guide 2026/2027 -- 2026/2027 | Passing Scor
OBJECTIVE ASSESSMENT - EXAM
WGU D774 Intro to
Business Accounting
Exam Bank (Objective
Assessment) Update,
Questions & Answers
(Verified Answers) ||
Complete A+ Guide
2026/2027
D774 | Intro to Business Accounting
75 100%
QUESTIONS VERIFIED ANSWERS EDITION
TOPICS COVERED
Double-Entry Bookkeeping Revenue and Expense Recognition
Adjusting and Closing Entries Operating, Investing, and Financing Activities
Asset Valuation and Depreciation Financial Statement Analysis
COVER PAGE - 1
, | WGU D774 Intro to Business Accounting Exam Bank (Objective Assessment) Update, Questions & Answers (Verified Answers)
Q1 Question 1 of 75
A small business owner records a transaction by increasing Cash and decreasing
Accounts Receivable. Which of the following describes the economic event that
occurred?
A. A customer made a payment on an outstanding invoice.
B. The business purchased equipment using cash.
C. A service was provided to a customer on credit.
D. The owner invested additional personal funds into the business.
Correct Answer: A
Rationale:
Increasing Cash (debit) and decreasing Accounts Receivable (credit) indicates that a
customer has paid off a balance they previously owed. This transaction converts one asset
into another without changing total assets.
Q2 Question 2 of 75
A bookkeeper is reviewing the trial balance and notices that a utility bill received but not
yet paid was completely omitted. How will this omission affect the financial statements?
A. Assets will be understated and liabilities will be overstated.
B. Expenses will be understated and liabilities will be understated.
C. Net income will be understated and equity will be overstated.
D. Revenue will be overstated and assets will be understated.
Correct Answer: B
Rationale:
An unpaid utility bill is an accrued expense. Omission means the expense wasn't recorded
(understated) and the liability (Accounts Payable) wasn't recorded (understated).
o to Business Accounting Exam Bank (Objective Assessment) Update, Questions & Answers (Verified Answers) || Complete A+ Guide 2026/2027 -- 2026/2027 | Passing Scor
, Q3 Question 3 of 75
A company uses the accrual basis of accounting and receives $5,000 in advance for a
six-month service contract starting in November. If the company's fiscal year ends on
December 31, how much revenue should be recognized in the current year?
A. $833
B. $1,667
C. $2,500
D. $5,000
Correct Answer: B
Rationale:
Under accrual accounting, revenue is earned over time. Two months (November and
December) of the six-month contract have passed, so ($5,) * 2 = $1,666.67, rounded
to $1,667.
Q4 Question 4 of 75
During the month of June, a company purchased $1,200 of office supplies on account.
By the end of the month, a physical count shows $400 of supplies still on hand. What is
the correct adjusting entry at June 30?
A. Debit Supplies $400; Credit Supplies Expense $400
B. Debit Supplies Expense $1,200; Credit Supplies $1,200
C. Debit Supplies Expense $800; Credit Supplies $800
D. Debit Accounts Payable $800; Credit Supplies $800
Correct Answer: C
Rationale:
The amount used is $1,200 - $400 = $800. The adjusting entry must move the cost of the
consumed supplies from the asset account (Supplies) to the expense account (Supplies
Expense).
o to Business Accounting Exam Bank (Objective Assessment) Update, Questions & Answers (Verified Answers) || Complete A+ Guide 2026/2027 -- 2026/2027 | Passing Scor
, Q5 Question 5 of 75
A firm records a $2,000 payment for an insurance policy that covers the next 12 months
as an expense immediately. What is the impact of this error on the end-of-period
Balance Sheet?
A. Assets and Equity are both understated.
B. Liabilities are overstated and Equity is understated.
C. Assets are overstated and Liabilities are understated.
D. Net Income and Assets are both overstated.
Correct Answer: A
Rationale:
By expensing the full amount, the firm fails to record a Prepaid Insurance asset. This
understates assets and also understates net income (and thus equity) for the period.
Q6 Question 6 of 75
Which of the following accounts is considered a 'permanent' or 'real' account that is not
closed at the end of the accounting period?
A. Dividends
B. Service Revenue
C. Accumulated Depreciation
D. Rent Expense
Correct Answer: C
Rationale:
Accumulated Depreciation is a contra-asset account and appears on the Balance Sheet.
Balance sheet accounts are permanent, whereas revenue, expense, and dividend accounts
are temporary and closed annually.
o to Business Accounting Exam Bank (Objective Assessment) Update, Questions & Answers (Verified Answers) || Complete A+ Guide 2026/2027 -- 2026/2027 | Passing Scor
