WGU D196 TEST 2026 PRACTICE TEST SHEET
FULL SOLUTIONS CORRECT ANSWERS
PREPARATION SET
◉ Which type of account are accounts payable and notes payable
both examples of?
Answer: Liability
◉ What is the purpose of the financial accounting cycle?
Answer: To turn information about transactions into financial
statements
◉ According to the accounting equation, the amount of liabilities
and equity must always be equal to another amount.
What is that other amount?
Answer: Assets
◉ Which item is an expense item?
Answer: Cost of goods sold
◉ How is gross profit computed?
Answer: Sales minus cost of goods sold
, ◉ Which type of account is retained earnings?
Answer: Equity
◉ For purposes of cash flow classification in the statement of cash
flows, which item is an operating activity?
Answer: Paying employees
◉ How does a classified balance sheet provide useful information to
a decision maker?
Answer: It distinguishes between current and long-term assets.
◉ What information does a balance sheet provide to a decision
maker?
Answer: Summary of the financial position of a company at a
particular date
◉ What is an account payable?
Answer: The amount owed by a company that purchased goods or
services from a supplier on credit
◉ What is an example of a financial cost that would result from poor
direct labor budgeting and planning?
FULL SOLUTIONS CORRECT ANSWERS
PREPARATION SET
◉ Which type of account are accounts payable and notes payable
both examples of?
Answer: Liability
◉ What is the purpose of the financial accounting cycle?
Answer: To turn information about transactions into financial
statements
◉ According to the accounting equation, the amount of liabilities
and equity must always be equal to another amount.
What is that other amount?
Answer: Assets
◉ Which item is an expense item?
Answer: Cost of goods sold
◉ How is gross profit computed?
Answer: Sales minus cost of goods sold
, ◉ Which type of account is retained earnings?
Answer: Equity
◉ For purposes of cash flow classification in the statement of cash
flows, which item is an operating activity?
Answer: Paying employees
◉ How does a classified balance sheet provide useful information to
a decision maker?
Answer: It distinguishes between current and long-term assets.
◉ What information does a balance sheet provide to a decision
maker?
Answer: Summary of the financial position of a company at a
particular date
◉ What is an account payable?
Answer: The amount owed by a company that purchased goods or
services from a supplier on credit
◉ What is an example of a financial cost that would result from poor
direct labor budgeting and planning?
