WGU D196 Principles of Financial and
Managerial Accounting Exam
2026/2027 – Verified Q&As with
Detailed Rationales (Test Bank Bundle -
47 Questions)
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*QUESTION 1:*
A company purchases equipment for cash. What is the effect on the accounting equation?
A) Assets increase and liabilities increase
B) Assets decrease and liabilities decrease
C) One asset increases and another asset decreases
D) Assets increase and equity increases
> 🎯 *CORRECT ANSWER:* C) One asset increases and another asset decreases
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Cash (asset) decreases, and Equipment (asset) increases.
> * *Why Distractors Fail:* Liabilities and equity are not affected.
> * *Core Takeaway:* Exchanging assets does not change total assets.
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*QUESTION 2:*
A company pays a utility bill. What is the effect on the accounting equation?
,A) Assets decrease and liabilities decrease
B) Assets decrease and equity decreases
C) Assets increase and liabilities increase
D) Assets increase and equity increases
> 🎯 *CORRECT ANSWER:* B) Assets decrease and equity decreases
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Cash decreases (asset), and expenses decrease equity.
> * *Why Distractors Fail:* Liabilities are not affected by cash payment.
> * *Core Takeaway:* Expenses decrease equity.
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*QUESTION 3:*
A company sells goods on credit. What is the effect on the accounting equation?
A) Assets increase and liabilities increase
B) Assets increase and equity increases
C) Assets decrease and equity decreases
D) Assets decrease and liabilities decrease
> 🎯 *CORRECT ANSWER:* B) Assets increase and equity increases
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Accounts receivable increase (asset), and revenue increases equity.
> * *Why Distractors Fail:* Liabilities are not affected.
> * *Core Takeaway:* Revenue increases equity.
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*QUESTION 4:*
, The normal balance of an asset account is:
A) Debit
B) Credit
C) Zero
D) Not applicable
> 🎯 *CORRECT ANSWER:* A) Debit
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Assets have a normal debit balance.
> * *Why Distractors Fail:* Credit is the normal balance for liabilities and equity.
> * *Core Takeaway:* Assets are debit balance accounts.
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*QUESTION 5:*
The normal balance of a liability account is:
A) Credit
B) Debit
C) Zero
D) Not applicable
> 🎯 *CORRECT ANSWER:* A) Credit
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Liabilities have a normal credit balance.
> * *Why Distractors Fail:* Debit is the normal balance for assets.
> * *Core Takeaway:* Liabilities are credit balance accounts.
---
Managerial Accounting Exam
2026/2027 – Verified Q&As with
Detailed Rationales (Test Bank Bundle -
47 Questions)
---
*QUESTION 1:*
A company purchases equipment for cash. What is the effect on the accounting equation?
A) Assets increase and liabilities increase
B) Assets decrease and liabilities decrease
C) One asset increases and another asset decreases
D) Assets increase and equity increases
> 🎯 *CORRECT ANSWER:* C) One asset increases and another asset decreases
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Cash (asset) decreases, and Equipment (asset) increases.
> * *Why Distractors Fail:* Liabilities and equity are not affected.
> * *Core Takeaway:* Exchanging assets does not change total assets.
---
*QUESTION 2:*
A company pays a utility bill. What is the effect on the accounting equation?
,A) Assets decrease and liabilities decrease
B) Assets decrease and equity decreases
C) Assets increase and liabilities increase
D) Assets increase and equity increases
> 🎯 *CORRECT ANSWER:* B) Assets decrease and equity decreases
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Cash decreases (asset), and expenses decrease equity.
> * *Why Distractors Fail:* Liabilities are not affected by cash payment.
> * *Core Takeaway:* Expenses decrease equity.
---
*QUESTION 3:*
A company sells goods on credit. What is the effect on the accounting equation?
A) Assets increase and liabilities increase
B) Assets increase and equity increases
C) Assets decrease and equity decreases
D) Assets decrease and liabilities decrease
> 🎯 *CORRECT ANSWER:* B) Assets increase and equity increases
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Accounts receivable increase (asset), and revenue increases equity.
> * *Why Distractors Fail:* Liabilities are not affected.
> * *Core Takeaway:* Revenue increases equity.
---
*QUESTION 4:*
, The normal balance of an asset account is:
A) Debit
B) Credit
C) Zero
D) Not applicable
> 🎯 *CORRECT ANSWER:* A) Debit
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Assets have a normal debit balance.
> * *Why Distractors Fail:* Credit is the normal balance for liabilities and equity.
> * *Core Takeaway:* Assets are debit balance accounts.
---
*QUESTION 5:*
The normal balance of a liability account is:
A) Credit
B) Debit
C) Zero
D) Not applicable
> 🎯 *CORRECT ANSWER:* A) Credit
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Liabilities have a normal credit balance.
> * *Why Distractors Fail:* Debit is the normal balance for assets.
> * *Core Takeaway:* Liabilities are credit balance accounts.
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