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WGU D102 FINANCIAL ACCOUNTING
HIGH-YIELD COMPREHENSIVE EXAM
150+ VERIFIED QUESTIONS WITH
EXPERT RATIONALES
UPDATED 2026-2027
DOMAIN 1: ACCOUNTING EQUATION &
TRANSACTION ANALYSIS
Questions 1-30
Q1. A company purchases equipment for
$10,000 cash. What is the effect on the
accounting equation?
A) Assets increase $10,000; liabilities increase
$10,000
B) Assets decrease $10,000; equity decreases
$10,000
C) One asset increases, another asset decreases
D) No change to total assets
Answer: C
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Rationale: Purchasing equipment for cash
involves exchanging one asset (cash) for another
asset (equipment). Total assets remain
unchanged because the decrease in cash is offset
by the increase in equipment. No liability or
equity account is affected by this transaction .
Q2. A company borrows $50,000 from a bank,
signing a note payable. What is the effect on the
accounting equation?
A) Assets increase; liabilities increase
B) Assets increase; equity increase
C) Assets decrease; liabilities decrease
D) No change
Answer: A
Rationale: Borrowing cash increases the
company's assets (Cash) and increases its
liabilities (Notes Payable). The accounting
equation remains balanced because both sides
increase by the same amount. Equity is
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unaffected because this is a liability transaction,
not revenue or owner investment .
Q3. A company has total assets of $200,000 and
total liabilities of $80,000. What is the amount
of owners' equity?
A) $280,000
B) $120,000
C) $200,000
D) $80,000
Answer: B
Rationale: The accounting equation states:
Assets = Liabilities + Owners' Equity.
Therefore, Owners' Equity = Assets - Liabilities
= $200,000 - $80,000 = $120,000. Owners'
equity represents the residual interest in the
assets after deducting liabilities .
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Q4. If owners' equity equals $150,000 and
liabilities equal $100,000, what is the amount of
total assets?
A) $250,000
B) $50,000
C) $150,000
D) $100,000
Answer: A
Rationale: Using the accounting equation:
Assets = Liabilities + Owners' Equity =
$100,000 + $150,000 = $250,000. The
accounting equation must always balance,
representing the fundamental relationship in
double-entry accounting .
Q5. A company provides services for $5,000
cash. What is the effect on the accounting
equation?
A) Assets increase; equity increases
B) Assets increase; liabilities increase
WGU D102 FINANCIAL ACCOUNTING
HIGH-YIELD COMPREHENSIVE EXAM
150+ VERIFIED QUESTIONS WITH
EXPERT RATIONALES
UPDATED 2026-2027
DOMAIN 1: ACCOUNTING EQUATION &
TRANSACTION ANALYSIS
Questions 1-30
Q1. A company purchases equipment for
$10,000 cash. What is the effect on the
accounting equation?
A) Assets increase $10,000; liabilities increase
$10,000
B) Assets decrease $10,000; equity decreases
$10,000
C) One asset increases, another asset decreases
D) No change to total assets
Answer: C
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Rationale: Purchasing equipment for cash
involves exchanging one asset (cash) for another
asset (equipment). Total assets remain
unchanged because the decrease in cash is offset
by the increase in equipment. No liability or
equity account is affected by this transaction .
Q2. A company borrows $50,000 from a bank,
signing a note payable. What is the effect on the
accounting equation?
A) Assets increase; liabilities increase
B) Assets increase; equity increase
C) Assets decrease; liabilities decrease
D) No change
Answer: A
Rationale: Borrowing cash increases the
company's assets (Cash) and increases its
liabilities (Notes Payable). The accounting
equation remains balanced because both sides
increase by the same amount. Equity is
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unaffected because this is a liability transaction,
not revenue or owner investment .
Q3. A company has total assets of $200,000 and
total liabilities of $80,000. What is the amount
of owners' equity?
A) $280,000
B) $120,000
C) $200,000
D) $80,000
Answer: B
Rationale: The accounting equation states:
Assets = Liabilities + Owners' Equity.
Therefore, Owners' Equity = Assets - Liabilities
= $200,000 - $80,000 = $120,000. Owners'
equity represents the residual interest in the
assets after deducting liabilities .
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Q4. If owners' equity equals $150,000 and
liabilities equal $100,000, what is the amount of
total assets?
A) $250,000
B) $50,000
C) $150,000
D) $100,000
Answer: A
Rationale: Using the accounting equation:
Assets = Liabilities + Owners' Equity =
$100,000 + $150,000 = $250,000. The
accounting equation must always balance,
representing the fundamental relationship in
double-entry accounting .
Q5. A company provides services for $5,000
cash. What is the effect on the accounting
equation?
A) Assets increase; equity increases
B) Assets increase; liabilities increase
