WESTERN GOVERNORS UNIVERSITY
WGU D104 Intermediate
Accounting II
Units 4-6 — Practice
Question Bank
Intermediate Accounting II — NCLEX-Style Practice Questions with
Rationales
Comprehensive Review: Depreciation, Liabilities, Stockholders' Equity & More
Edition 1 · July 2026
Table of Contents
1. Instructions for Use 2
2. Practice Questions with Answers & Rationales 2
WGU D104 · Western Governors University Page 1
,WGU D104 INTERMEDIATE ACCOUNTING II UNITS 4-6 PRACTICE GUIDE INSTRUCTIONS & PRACTICE QUESTIONS
How to Use This Guide
Read each stem, choose your answer, then check the rationale directly below it. The correct
option is marked, and each wrong option is explained so you understand why it's wrong — not
just that it is.
Category: Intermediate Accounting II — Depreciation, Liabilities &
Stockholders' Equity
1 What is the formula for Asset Turnover Ratio?
A Net sales / Average total assets
B Net income / Total sales
C Net income / Average total assets
D Current assets / Current liabilities
Why A is correct: Asset Turnover Ratio = Net sales / Average total assets. It measures how
efficiently a company uses its assets to generate sales.
B — This is the Profit Margin Ratio.
C — This is the Rate of Return on Assets.
D — This is the Current Ratio.
,2 What is the formula for Profit Margin Ratio?
A Net sales / Average total assets
B Net income / Total sales
C Net income / Average total assets
D Current assets / Current liabilities
Why B is correct: Profit Margin Ratio = Net income / Total sales. It measures the
percentage of each sales dollar that results in net income.
A — This is the Asset Turnover Ratio.
C — This is the Rate of Return on Assets.
D — This is the Current Ratio.
3 What is the formula for Rate of Return on Assets?
A Net sales / Average total assets
B Net income / Total sales
C Net income / Average total assets
D Current assets / Current liabilities
Why C is correct: Rate of Return on Assets = Net income / Average total assets. It measures
how effectively a company uses its assets to generate profit.
A — This is the Asset Turnover Ratio.
B — This is the Profit Margin Ratio.
D — This is the Current Ratio.
, 4 What is the formula for the Current Ratio?
A Net sales / Average total assets
B Net income / Total sales
C Net income / Average total assets
D Current assets / Current liabilities
Why D is correct: Current Ratio = Current assets / Current liabilities. It measures a
company's ability to pay short-term obligations.
A — This is the Asset Turnover Ratio.
B — This is the Profit Margin Ratio.
C — This is the Rate of Return on Assets.
5 What is the formula for the Acid-Test Ratio?
A (Cash + Short-term investments + Net receivables) / Current liabilities
B Current assets / Current liabilities
C Net income / Average total assets
D Net sales / Average total assets
Why A is correct: Acid-Test Ratio = (Cash + Short-term investments + Net receivables) /
Current liabilities. It measures immediate liquidity.
B — This is the Current Ratio.
C — This is the Rate of Return on Assets.
D — This is the Asset Turnover Ratio.
WGU D104 Intermediate
Accounting II
Units 4-6 — Practice
Question Bank
Intermediate Accounting II — NCLEX-Style Practice Questions with
Rationales
Comprehensive Review: Depreciation, Liabilities, Stockholders' Equity & More
Edition 1 · July 2026
Table of Contents
1. Instructions for Use 2
2. Practice Questions with Answers & Rationales 2
WGU D104 · Western Governors University Page 1
,WGU D104 INTERMEDIATE ACCOUNTING II UNITS 4-6 PRACTICE GUIDE INSTRUCTIONS & PRACTICE QUESTIONS
How to Use This Guide
Read each stem, choose your answer, then check the rationale directly below it. The correct
option is marked, and each wrong option is explained so you understand why it's wrong — not
just that it is.
Category: Intermediate Accounting II — Depreciation, Liabilities &
Stockholders' Equity
1 What is the formula for Asset Turnover Ratio?
A Net sales / Average total assets
B Net income / Total sales
C Net income / Average total assets
D Current assets / Current liabilities
Why A is correct: Asset Turnover Ratio = Net sales / Average total assets. It measures how
efficiently a company uses its assets to generate sales.
B — This is the Profit Margin Ratio.
C — This is the Rate of Return on Assets.
D — This is the Current Ratio.
,2 What is the formula for Profit Margin Ratio?
A Net sales / Average total assets
B Net income / Total sales
C Net income / Average total assets
D Current assets / Current liabilities
Why B is correct: Profit Margin Ratio = Net income / Total sales. It measures the
percentage of each sales dollar that results in net income.
A — This is the Asset Turnover Ratio.
C — This is the Rate of Return on Assets.
D — This is the Current Ratio.
3 What is the formula for Rate of Return on Assets?
A Net sales / Average total assets
B Net income / Total sales
C Net income / Average total assets
D Current assets / Current liabilities
Why C is correct: Rate of Return on Assets = Net income / Average total assets. It measures
how effectively a company uses its assets to generate profit.
A — This is the Asset Turnover Ratio.
B — This is the Profit Margin Ratio.
D — This is the Current Ratio.
, 4 What is the formula for the Current Ratio?
A Net sales / Average total assets
B Net income / Total sales
C Net income / Average total assets
D Current assets / Current liabilities
Why D is correct: Current Ratio = Current assets / Current liabilities. It measures a
company's ability to pay short-term obligations.
A — This is the Asset Turnover Ratio.
B — This is the Profit Margin Ratio.
C — This is the Rate of Return on Assets.
5 What is the formula for the Acid-Test Ratio?
A (Cash + Short-term investments + Net receivables) / Current liabilities
B Current assets / Current liabilities
C Net income / Average total assets
D Net sales / Average total assets
Why A is correct: Acid-Test Ratio = (Cash + Short-term investments + Net receivables) /
Current liabilities. It measures immediate liquidity.
B — This is the Current Ratio.
C — This is the Rate of Return on Assets.
D — This is the Asset Turnover Ratio.
