,WGU D102 OA Financial Accounting 2026/2027 Questions And
Answers
Q1. Which equation must remain in balance after every properly
recorded business transaction?
A) Assets = Liabilities + Stockholders’ Equity
B) Assets + Liabilities = Revenue
C) Revenue − Expenses = Assets
D) Cash = Liabilities + Revenue
Correct Answer: A) Assets = Liabilities + Stockholders’ Equity
Rationale: Assets represent resources controlled by the business, while
liabilities and equity represent the claims against those resources.
Q2. Which financial statement reports assets, liabilities, and
stockholders’ equity at a specific date?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Correct Answer: B) Balance sheet
Rationale: The balance sheet presents the company's financial position at a
particular point in time.
Q3. Which financial statement reports revenues and expenses for a
period?
A) Balance sheet
B) Statement of cash flows
C) Income statement
D) Statement of retained earnings
Correct Answer: C) Income statement
Rationale: The income statement measures financial performance by
comparing revenues earned with expenses incurred during the period.
Q4. Which financial statement classifies cash movements as
operating, investing, or financing activities?
A) Income statement
B) Balance sheet
, C) Statement of retained earnings
D) Statement of cash flows
Correct Answer: D) Statement of cash flows
Rationale: The statement of cash flows explains changes in cash according
to operating, investing, and financing activities.
Q5. A company has assets of $420,000 and liabilities of $170,000.
What is stockholders’ equity?
A) $170,000
B) $590,000
C) $250,000
D) $420,000
Correct Answer: C) $250,000
Rationale: Equity equals assets minus liabilities: $420,000 − $170,000 =
$250,000.
Q6. A business purchases equipment for $30,000 cash. What is the
immediate effect on total assets?
A) Assets increase by $30,000.
B) Total assets remain unchanged.
C) Assets decrease by $30,000.
D) Equity increases by $30,000.
Correct Answer: B) Total assets remain unchanged.
Rationale: Equipment increases by $30,000 while cash decreases by
$30,000, so total assets do not change.
Q7. A company receives $50,000 cash by borrowing from a bank.
What happens to the accounting equation?
A) Assets increase $50,000 and liabilities increase $50,000.
B) Assets increase $50,000 and equity increases $50,000.
C) Liabilities decrease $50,000 and equity increases $50,000.
D) Assets decrease $50,000 and liabilities increase $50,000.
Correct Answer: A) Assets increase $50,000 and liabilities increase $50,000.
Rationale: The company receives cash and simultaneously incurs an
obligation to repay the lender.
Answers
Q1. Which equation must remain in balance after every properly
recorded business transaction?
A) Assets = Liabilities + Stockholders’ Equity
B) Assets + Liabilities = Revenue
C) Revenue − Expenses = Assets
D) Cash = Liabilities + Revenue
Correct Answer: A) Assets = Liabilities + Stockholders’ Equity
Rationale: Assets represent resources controlled by the business, while
liabilities and equity represent the claims against those resources.
Q2. Which financial statement reports assets, liabilities, and
stockholders’ equity at a specific date?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Correct Answer: B) Balance sheet
Rationale: The balance sheet presents the company's financial position at a
particular point in time.
Q3. Which financial statement reports revenues and expenses for a
period?
A) Balance sheet
B) Statement of cash flows
C) Income statement
D) Statement of retained earnings
Correct Answer: C) Income statement
Rationale: The income statement measures financial performance by
comparing revenues earned with expenses incurred during the period.
Q4. Which financial statement classifies cash movements as
operating, investing, or financing activities?
A) Income statement
B) Balance sheet
, C) Statement of retained earnings
D) Statement of cash flows
Correct Answer: D) Statement of cash flows
Rationale: The statement of cash flows explains changes in cash according
to operating, investing, and financing activities.
Q5. A company has assets of $420,000 and liabilities of $170,000.
What is stockholders’ equity?
A) $170,000
B) $590,000
C) $250,000
D) $420,000
Correct Answer: C) $250,000
Rationale: Equity equals assets minus liabilities: $420,000 − $170,000 =
$250,000.
Q6. A business purchases equipment for $30,000 cash. What is the
immediate effect on total assets?
A) Assets increase by $30,000.
B) Total assets remain unchanged.
C) Assets decrease by $30,000.
D) Equity increases by $30,000.
Correct Answer: B) Total assets remain unchanged.
Rationale: Equipment increases by $30,000 while cash decreases by
$30,000, so total assets do not change.
Q7. A company receives $50,000 cash by borrowing from a bank.
What happens to the accounting equation?
A) Assets increase $50,000 and liabilities increase $50,000.
B) Assets increase $50,000 and equity increases $50,000.
C) Liabilities decrease $50,000 and equity increases $50,000.
D) Assets decrease $50,000 and liabilities increase $50,000.
Correct Answer: A) Assets increase $50,000 and liabilities increase $50,000.
Rationale: The company receives cash and simultaneously incurs an
obligation to repay the lender.
