WGU D102 FINANCIAL ACCOUNTING
FINAL EXAM PREP QUESTIONS AND
ANSWERS 100% VERIFIED 2026/2027
1. Which of the following describes the correct impact on the accounting equation when a
company performs services for a customer on account?
A. Assets increase and Liabilities increase
B. Liabilities increase and Equity decreases
C. Assets decrease and Equity increases
D. Assets increase and Equity increases
Answer: D
Conceptual Explanation: Performing services on account increases Accounts Receivable
(an Asset) and Service Revenue, which increases Retained Earnings (Equity).
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When the performance obligation is satisfied
B. When cash is received from the customer
C. At the end of the fiscal year
,D. When the order is placed by the customer
Answer: A
Conceptual Explanation: The revenue recognition principle states that revenue should be
recognized in the period in which the performance obligation is satisfied, regardless of
when cash is received.
3. A company purchased equipment for $50,000 with a residual value of $5,000 and a 5-year
useful life. Using the double-declining-balance method, what is the depreciation expense for
the second year?
A. $20,000
B. $18,000
C. $12,000
D. $9,000
Answer: C
Conceptual Explanation: Year 1: $50,000 * 40% = $20,000. Year 2 Book Value: $50,000 -
$20,000 = $30,000. Year 2 Expense: $30,000 * 40% = $12,000.
4. Which financial statement reports the financial position of a company at a specific point in
time?
A. Income Statement
B. Balance Sheet
, C. Statement of Retained Earnings
D. Statement of Cash Flows
Answer: B
Conceptual Explanation: The Balance Sheet provides a snapshot of assets, liabilities, and
equity at a specific date, whereas the others cover a period of time.
5. During a period of steadily rising prices, which inventory costing method will result in the
lowest net income?
A. FIFO (First-In, First-Out)
B. Specific Identification
C. Weighted Average Cost
D. LIFO (Last-In, First-Out)
Answer: D
Conceptual Explanation: In rising prices, LIFO assigns the most recent (higher) costs to
COGS, resulting in lower gross profit and lower net income.
6. Which of the following accounts is considered a ‘temporary’ account and is closed at the
end of the period?
A. Accumulated Depreciation
B. Unearned Revenue
C. Dividends
FINAL EXAM PREP QUESTIONS AND
ANSWERS 100% VERIFIED 2026/2027
1. Which of the following describes the correct impact on the accounting equation when a
company performs services for a customer on account?
A. Assets increase and Liabilities increase
B. Liabilities increase and Equity decreases
C. Assets decrease and Equity increases
D. Assets increase and Equity increases
Answer: D
Conceptual Explanation: Performing services on account increases Accounts Receivable
(an Asset) and Service Revenue, which increases Retained Earnings (Equity).
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When the performance obligation is satisfied
B. When cash is received from the customer
C. At the end of the fiscal year
,D. When the order is placed by the customer
Answer: A
Conceptual Explanation: The revenue recognition principle states that revenue should be
recognized in the period in which the performance obligation is satisfied, regardless of
when cash is received.
3. A company purchased equipment for $50,000 with a residual value of $5,000 and a 5-year
useful life. Using the double-declining-balance method, what is the depreciation expense for
the second year?
A. $20,000
B. $18,000
C. $12,000
D. $9,000
Answer: C
Conceptual Explanation: Year 1: $50,000 * 40% = $20,000. Year 2 Book Value: $50,000 -
$20,000 = $30,000. Year 2 Expense: $30,000 * 40% = $12,000.
4. Which financial statement reports the financial position of a company at a specific point in
time?
A. Income Statement
B. Balance Sheet
, C. Statement of Retained Earnings
D. Statement of Cash Flows
Answer: B
Conceptual Explanation: The Balance Sheet provides a snapshot of assets, liabilities, and
equity at a specific date, whereas the others cover a period of time.
5. During a period of steadily rising prices, which inventory costing method will result in the
lowest net income?
A. FIFO (First-In, First-Out)
B. Specific Identification
C. Weighted Average Cost
D. LIFO (Last-In, First-Out)
Answer: D
Conceptual Explanation: In rising prices, LIFO assigns the most recent (higher) costs to
COGS, resulting in lower gross profit and lower net income.
6. Which of the following accounts is considered a ‘temporary’ account and is closed at the
end of the period?
A. Accumulated Depreciation
B. Unearned Revenue
C. Dividends
