WGU D102 FINANCIAL ACCOUNTING
COMPREHENSIVE EXAM QUESTIONS
AND ANSWERS 100% VERIFIED
2026/2027
1. Which accounting principle requires that expenses be recorded in the same period as the
revenues they helped generate?
A. Revenue Recognition Principle
B. Materiality Concept
C. Matching Principle
D. Going Concern Assumption
Answer: C
Conceptual Explanation: The matching principle dictates that efforts (expenses) should
be matched with results (revenues) in the period the result is produced.
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When cash is received
B. When the contract is signed
C. When services are performed or goods are delivered
D. At the end of the fiscal year
,Answer: C
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned
(performance obligation satisfied), regardless of when cash is exchanged.
3. A company purchased equipment for $50,000 with a residual value of $5,000 and a 5-year
useful life. Using straight-line depreciation, what is the annual depreciation expense?
A. $10,000
B. $11,000
C. $45,000
D. $9,000
Answer: D
Conceptual Explanation: ($50,000 cost - $5,000 residual value) / 5 years = $9,000 per
year.
4. Which of the following accounts is considered a ‘Permanent’ account?
A. Utilities Expense
B. Retained Earnings
C. Service Revenue
D. Dividends
Answer: B
, Conceptual Explanation: Balance sheet accounts (Assets, Liabilities, and Equity like
Retained Earnings) are permanent; Income statement accounts and Dividends are
temporary.
5. If a company has a Current Ratio of 2.5, what does this indicate?
A. The company has $2.50 in current assets for every $1.00 of current liabilities.
B. The company has $2.50 in total assets for every $1.00 of total debt.
C. The company’s net income is 2.5 times its sales.
D. The company is insolvent.
Answer: A
Conceptual Explanation: Current Ratio = Current Assets / Current Liabilities. A ratio of
2.5 means current assets are 2.5 times current liabilities.
6. 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
COMPREHENSIVE EXAM QUESTIONS
AND ANSWERS 100% VERIFIED
2026/2027
1. Which accounting principle requires that expenses be recorded in the same period as the
revenues they helped generate?
A. Revenue Recognition Principle
B. Materiality Concept
C. Matching Principle
D. Going Concern Assumption
Answer: C
Conceptual Explanation: The matching principle dictates that efforts (expenses) should
be matched with results (revenues) in the period the result is produced.
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When cash is received
B. When the contract is signed
C. When services are performed or goods are delivered
D. At the end of the fiscal year
,Answer: C
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned
(performance obligation satisfied), regardless of when cash is exchanged.
3. A company purchased equipment for $50,000 with a residual value of $5,000 and a 5-year
useful life. Using straight-line depreciation, what is the annual depreciation expense?
A. $10,000
B. $11,000
C. $45,000
D. $9,000
Answer: D
Conceptual Explanation: ($50,000 cost - $5,000 residual value) / 5 years = $9,000 per
year.
4. Which of the following accounts is considered a ‘Permanent’ account?
A. Utilities Expense
B. Retained Earnings
C. Service Revenue
D. Dividends
Answer: B
, Conceptual Explanation: Balance sheet accounts (Assets, Liabilities, and Equity like
Retained Earnings) are permanent; Income statement accounts and Dividends are
temporary.
5. If a company has a Current Ratio of 2.5, what does this indicate?
A. The company has $2.50 in current assets for every $1.00 of current liabilities.
B. The company has $2.50 in total assets for every $1.00 of total debt.
C. The company’s net income is 2.5 times its sales.
D. The company is insolvent.
Answer: A
Conceptual Explanation: Current Ratio = Current Assets / Current Liabilities. A ratio of
2.5 means current assets are 2.5 times current liabilities.
6. 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
