WGU D102 FINANCIAL ACCOUNTING
COMPREHENSIVE EXAM PREP
QUESTIONS AND ANSWERS 100%
VERIFIED 2026/2027
1. A company performs services for a client on account. Which of the following describes the
effect on the accounting equation?
A. Increase Assets and Increase Liabilities
B. Decrease Assets and Decrease Equity
C. Increase Assets and Increase Equity
D. Increase Liabilities and Decrease Equity
Answer: C
Conceptual Explanation: Performing services on account increases Accounts Receivable
(an asset) and Service Revenue, which increases Retained Earnings (part of Equity).
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When the cash is collected from the customer
B. At the end of the fiscal year
C. When the contract is signed by both parties
D. When the service is performed or the goods are delivered
,Answer: D
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned
(performance obligation satisfied), regardless of when cash is received.
3. Which of the following accounts is considered a ‘permanent’ or ‘real’ account?
A. Dividends
B. Accumulated Depreciation
C. Rent Expense
D. Service Revenue
Answer: B
Conceptual Explanation: Accumulated Depreciation is a contra-asset account and stays on
the Balance Sheet; the others are temporary accounts closed at year-end.
4. A company purchased a delivery truck for $40,000 with a salvage value of $4,000 and an
estimated life of 6 years. Using straight-line depreciation, what is the annual expense?
A. $6,667
B. $6,000
C. $5,000
D. $7,333
Answer: B
, Conceptual Explanation: ($40,000 Cost - $4,000 Salvage) / 6 years = $6,000 per year.
5. Which accounting principle requires that financial statements provide enough information
for an informed user to make decisions?
A. Full Disclosure Principle
B. Historical Cost Principle
C. Materiality Concept
D. Economic Entity Assumption
Answer: A
Conceptual Explanation: The Full Disclosure Principle requires reporting all
circumstances and events that make a difference to financial statement users.
6. On a bank reconciliation, how are outstanding checks treated?
A. Added to the book balance
B. Deducted from the book balance
C. Deducted from the bank balance
D. Added to the bank balance
Answer: C
Conceptual Explanation: Outstanding checks have been recorded in the company books
but not yet by the bank, so they are subtracted from the bank balance.
COMPREHENSIVE EXAM PREP
QUESTIONS AND ANSWERS 100%
VERIFIED 2026/2027
1. A company performs services for a client on account. Which of the following describes the
effect on the accounting equation?
A. Increase Assets and Increase Liabilities
B. Decrease Assets and Decrease Equity
C. Increase Assets and Increase Equity
D. Increase Liabilities and Decrease Equity
Answer: C
Conceptual Explanation: Performing services on account increases Accounts Receivable
(an asset) and Service Revenue, which increases Retained Earnings (part of Equity).
2. Under the accrual basis of accounting, when is revenue generally recognized?
A. When the cash is collected from the customer
B. At the end of the fiscal year
C. When the contract is signed by both parties
D. When the service is performed or the goods are delivered
,Answer: D
Conceptual Explanation: Accrual accounting recognizes revenue when it is earned
(performance obligation satisfied), regardless of when cash is received.
3. Which of the following accounts is considered a ‘permanent’ or ‘real’ account?
A. Dividends
B. Accumulated Depreciation
C. Rent Expense
D. Service Revenue
Answer: B
Conceptual Explanation: Accumulated Depreciation is a contra-asset account and stays on
the Balance Sheet; the others are temporary accounts closed at year-end.
4. A company purchased a delivery truck for $40,000 with a salvage value of $4,000 and an
estimated life of 6 years. Using straight-line depreciation, what is the annual expense?
A. $6,667
B. $6,000
C. $5,000
D. $7,333
Answer: B
, Conceptual Explanation: ($40,000 Cost - $4,000 Salvage) / 6 years = $6,000 per year.
5. Which accounting principle requires that financial statements provide enough information
for an informed user to make decisions?
A. Full Disclosure Principle
B. Historical Cost Principle
C. Materiality Concept
D. Economic Entity Assumption
Answer: A
Conceptual Explanation: The Full Disclosure Principle requires reporting all
circumstances and events that make a difference to financial statement users.
6. On a bank reconciliation, how are outstanding checks treated?
A. Added to the book balance
B. Deducted from the book balance
C. Deducted from the bank balance
D. Added to the bank balance
Answer: C
Conceptual Explanation: Outstanding checks have been recorded in the company books
but not yet by the bank, so they are subtracted from the bank balance.
