WGU D102 FINANCIAL ACCOUNTING
PRACTICE EXAM QUESTIONS AND
ANSWERS 100% VERIFIED 2026/2027
1. Which financial statement reports a company’s financial position at a specific point in
time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: C
Conceptual Explanation: The Balance Sheet provides a snapshot of assets, liabilities, and
equity at a specific point in time, unlike other statements that cover a period.
2. What is the normal balance and account type for ‘Accumulated Depreciation’?
A. Credit; Contra-Asset
B. Debit; Asset
C. Credit; Liability
D. Debit; Expense
,Answer: A
Conceptual Explanation: Accumulated Depreciation is a contra-asset account, meaning it
reduces the carrying value of assets and carries a normal credit balance.
3. Under the accrual basis of accounting, when is revenue recognized?
A. When the performance obligation is satisfied
B. When cash is received
C. At the end of the fiscal year
D. When the contract is signed
Answer: A
Conceptual Explanation: Revenue is recognized when earned, which occurs when the
company fulfills its performance obligation to the customer.
4. Which of the following accounts is considered a permanent (real) account?
A. Dividends
B. Retained Earnings
C. Supplies Expense
D. Service Revenue
Answer: B
, Conceptual Explanation: Permanent accounts (Assets, Liabilities, and Equity) are not
closed at year-end. Retained Earnings is an equity account that carries forward.
5. 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 expense?
A. $10,000
B. $11,000
C. $9,000
D. $45,000
Answer: C
Conceptual Explanation: ($50,000 cost - $5,000 residual) / 5 years = $9,000 per year.
6. Which internal control component is often called the ‘tone at the top’?
A. Risk Assessment
B. Monitoring Activities
C. Information and Communication
D. Control Environment
Answer: D
Conceptual Explanation: The control environment sets the overall ethical tone of the
organization and is the foundation for all other components of internal control.
PRACTICE EXAM QUESTIONS AND
ANSWERS 100% VERIFIED 2026/2027
1. Which financial statement reports a company’s financial position at a specific point in
time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: C
Conceptual Explanation: The Balance Sheet provides a snapshot of assets, liabilities, and
equity at a specific point in time, unlike other statements that cover a period.
2. What is the normal balance and account type for ‘Accumulated Depreciation’?
A. Credit; Contra-Asset
B. Debit; Asset
C. Credit; Liability
D. Debit; Expense
,Answer: A
Conceptual Explanation: Accumulated Depreciation is a contra-asset account, meaning it
reduces the carrying value of assets and carries a normal credit balance.
3. Under the accrual basis of accounting, when is revenue recognized?
A. When the performance obligation is satisfied
B. When cash is received
C. At the end of the fiscal year
D. When the contract is signed
Answer: A
Conceptual Explanation: Revenue is recognized when earned, which occurs when the
company fulfills its performance obligation to the customer.
4. Which of the following accounts is considered a permanent (real) account?
A. Dividends
B. Retained Earnings
C. Supplies Expense
D. Service Revenue
Answer: B
, Conceptual Explanation: Permanent accounts (Assets, Liabilities, and Equity) are not
closed at year-end. Retained Earnings is an equity account that carries forward.
5. 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 expense?
A. $10,000
B. $11,000
C. $9,000
D. $45,000
Answer: C
Conceptual Explanation: ($50,000 cost - $5,000 residual) / 5 years = $9,000 per year.
6. Which internal control component is often called the ‘tone at the top’?
A. Risk Assessment
B. Monitoring Activities
C. Information and Communication
D. Control Environment
Answer: D
Conceptual Explanation: The control environment sets the overall ethical tone of the
organization and is the foundation for all other components of internal control.
