WGU D102 FINANCIAL ACCOUNTING
COMPREHENSIVE EXAM QUESTIONS
AND ANSWERS 100% VERIFIED
2026/2027
1. Which of the following accounting principles requires that expenses be recognized in the
same period as the related revenue?
A. Cost Principle
B. Matching Principle
C. Revenue Recognition Principle
D. Full Disclosure Principle
Answer: B
Conceptual Explanation: The Matching Principle (or Expense Recognition Principle)
dictates that expenses should be reported in the same period as the revenues they helped
generate.
2. A company purchased equipment for $50,000 with a residual value of $5,000 and a useful
life of 5 years. Using the double-declining balance method, what is the depreciation expense
for the second year?
A. $12,000
,B. $20,000
C. $10,800
D. $18,000
Answer: A
Conceptual Explanation: Year 1: 40% (2/5) of $50,000 = $20,000. Year 2: 40% of
($50,000 - $20,000) = $12,000.
3. In a period of rising prices, which inventory costing method typically results in the lowest
net income and the lowest ending inventory?
A. FIFO
B. Specific Identification
C. Weighted Average Cost
D. LIFO
Answer: D
Conceptual Explanation: LIFO assumes the last items purchased (the most expensive in a
rising market) are sold first, increasing COGS and decreasing net income and ending
inventory.
4. A company has a current ratio of 2.5. If the company pays $5,000 of its accounts payable
using cash, what happens to the current ratio?
A. It increases
, B. It decreases
C. It stays the same
D. It becomes zero
Answer: A
Conceptual Explanation: Since the current ratio is above 1.0, an equal decrease in both
current assets and current liabilities increases the ratio.
5. Which of the following accounts is NOT closed at the end of the accounting period?
A. Dividends
B. Accumulated Depreciation
C. Service Revenue
D. Utilities Expense
Answer: B
Conceptual Explanation: Accumulated Depreciation is a contra-asset account, which is a
permanent account. Temporary accounts (revenues, expenses, dividends) are closed.
6. If a company fails to adjust for accrued interest at the end of the period, what is the effect
on the financial statements?
A. Assets are overstated
B. Liabilities are overstated
COMPREHENSIVE EXAM QUESTIONS
AND ANSWERS 100% VERIFIED
2026/2027
1. Which of the following accounting principles requires that expenses be recognized in the
same period as the related revenue?
A. Cost Principle
B. Matching Principle
C. Revenue Recognition Principle
D. Full Disclosure Principle
Answer: B
Conceptual Explanation: The Matching Principle (or Expense Recognition Principle)
dictates that expenses should be reported in the same period as the revenues they helped
generate.
2. A company purchased equipment for $50,000 with a residual value of $5,000 and a useful
life of 5 years. Using the double-declining balance method, what is the depreciation expense
for the second year?
A. $12,000
,B. $20,000
C. $10,800
D. $18,000
Answer: A
Conceptual Explanation: Year 1: 40% (2/5) of $50,000 = $20,000. Year 2: 40% of
($50,000 - $20,000) = $12,000.
3. In a period of rising prices, which inventory costing method typically results in the lowest
net income and the lowest ending inventory?
A. FIFO
B. Specific Identification
C. Weighted Average Cost
D. LIFO
Answer: D
Conceptual Explanation: LIFO assumes the last items purchased (the most expensive in a
rising market) are sold first, increasing COGS and decreasing net income and ending
inventory.
4. A company has a current ratio of 2.5. If the company pays $5,000 of its accounts payable
using cash, what happens to the current ratio?
A. It increases
, B. It decreases
C. It stays the same
D. It becomes zero
Answer: A
Conceptual Explanation: Since the current ratio is above 1.0, an equal decrease in both
current assets and current liabilities increases the ratio.
5. Which of the following accounts is NOT closed at the end of the accounting period?
A. Dividends
B. Accumulated Depreciation
C. Service Revenue
D. Utilities Expense
Answer: B
Conceptual Explanation: Accumulated Depreciation is a contra-asset account, which is a
permanent account. Temporary accounts (revenues, expenses, dividends) are closed.
6. If a company fails to adjust for accrued interest at the end of the period, what is the effect
on the financial statements?
A. Assets are overstated
B. Liabilities are overstated
