WGU D196 Principles of Financial and Managerial Accounting OA actual
2026 Exam questions and well detailed answers
Question: A corporation purchases office equipment for $12,000,
paying $3,000 in cash and signing a note payable for the remaining
$9,000. How does this transaction affect the fundamental accounting
equation?
A) Assets increase by $9,000; liabilities increase by $9,000; equity is
unchanged.
B) Assets increase by $12,000; liabilities increase by $3,000; equity
increases by $9,000.
C) Assets decrease by $3,000; liabilities increase by $9,000; equity
decreases by $12,000.
D) Assets increase by $12,000; liabilities decrease by $3,000; equity is
unchanged.
Answer: A
Explanation: Equipment (Asset) goes up by $12,000. Cash (Asset) goes
down by $3,000, resulting in a net asset increase of $9,000. Notes
Payable (Liability) increases by $9,000. Thus, Assets ($9,000 net) =
Liabilities ($9,000) + Equity ($0).
Question: Which of the following is considered an external user of
financial accounting information?
A) Production supervisor
B) Chief Executive Officer (CEO)
C) Potential investor evaluating stock purchase
D) Department head of marketing
Answer: C
,WGU D196 Principles of Financial and Managerial Accounting OA actual
2026 Exam questions and well detailed answers
Explanation: External users include investors, creditors, regulators, and
customers who do not work inside the company or manage its daily
operations.
Question: Under the accrual basis of accounting, when should a
service revenue be recorded?
A) When the customer submits a purchase order
B) When the cash is physically collected from the client
C) When the service has been performed, regardless of when cash
changes hands
D) At the end of the fiscal quarter
Answer: C
Explanation: Accrual accounting requires revenue to be recognized
when it is earned (the performance obligation is met), matching the
timing of economic activity rather than cash flow.
Question: Which account normally carries a debit balance?
A) Accounts Payable
B) Common Stock
C) Service Revenue
D) Prepaid Rent
Answer: D
Explanation: Prepaid Rent is an asset account. Assets and expenses
normally carry debit balances, whereas liabilities, equity, and revenues
normally carry credit balances.
, WGU D196 Principles of Financial and Managerial Accounting OA actual
2026 Exam questions and well detailed answers
Question: The principle that requires expenses to be recorded in the
same period as the revenues they helped generate is known as the:
A) Revenue recognition principle
B) Cost principle
C) Matching principle
D) Monetary unit assumption
Answer: C
Explanation: The matching principle ensures that all expenses incurred
to generate specific revenues are reported in the same accounting
period as those revenues.
Question: If total assets equal $150,000 and total equity equals
$90,000, what is the amount of total liabilities?
A) $240,000
B) $60,000
C) $90,000
D) $150,000
Answer: B
Explanation: Using the accounting equation (Assets = Liabilities +
Equity), Liabilities = Assets - Equity ($150,000 - $90,000 = $60,000).
Question: Which organization currently has the legal authority to
establish U.S. accounting and reporting standards (GAAP)?
A) Financial Accounting Standards Board (FASB)
, WGU D196 Principles of Financial and Managerial Accounting OA actual
2026 Exam questions and well detailed answers
B) Securities and Exchange Commission (SEC)
C) American Institute of Certified Public Accountants (AICPA)
D) Internal Revenue Service (IRS)
Answer: B
Explanation: The SEC holds ultimate legal authority for setting
accounting principles for publicly traded companies in the U.S., though
it delegates day-to-day standard-setting to the FASB.
Question: Which of the following accounts is closed out (reset to
zero) at the end of the accounting year?
A) Retained Earnings
B) Equipment
C) Salaries Expense
D) Accounts Receivable
Answer: C
Explanation: Temporary accounts (revenues, expenses, and dividends)
are closed at year-end. Permanent accounts (assets, liabilities, and
equity accounts like common stock and retained earnings) carry their
balances forward.
Question: A company performs services for a client on account for
$4,500. How does this transaction affect the accounts?
A) Cash increases $4,500; Service Revenue increases $4,500
B) Accounts Receivable increases $4,500; Service Revenue increases
$4,500
2026 Exam questions and well detailed answers
Question: A corporation purchases office equipment for $12,000,
paying $3,000 in cash and signing a note payable for the remaining
$9,000. How does this transaction affect the fundamental accounting
equation?
A) Assets increase by $9,000; liabilities increase by $9,000; equity is
unchanged.
B) Assets increase by $12,000; liabilities increase by $3,000; equity
increases by $9,000.
C) Assets decrease by $3,000; liabilities increase by $9,000; equity
decreases by $12,000.
D) Assets increase by $12,000; liabilities decrease by $3,000; equity is
unchanged.
Answer: A
Explanation: Equipment (Asset) goes up by $12,000. Cash (Asset) goes
down by $3,000, resulting in a net asset increase of $9,000. Notes
Payable (Liability) increases by $9,000. Thus, Assets ($9,000 net) =
Liabilities ($9,000) + Equity ($0).
Question: Which of the following is considered an external user of
financial accounting information?
A) Production supervisor
B) Chief Executive Officer (CEO)
C) Potential investor evaluating stock purchase
D) Department head of marketing
Answer: C
,WGU D196 Principles of Financial and Managerial Accounting OA actual
2026 Exam questions and well detailed answers
Explanation: External users include investors, creditors, regulators, and
customers who do not work inside the company or manage its daily
operations.
Question: Under the accrual basis of accounting, when should a
service revenue be recorded?
A) When the customer submits a purchase order
B) When the cash is physically collected from the client
C) When the service has been performed, regardless of when cash
changes hands
D) At the end of the fiscal quarter
Answer: C
Explanation: Accrual accounting requires revenue to be recognized
when it is earned (the performance obligation is met), matching the
timing of economic activity rather than cash flow.
Question: Which account normally carries a debit balance?
A) Accounts Payable
B) Common Stock
C) Service Revenue
D) Prepaid Rent
Answer: D
Explanation: Prepaid Rent is an asset account. Assets and expenses
normally carry debit balances, whereas liabilities, equity, and revenues
normally carry credit balances.
, WGU D196 Principles of Financial and Managerial Accounting OA actual
2026 Exam questions and well detailed answers
Question: The principle that requires expenses to be recorded in the
same period as the revenues they helped generate is known as the:
A) Revenue recognition principle
B) Cost principle
C) Matching principle
D) Monetary unit assumption
Answer: C
Explanation: The matching principle ensures that all expenses incurred
to generate specific revenues are reported in the same accounting
period as those revenues.
Question: If total assets equal $150,000 and total equity equals
$90,000, what is the amount of total liabilities?
A) $240,000
B) $60,000
C) $90,000
D) $150,000
Answer: B
Explanation: Using the accounting equation (Assets = Liabilities +
Equity), Liabilities = Assets - Equity ($150,000 - $90,000 = $60,000).
Question: Which organization currently has the legal authority to
establish U.S. accounting and reporting standards (GAAP)?
A) Financial Accounting Standards Board (FASB)
, WGU D196 Principles of Financial and Managerial Accounting OA actual
2026 Exam questions and well detailed answers
B) Securities and Exchange Commission (SEC)
C) American Institute of Certified Public Accountants (AICPA)
D) Internal Revenue Service (IRS)
Answer: B
Explanation: The SEC holds ultimate legal authority for setting
accounting principles for publicly traded companies in the U.S., though
it delegates day-to-day standard-setting to the FASB.
Question: Which of the following accounts is closed out (reset to
zero) at the end of the accounting year?
A) Retained Earnings
B) Equipment
C) Salaries Expense
D) Accounts Receivable
Answer: C
Explanation: Temporary accounts (revenues, expenses, and dividends)
are closed at year-end. Permanent accounts (assets, liabilities, and
equity accounts like common stock and retained earnings) carry their
balances forward.
Question: A company performs services for a client on account for
$4,500. How does this transaction affect the accounts?
A) Cash increases $4,500; Service Revenue increases $4,500
B) Accounts Receivable increases $4,500; Service Revenue increases
$4,500
