WGU D774 Intro to Business Accounting
OBJECTIVE ASSESSMENT ACTUAL EXAM
2025/2026 COMPLETE QUESTIONS BANK AND
CORRECT DETAILED ANSWERS WITH RATIONALES
||
100% GUARANTEED PASS
<NEWEST VERSION>
1. Accounting - ANSWER ✔ The process of organizing, analyzing, and
communicating financial information to support decision-making
2. Accrual Accounting - ANSWER ✔ An accounting method that records
revenues and expenses when they are earned or incurred, not when cash
changes hands.
3. Accounting Equation - ANSWER ✔ The formula Assets = Liabilities +
Equity, which underpins the balance sheet.
4. Assets - ANSWER ✔ Resources owned by a business that have value and
can generate future benefit.
5. Assurance - ANSWER ✔ Independent verification that financial information
or internal controls are reliable and comply with relevant standards.
6. Auditor - ANSWER ✔ A professional who examines financial records and
controls to assess accuracy and compliance.
7. Balance Sheet - ANSWER ✔ A snapshot of a company's financial position
at a given time, showing assets, liabilities, and equity.
,8. Break-Even Point - ANSWER ✔ The level of sales at which total revenue
equals total costs, resulting in neither profit nor loss.
9. Budget Creep - ANSWER ✔ The gradual increase in a budget over time due
to repeated small increases that go unchallenged.
10.Budget Variance - ANSWER ✔ The difference between what was budgeted
and what actually occurred in financial performance.
11.Budgeting - ANSWER ✔ The process of planning and managing income
and expenses over a specific period to meet financial goals.
12.Statement of Cash Flows - ANSWER ✔ A financial statement that tracks
actual cash inflows and outflows across operating, investing, and financing
activities.
13.Statement of Owner's Equity - ANSWER ✔ A financial statement that
shows changes in equity over a period due to investments, earnings, and
withdrawals.
14.Unfavorable Variance - ANSWER ✔ When actual income is lower, or
expenses are higher than the budgeted amount.
15.Variable Costs - ANSWER ✔ Costs that change in direct proportion to
business activity levels.
16.Variance - ANSWER ✔ The difference between planned or expected results
and actual outcomes, often used in budgeting and financial analysis.
17.Zero-Based Budgeting (ZBB) - ANSWER ✔ A budgeting approach that
starts from scratch each cycle, requiring full justification for every expense.
18.When were the earliest forms of rudimentary bookkeeping developed? -
ANSWER ✔ About 5,000 years ago by the Mesopotamians, Babylonians,
and ancient Egyptians
,19.What was one type of dealing that contributed to the Great Wall Street Crash
of 1929? - ANSWER ✔ Operating pump and dump plans
20.How can a company's financial statements be used to attract new investors? -
ANSWER ✔ By documenting past performance
21.Who are the primary users of management accounting information? -
ANSWER ✔ Internal users
22.Which time interval is covered by a balance sheet? - ANSWER ✔ A
snapshot prepared as of a specific date
23.Who are the primary users of managerial accounting information? -
ANSWER ✔ Decision makers inside a company
24.Why might one company's management accounting system differ from that
of another company's? - ANSWER ✔ Competitive needs
25.How does the change in the cash balance for the year impact the
computation of the ending retained earnings balance? - ANSWER ✔ It is
ignored.
26.Which primary financial statement provides a detailed report explaining one
component in the year-to-year change in the retained earnings balance? -
ANSWER ✔ Income statement
27.Which balance sheet account is directly impacted by net income? -
ANSWER ✔ Retained Earnings
28.How do the budgets of manufacturing companies, such as airplane parts
manufacturers, differ from those of retail companies, such as clothing
stores? - ANSWER ✔ Manufacturing company budgets include production
and product cost budgets.
29.What is a common use of a cash budget? - ANSWER ✔ To identify the need
for external financing
, 30.Endothon Company, a recreational vehicle dealer, has prepared a set of
company budgets for next year based on a sales forecast that assumes that
the competitive environment next year will be the same as it was this year. A
competitor has just announced that it will open a new dealership right across
the street from Endothon Company. This represents a major change in
Endothon's competitive environment.
What is an appropriate first response for Endothon with respect to its
budgets for next year? - ANSWER ✔ Modify the sales budget.
31.Which statement represents a major disadvantage of an incremental budget?
- ANSWER ✔ It requires the assumption that this period is very similar to
last period.
32.Which two budgets must precede the creation of the materials cost budget in
a production company? - ANSWER ✔ Sales and production
33.What is a way that budgeting assists in operating a company? - ANSWER ✔
Aligns management decisions with the company's goals and objectives
34.Which question about strategy must be answered when using zero-based
budgeting? - ANSWER ✔ Have there been any significant strategy changes
that should cause a reallocation of budgeted funds?
35.What is the starting point when using zero-based budgeting? - ANSWER ✔
The amount of each expense is zero.
36.Which problem can be caused by the small annual increases (2% or 3%) that
are routinely approved with incremental budgeting? - ANSWER ✔ They get
compounded each year and can become significant over time.
37.Quiet Flag Industries has reported these budget and actual data for the most
recent quarter:
Total Revenue$400,000$390,000
Total Operating Cost(200,000)(220,000)
Total Selling Cost(30,000)(40,000)
Total Administrative Cost(140,000)(60,000)
Profit$30,000$70,000
OBJECTIVE ASSESSMENT ACTUAL EXAM
2025/2026 COMPLETE QUESTIONS BANK AND
CORRECT DETAILED ANSWERS WITH RATIONALES
||
100% GUARANTEED PASS
<NEWEST VERSION>
1. Accounting - ANSWER ✔ The process of organizing, analyzing, and
communicating financial information to support decision-making
2. Accrual Accounting - ANSWER ✔ An accounting method that records
revenues and expenses when they are earned or incurred, not when cash
changes hands.
3. Accounting Equation - ANSWER ✔ The formula Assets = Liabilities +
Equity, which underpins the balance sheet.
4. Assets - ANSWER ✔ Resources owned by a business that have value and
can generate future benefit.
5. Assurance - ANSWER ✔ Independent verification that financial information
or internal controls are reliable and comply with relevant standards.
6. Auditor - ANSWER ✔ A professional who examines financial records and
controls to assess accuracy and compliance.
7. Balance Sheet - ANSWER ✔ A snapshot of a company's financial position
at a given time, showing assets, liabilities, and equity.
,8. Break-Even Point - ANSWER ✔ The level of sales at which total revenue
equals total costs, resulting in neither profit nor loss.
9. Budget Creep - ANSWER ✔ The gradual increase in a budget over time due
to repeated small increases that go unchallenged.
10.Budget Variance - ANSWER ✔ The difference between what was budgeted
and what actually occurred in financial performance.
11.Budgeting - ANSWER ✔ The process of planning and managing income
and expenses over a specific period to meet financial goals.
12.Statement of Cash Flows - ANSWER ✔ A financial statement that tracks
actual cash inflows and outflows across operating, investing, and financing
activities.
13.Statement of Owner's Equity - ANSWER ✔ A financial statement that
shows changes in equity over a period due to investments, earnings, and
withdrawals.
14.Unfavorable Variance - ANSWER ✔ When actual income is lower, or
expenses are higher than the budgeted amount.
15.Variable Costs - ANSWER ✔ Costs that change in direct proportion to
business activity levels.
16.Variance - ANSWER ✔ The difference between planned or expected results
and actual outcomes, often used in budgeting and financial analysis.
17.Zero-Based Budgeting (ZBB) - ANSWER ✔ A budgeting approach that
starts from scratch each cycle, requiring full justification for every expense.
18.When were the earliest forms of rudimentary bookkeeping developed? -
ANSWER ✔ About 5,000 years ago by the Mesopotamians, Babylonians,
and ancient Egyptians
,19.What was one type of dealing that contributed to the Great Wall Street Crash
of 1929? - ANSWER ✔ Operating pump and dump plans
20.How can a company's financial statements be used to attract new investors? -
ANSWER ✔ By documenting past performance
21.Who are the primary users of management accounting information? -
ANSWER ✔ Internal users
22.Which time interval is covered by a balance sheet? - ANSWER ✔ A
snapshot prepared as of a specific date
23.Who are the primary users of managerial accounting information? -
ANSWER ✔ Decision makers inside a company
24.Why might one company's management accounting system differ from that
of another company's? - ANSWER ✔ Competitive needs
25.How does the change in the cash balance for the year impact the
computation of the ending retained earnings balance? - ANSWER ✔ It is
ignored.
26.Which primary financial statement provides a detailed report explaining one
component in the year-to-year change in the retained earnings balance? -
ANSWER ✔ Income statement
27.Which balance sheet account is directly impacted by net income? -
ANSWER ✔ Retained Earnings
28.How do the budgets of manufacturing companies, such as airplane parts
manufacturers, differ from those of retail companies, such as clothing
stores? - ANSWER ✔ Manufacturing company budgets include production
and product cost budgets.
29.What is a common use of a cash budget? - ANSWER ✔ To identify the need
for external financing
, 30.Endothon Company, a recreational vehicle dealer, has prepared a set of
company budgets for next year based on a sales forecast that assumes that
the competitive environment next year will be the same as it was this year. A
competitor has just announced that it will open a new dealership right across
the street from Endothon Company. This represents a major change in
Endothon's competitive environment.
What is an appropriate first response for Endothon with respect to its
budgets for next year? - ANSWER ✔ Modify the sales budget.
31.Which statement represents a major disadvantage of an incremental budget?
- ANSWER ✔ It requires the assumption that this period is very similar to
last period.
32.Which two budgets must precede the creation of the materials cost budget in
a production company? - ANSWER ✔ Sales and production
33.What is a way that budgeting assists in operating a company? - ANSWER ✔
Aligns management decisions with the company's goals and objectives
34.Which question about strategy must be answered when using zero-based
budgeting? - ANSWER ✔ Have there been any significant strategy changes
that should cause a reallocation of budgeted funds?
35.What is the starting point when using zero-based budgeting? - ANSWER ✔
The amount of each expense is zero.
36.Which problem can be caused by the small annual increases (2% or 3%) that
are routinely approved with incremental budgeting? - ANSWER ✔ They get
compounded each year and can become significant over time.
37.Quiet Flag Industries has reported these budget and actual data for the most
recent quarter:
Total Revenue$400,000$390,000
Total Operating Cost(200,000)(220,000)
Total Selling Cost(30,000)(40,000)
Total Administrative Cost(140,000)(60,000)
Profit$30,000$70,000
