D102 WGU PRACTICE TEST QUESTIONS & ANSWERS
What information is contained in a balance sheet? +
• Report of a company's financial position as of a point in time.
• Report of a company's financial position during a period of time.
• Report of a company's operating performance as of a point in time.
• Report of a company's operating performance during a period of time. - Answer -
Report of a company's financial position as of a point in time.
What is an owners' equity item?
• Accounts receivable
• Loans payable
• Cash
• Capital stock - Answer -Capital stock
A company ended July with assets of $150,000 and owner's equity of $60,000.
What is the amount of liabilities at the end of July?
• $60,000
• $90,000
• $150,000
• $300,000 - Answer -$90,000
$100,000 - $3,000 - $7,000 = $90,000
What is reported in a multiple-step income statement that is not reported in a single-step
income statement? +
• Retained earnings
• Cash collected from customers
• Gross profit
• Dividends - Answer -Gross profit
How is gross profit computed? +
• Total revenues minus total expenses.
• Cash minus dividends.
• Sales minus operating expenses.
• Sales minus cost of goods sold. - Answer -Sales minus cost of goods sold.
The following are some accounts from a company's financial statements:
accounts receivable
cost of goods sold
cash
retained earnings
sales
inventory
income tax expense
accounts payable
, Which set is a list of all of the items that are used in computing this company's net
income?
• Sales, cost of goods sold, and income tax expense.
• Inventory, accounts payable, and retained earnings.
• Cash, retained earnings, and accounts payable.
• Cash, accounts receivable, and accounts payable. - Answer -Sales, cost of goods
sold, and income tax expense.
What is the proper way to record an increase in an asset account and an increase in an
equity account?
• Asset, credit; equity, credit
• Asset, debit; equity, debit
• Asset, debit; equity, credit
• Asset, credit; equity, debit - Answer -Asset, debit; equity, credit
A company was started last year when the shareholders invested $70,000 cash into it.
At that time, the company also borrowed $100,000 cash from a local bank. The
company used $140,000 cash to purchase inventory for $140,000. This year the
company sold all of the inventory for $95,000 cash (and that is not a typographical error;
the amount received for all of the inventory was only $95,000 cash).
Which account balance is correct with respect to this company's balance sheet after the
sale of the inventory? +
• Total owners' equity is $115,000.
• Cash is $45,000.
• Total owners' equity is $70,000.
• Total owners' equity is $25,000. - Answer -Total owners' equity is $25,000.
On January 1, a company had these assets, liabilities, and equities:
Cash $100
Inventory $140
Accounts payable $70
Paid-in capital $150
Retained earnings $20
During the year, the company entered into these transactions:
Selling inventory costing $140 for a total of $200; cash of $30 was received, and the
remaining $170 was put on account.
Paying cash for rent of $45.
Paying cash dividends of $30.
What is this company's total equity at the end of the year? +
• $130
• $150
• $155
• $210 - Answer -$155
$100 + $140 - $70 = $170 ->
$170 - $140 + $200 = $230 ->
What information is contained in a balance sheet? +
• Report of a company's financial position as of a point in time.
• Report of a company's financial position during a period of time.
• Report of a company's operating performance as of a point in time.
• Report of a company's operating performance during a period of time. - Answer -
Report of a company's financial position as of a point in time.
What is an owners' equity item?
• Accounts receivable
• Loans payable
• Cash
• Capital stock - Answer -Capital stock
A company ended July with assets of $150,000 and owner's equity of $60,000.
What is the amount of liabilities at the end of July?
• $60,000
• $90,000
• $150,000
• $300,000 - Answer -$90,000
$100,000 - $3,000 - $7,000 = $90,000
What is reported in a multiple-step income statement that is not reported in a single-step
income statement? +
• Retained earnings
• Cash collected from customers
• Gross profit
• Dividends - Answer -Gross profit
How is gross profit computed? +
• Total revenues minus total expenses.
• Cash minus dividends.
• Sales minus operating expenses.
• Sales minus cost of goods sold. - Answer -Sales minus cost of goods sold.
The following are some accounts from a company's financial statements:
accounts receivable
cost of goods sold
cash
retained earnings
sales
inventory
income tax expense
accounts payable
, Which set is a list of all of the items that are used in computing this company's net
income?
• Sales, cost of goods sold, and income tax expense.
• Inventory, accounts payable, and retained earnings.
• Cash, retained earnings, and accounts payable.
• Cash, accounts receivable, and accounts payable. - Answer -Sales, cost of goods
sold, and income tax expense.
What is the proper way to record an increase in an asset account and an increase in an
equity account?
• Asset, credit; equity, credit
• Asset, debit; equity, debit
• Asset, debit; equity, credit
• Asset, credit; equity, debit - Answer -Asset, debit; equity, credit
A company was started last year when the shareholders invested $70,000 cash into it.
At that time, the company also borrowed $100,000 cash from a local bank. The
company used $140,000 cash to purchase inventory for $140,000. This year the
company sold all of the inventory for $95,000 cash (and that is not a typographical error;
the amount received for all of the inventory was only $95,000 cash).
Which account balance is correct with respect to this company's balance sheet after the
sale of the inventory? +
• Total owners' equity is $115,000.
• Cash is $45,000.
• Total owners' equity is $70,000.
• Total owners' equity is $25,000. - Answer -Total owners' equity is $25,000.
On January 1, a company had these assets, liabilities, and equities:
Cash $100
Inventory $140
Accounts payable $70
Paid-in capital $150
Retained earnings $20
During the year, the company entered into these transactions:
Selling inventory costing $140 for a total of $200; cash of $30 was received, and the
remaining $170 was put on account.
Paying cash for rent of $45.
Paying cash dividends of $30.
What is this company's total equity at the end of the year? +
• $130
• $150
• $155
• $210 - Answer -$155
$100 + $140 - $70 = $170 ->
$170 - $140 + $200 = $230 ->
