C928 - WGU IT FINANCE (LESSON
SUMMARIES) EXAM QUESTIONS WITH
100% CORRECT ANSWERS LATEST
VERSION 2025/2026.
What is a business? (Lesson 1) - ANS A business provides goods or services (outputs) to
customers with the objective of earning a profit. Three types of businesses include service,
merchandising, and manufacturing businesses. Accounting is an information system that
provides reports to users about the economic activities and condition of a business. Ethics are
moral principles that guide the conduct of individuals. Good ethical conduct depends on
individual character and company culture. Accountants are engaged in private accounting or
public accounting.
What are the main accounting standards and regulatory boards? (Lesson 1) - ANS Generally
accepted accounting principles (GAAP) are used in preparing financial statements. To be useful,
financial reports should provide information that is relevant and a faithful representation of the
economic activity or condition. GAAP is based upon the assumptions of monetary unit, time
period, business entity, and going concern. The principles of measurement, historical cost,
revenue recognition, and expense recognition are an integral part of GAAP. The Financial
Standards Board (FASB), Security and Exchange Commission (SEC), and International Accounting
Standards Board (IASB) develop standards that are incorporated into GAAP.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, How are the resources of a business and claims stated? (Lesson 1) - ANS The resources
owned by a business and the rights or claims to these resources may be stated in the form of an
equation, as follows: Assets = Liabilities + Equity
How are business transactions stated? (Lesson 1) - ANS All business transactions can be
stated in terms of the change in one or more of the three elements of the accounting equation.
What are the primary finacial statements and reports used by businesses? (Lesson 1) -
ANS The primary financial statements of a corporation are the income statement, the
retained earnings statement, the balance sheet, and the statement of cash flows. The income
statement reports a period's net income or net loss, which is also reported on the retained
earnings statement. The ending retained earnings reported on the retained earnings statement
is also reported on the balance sheet. The ending cash balance is reported on the balance sheet
and the statement of cash flows.
End-of-period account adjustment process. (Lesson 2) - ANS Exhibit 1 illustrates the end-of-
period process by which accounts are adjusted and how the adjusted accounts flow into the
financial statements.
The use of the end-of-period spreadsheet to produce other reports and statements. (Lesson 2) -
ANS Using the end-of-period spreadsheet shown in Exhibit 1, the income statement, retained
earnings statement, and balance sheet can be prepared. A classified balance sheet has sections
for current assets; property, plant, and equipment; current liabilities; long-term liabilities; and
stockholders' equity.
Entries used in closing the temporary accounts. (Lesson 2) - ANS Four entries are required in
closing the temporary accounts. The first entry closes the revenue accounts to Income
Summary. The second entry closes the expense accounts to Income Summary. The third entry
closes the balance of Income Summary (net income or net loss) to the retained earnings
account. The fourth entry closes the dividends account to the retained earnings account. After
the closing entries have been posted to the ledger, the balance in the retained earnings account
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
SUMMARIES) EXAM QUESTIONS WITH
100% CORRECT ANSWERS LATEST
VERSION 2025/2026.
What is a business? (Lesson 1) - ANS A business provides goods or services (outputs) to
customers with the objective of earning a profit. Three types of businesses include service,
merchandising, and manufacturing businesses. Accounting is an information system that
provides reports to users about the economic activities and condition of a business. Ethics are
moral principles that guide the conduct of individuals. Good ethical conduct depends on
individual character and company culture. Accountants are engaged in private accounting or
public accounting.
What are the main accounting standards and regulatory boards? (Lesson 1) - ANS Generally
accepted accounting principles (GAAP) are used in preparing financial statements. To be useful,
financial reports should provide information that is relevant and a faithful representation of the
economic activity or condition. GAAP is based upon the assumptions of monetary unit, time
period, business entity, and going concern. The principles of measurement, historical cost,
revenue recognition, and expense recognition are an integral part of GAAP. The Financial
Standards Board (FASB), Security and Exchange Commission (SEC), and International Accounting
Standards Board (IASB) develop standards that are incorporated into GAAP.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, How are the resources of a business and claims stated? (Lesson 1) - ANS The resources
owned by a business and the rights or claims to these resources may be stated in the form of an
equation, as follows: Assets = Liabilities + Equity
How are business transactions stated? (Lesson 1) - ANS All business transactions can be
stated in terms of the change in one or more of the three elements of the accounting equation.
What are the primary finacial statements and reports used by businesses? (Lesson 1) -
ANS The primary financial statements of a corporation are the income statement, the
retained earnings statement, the balance sheet, and the statement of cash flows. The income
statement reports a period's net income or net loss, which is also reported on the retained
earnings statement. The ending retained earnings reported on the retained earnings statement
is also reported on the balance sheet. The ending cash balance is reported on the balance sheet
and the statement of cash flows.
End-of-period account adjustment process. (Lesson 2) - ANS Exhibit 1 illustrates the end-of-
period process by which accounts are adjusted and how the adjusted accounts flow into the
financial statements.
The use of the end-of-period spreadsheet to produce other reports and statements. (Lesson 2) -
ANS Using the end-of-period spreadsheet shown in Exhibit 1, the income statement, retained
earnings statement, and balance sheet can be prepared. A classified balance sheet has sections
for current assets; property, plant, and equipment; current liabilities; long-term liabilities; and
stockholders' equity.
Entries used in closing the temporary accounts. (Lesson 2) - ANS Four entries are required in
closing the temporary accounts. The first entry closes the revenue accounts to Income
Summary. The second entry closes the expense accounts to Income Summary. The third entry
closes the balance of Income Summary (net income or net loss) to the retained earnings
account. The fourth entry closes the dividends account to the retained earnings account. After
the closing entries have been posted to the ledger, the balance in the retained earnings account
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
