WGU D774 Intro to Business Accounting
| OA | Objective Assessment | 2026
Update | 100% Correct|| Questions and
Well Detailed Answers Plus Rationales
1. What is the primary purpose of accounting?
A. To calculate taxes
B. To record financial transactions
C. To provide financial information for decision-making
D. To track employee performance
Answer: C
Rationale: Accounting’s main purpose is to provide useful financial information to internal
and external users for decision-making.
2. Which of the following is an internal user of accounting information?
A. Investor
B. Creditor
C. Manager
D. Government agency
Answer: C
Rationale: Managers use accounting information internally to plan, control, and evaluate
business operations.
3. Financial accounting focuses primarily on:
A. Future projections
B. Internal decision-making
C. External reporting
D. Budget preparation
Answer: C
Rationale: Financial accounting prepares reports for external users such as investors and
creditors.
,4. Managerial accounting differs from financial accounting because it:
A. Follows GAAP
B. Is required by law
C. Focuses on internal users
D. Produces audited statements
Answer: C
Rationale: Managerial accounting is used internally and is not bound by GAAP.
Accounting Principles & Assumptions
5. The business entity assumption means:
A. The business is separate from its owner
B. The business will last forever
C. All transactions are recorded at market value
D. Only cash transactions are recorded
Answer: A
Rationale: Business finances must be kept separate from personal finances.
6. Which principle states that accounting records assume the business will continue
operating?
A. Cost principle
B. Revenue recognition principle
C. Going concern assumption
D. Matching principle
Answer: C
Rationale: The going concern assumption assumes the business will remain operational into
the foreseeable future.
7. Under the cost principle, assets are recorded at:
A. Market value
B. Replacement cost
C. Historical cost
D. Selling price
Answer: C
Rationale: Assets are recorded at their original purchase price.
, 8. The revenue recognition principle requires revenue to be recorded when:
A. Cash is received
B. Expenses are paid
C. Revenue is earned
D. The customer places an order
Answer: C
Rationale: Revenue is recorded when it is earned, regardless of cash flow.
9. The matching principle requires that:
A. Assets equal liabilities
B. Expenses be matched with revenues
C. Cash equals profit
D. Revenue be recorded first
Answer: B
Rationale: Expenses should be recorded in the same period as the revenues they help
generate.
The Accounting Equation
10. The basic accounting equation is:
A. Assets = Revenue − Expenses
B. Assets = Liabilities + Equity
C. Assets + Liabilities = Equity
D. Revenue = Expenses
Answer: B
Rationale: This equation is the foundation of all accounting systems.
11. If total assets are $100,000 and total liabilities are $40,000, equity equals:
A. $60,000
B. $140,000
C. $40,000
D. $100,000
Answer: A
Rationale: Equity = Assets − Liabilities = $100,000 − $40,000.
| OA | Objective Assessment | 2026
Update | 100% Correct|| Questions and
Well Detailed Answers Plus Rationales
1. What is the primary purpose of accounting?
A. To calculate taxes
B. To record financial transactions
C. To provide financial information for decision-making
D. To track employee performance
Answer: C
Rationale: Accounting’s main purpose is to provide useful financial information to internal
and external users for decision-making.
2. Which of the following is an internal user of accounting information?
A. Investor
B. Creditor
C. Manager
D. Government agency
Answer: C
Rationale: Managers use accounting information internally to plan, control, and evaluate
business operations.
3. Financial accounting focuses primarily on:
A. Future projections
B. Internal decision-making
C. External reporting
D. Budget preparation
Answer: C
Rationale: Financial accounting prepares reports for external users such as investors and
creditors.
,4. Managerial accounting differs from financial accounting because it:
A. Follows GAAP
B. Is required by law
C. Focuses on internal users
D. Produces audited statements
Answer: C
Rationale: Managerial accounting is used internally and is not bound by GAAP.
Accounting Principles & Assumptions
5. The business entity assumption means:
A. The business is separate from its owner
B. The business will last forever
C. All transactions are recorded at market value
D. Only cash transactions are recorded
Answer: A
Rationale: Business finances must be kept separate from personal finances.
6. Which principle states that accounting records assume the business will continue
operating?
A. Cost principle
B. Revenue recognition principle
C. Going concern assumption
D. Matching principle
Answer: C
Rationale: The going concern assumption assumes the business will remain operational into
the foreseeable future.
7. Under the cost principle, assets are recorded at:
A. Market value
B. Replacement cost
C. Historical cost
D. Selling price
Answer: C
Rationale: Assets are recorded at their original purchase price.
, 8. The revenue recognition principle requires revenue to be recorded when:
A. Cash is received
B. Expenses are paid
C. Revenue is earned
D. The customer places an order
Answer: C
Rationale: Revenue is recorded when it is earned, regardless of cash flow.
9. The matching principle requires that:
A. Assets equal liabilities
B. Expenses be matched with revenues
C. Cash equals profit
D. Revenue be recorded first
Answer: B
Rationale: Expenses should be recorded in the same period as the revenues they help
generate.
The Accounting Equation
10. The basic accounting equation is:
A. Assets = Revenue − Expenses
B. Assets = Liabilities + Equity
C. Assets + Liabilities = Equity
D. Revenue = Expenses
Answer: B
Rationale: This equation is the foundation of all accounting systems.
11. If total assets are $100,000 and total liabilities are $40,000, equity equals:
A. $60,000
B. $140,000
C. $40,000
D. $100,000
Answer: A
Rationale: Equity = Assets − Liabilities = $100,000 − $40,000.
