WGU D774 Introduction to Business
Accounting Objective Assessment (OA) Practice
Exam 100 Questions & Answers
2026-2027 Syllabus
SECTION 1: ACCOUNTING FUNDAMENTALS & THE
ACCOUNTING EQUATION (Questions 1-15)
1. What is the primary purpose of accounting in business?
A) To calculate taxes owed to the government
B) To provide useful financial information for decision-making
C) To track employee performance and payroll
D) To manage day-to-day cash operations
Answer B:
Rationale: Accounting is fundamentally an information system that
identifies, records, and communicates financial information to help
stakeholders make informed business decisions. While accounting
does assist with tax compliance and cash management, its primary
purpose is decision-making support. ---
2. Which of the following correctly represents the accounting
equation?
A) Assets = Liabilities - Equity
B) Assets = Liabilities + Equity
C) Assets + Liabilities = Equity
,D) Assets = Equity - Liabilities
Answer B:
Rationale: The accounting equation is the foundation of double-entry
bookkeeping, stating that a company's resources (assets) are financed
by either debt (liabilities) or owner investments (equity). This equation
must always balance. ---
3. If a company has total assets of $500,000 and total liabilities of
$200,000, what is the owner's equity?
A) $700,000
B) $300,000
C) $200,000
D) $500,000
Answer B:
Rationale: Using the accounting equation (Assets = Liabilities +
Equity), we can solve for equity: Equity = Assets - Liabilities =
$500,000 - $200,000 = $300,000. This represents the owner's residual
claim on the business assets. ---
4. What are assets?
A) Obligations a business owes to others
B) The owner's residual interest in the business
C) Economic resources owned or controlled by a company that
provide future economic benefit
D) The costs of running a business
Answer C:
,Rationale: Assets are economic resources that a company owns or
controls and expects to benefit from in the future. Examples include
cash, inventory, equipment, and accounts receivable. ---
5. Which of the following is a liability?
A) Cash
B) Accounts Receivable
C) Accounts Payable
D) Equipment
Answer C:
Rationale: Liabilities represent obligations a business owes to others.
Accounts Payable is a liability representing amounts owed to suppliers
for purchases made on credit. Cash, Accounts Receivable, and
Equipment are all assets. ---
6. The economic entity assumption requires that:
A) The business will continue to operate indefinitely
B) Transactions are recorded in the currency of the country where the
business operates
C) The business be treated as separate from its owners
D) Financial statements are prepared at regular intervals
Answer C:
Rationale: The economic entity assumption requires that the business
be accounted for separately from its owners or other entities. This
allows for clear tracking of business performance independent of
owner transactions. ---
, 7. Which accounting assumption justifies the use of historical cost
and deferral of certain expenses?
A) Economic entity assumption
B) Going concern assumption
C) Monetary unit assumption
D) Time period assumption
Answer B:
Rationale: The going concern assumption presumes that a business
will continue to operate indefinitely. This justifies recording assets at
historical cost rather than liquidation value and deferring expenses to
future periods. ---
8. What is the monetary unit assumption?
A) Transactions are recorded using the accrual basis
B) Transactions are recorded in a stable monetary unit
C) Transactions are recorded at their fair market value
D) Transactions are recorded only when cash changes hands
Answer B:
Rationale: The monetary unit assumption requires that transactions be
recorded in a stable monetary unit (currency), typically the currency of
the country where the business operates. This assumes the currency's
purchasing power remains relatively stable over time. ---
9. Which of the following is a user of financial accounting
information?
A) Investors
Accounting Objective Assessment (OA) Practice
Exam 100 Questions & Answers
2026-2027 Syllabus
SECTION 1: ACCOUNTING FUNDAMENTALS & THE
ACCOUNTING EQUATION (Questions 1-15)
1. What is the primary purpose of accounting in business?
A) To calculate taxes owed to the government
B) To provide useful financial information for decision-making
C) To track employee performance and payroll
D) To manage day-to-day cash operations
Answer B:
Rationale: Accounting is fundamentally an information system that
identifies, records, and communicates financial information to help
stakeholders make informed business decisions. While accounting
does assist with tax compliance and cash management, its primary
purpose is decision-making support. ---
2. Which of the following correctly represents the accounting
equation?
A) Assets = Liabilities - Equity
B) Assets = Liabilities + Equity
C) Assets + Liabilities = Equity
,D) Assets = Equity - Liabilities
Answer B:
Rationale: The accounting equation is the foundation of double-entry
bookkeeping, stating that a company's resources (assets) are financed
by either debt (liabilities) or owner investments (equity). This equation
must always balance. ---
3. If a company has total assets of $500,000 and total liabilities of
$200,000, what is the owner's equity?
A) $700,000
B) $300,000
C) $200,000
D) $500,000
Answer B:
Rationale: Using the accounting equation (Assets = Liabilities +
Equity), we can solve for equity: Equity = Assets - Liabilities =
$500,000 - $200,000 = $300,000. This represents the owner's residual
claim on the business assets. ---
4. What are assets?
A) Obligations a business owes to others
B) The owner's residual interest in the business
C) Economic resources owned or controlled by a company that
provide future economic benefit
D) The costs of running a business
Answer C:
,Rationale: Assets are economic resources that a company owns or
controls and expects to benefit from in the future. Examples include
cash, inventory, equipment, and accounts receivable. ---
5. Which of the following is a liability?
A) Cash
B) Accounts Receivable
C) Accounts Payable
D) Equipment
Answer C:
Rationale: Liabilities represent obligations a business owes to others.
Accounts Payable is a liability representing amounts owed to suppliers
for purchases made on credit. Cash, Accounts Receivable, and
Equipment are all assets. ---
6. The economic entity assumption requires that:
A) The business will continue to operate indefinitely
B) Transactions are recorded in the currency of the country where the
business operates
C) The business be treated as separate from its owners
D) Financial statements are prepared at regular intervals
Answer C:
Rationale: The economic entity assumption requires that the business
be accounted for separately from its owners or other entities. This
allows for clear tracking of business performance independent of
owner transactions. ---
, 7. Which accounting assumption justifies the use of historical cost
and deferral of certain expenses?
A) Economic entity assumption
B) Going concern assumption
C) Monetary unit assumption
D) Time period assumption
Answer B:
Rationale: The going concern assumption presumes that a business
will continue to operate indefinitely. This justifies recording assets at
historical cost rather than liquidation value and deferring expenses to
future periods. ---
8. What is the monetary unit assumption?
A) Transactions are recorded using the accrual basis
B) Transactions are recorded in a stable monetary unit
C) Transactions are recorded at their fair market value
D) Transactions are recorded only when cash changes hands
Answer B:
Rationale: The monetary unit assumption requires that transactions be
recorded in a stable monetary unit (currency), typically the currency of
the country where the business operates. This assumes the currency's
purchasing power remains relatively stable over time. ---
9. Which of the following is a user of financial accounting
information?
A) Investors
