WGU D774 – Intro to Business Accounting Objective Assessment (OA)
| Questions and Answers | 2026 Update | 100% Correct.
✅ WGU D774 – Intro to Business Accounting
Objective Assessment (OA)
ALL CORE QUESTIONS & ANSWERS
Section 1: Accounting Fundamentals
1. What is accounting?
Answer: The process of identifying, recording, analyzing, and communicating financial information to
users.
2. What is financial accounting primarily concerned with?
Answer: Providing financial information to external users such as investors, creditors, and regulators.
3. Who are internal users of accounting information?
Answer: Managers, executives, and employees.
4. Who are external users of accounting information?
Answer: Investors, lenders, government agencies, and suppliers.
5. What are GAAP?
Answer: Generally Accepted Accounting Principles that guide financial reporting in the U.S.
6. What is the accounting equation?
Answer:
Assets = Liabilities + Equity
7. What are assets?
Answer: Resources owned by a business that provide future economic benefit.
,8. What are liabilities?
Answer: Obligations a business owes to others.
9. What is equity?
Answer: The owner’s residual interest in the business after liabilities are deducted from assets.
10. Why must the accounting equation always balance?
Answer: Every transaction affects at least two accounts and preserves the equality.
Section 2: Debits and Credits
11. What is a debit?
Answer: An entry on the left side of an account.
12. What is a credit?
Answer: An entry on the right side of an account.
13. What is the normal balance of an asset account?
Answer: Debit.
14. What is the normal balance of a liability account?
Answer: Credit.
15. What is the normal balance of equity?
Answer: Credit.
16. What is the normal balance of revenue?
Answer: Credit.
,17. What is the normal balance of expense accounts?
Answer: Debit.
18. What is double-entry accounting?
Answer: A system where each transaction affects at least two accounts with equal debits and credits.
19. Which accounts increase with debits?
Answer: Assets and expenses.
20. Which accounts increase with credits?
Answer: Liabilities, equity, and revenues.
Section 3: Financial Statements
21. What are the four main financial statements?
Answer:
1. Income Statement
2. Balance Sheet
3. Statement of Owner’s Equity
4. Statement of Cash Flows
22. What does the income statement show?
Answer: Revenues, expenses, and net income over a period of time.
23. Formula for net income?
Answer:
Net Income = Revenues − Expenses
24. What does the balance sheet show?
Answer: Assets, liabilities, and equity at a specific point in time.
, 25. What does the statement of owner’s equity show?
Answer: Changes in owner’s equity over a period.
26. What does the statement of cash flows show?
Answer: Cash inflows and outflows from operating, investing, and financing activities.
27. What are operating activities?
Answer: Day-to-day business operations (sales, expenses).
28. What are investing activities?
Answer: Buying or selling long-term assets.
29. What are financing activities?
Answer: Owner investments, loans, and distributions.
30. Which statement is prepared first?
Answer: Income Statement.
Section 4: Revenues & Expenses
31. What is revenue?
Answer: Income earned from providing goods or services.
32. What is an expense?
Answer: Costs incurred to generate revenue.
33. What is the matching principle?
Answer: Expenses should be recorded in the same period as the revenues they help generate.
| Questions and Answers | 2026 Update | 100% Correct.
✅ WGU D774 – Intro to Business Accounting
Objective Assessment (OA)
ALL CORE QUESTIONS & ANSWERS
Section 1: Accounting Fundamentals
1. What is accounting?
Answer: The process of identifying, recording, analyzing, and communicating financial information to
users.
2. What is financial accounting primarily concerned with?
Answer: Providing financial information to external users such as investors, creditors, and regulators.
3. Who are internal users of accounting information?
Answer: Managers, executives, and employees.
4. Who are external users of accounting information?
Answer: Investors, lenders, government agencies, and suppliers.
5. What are GAAP?
Answer: Generally Accepted Accounting Principles that guide financial reporting in the U.S.
6. What is the accounting equation?
Answer:
Assets = Liabilities + Equity
7. What are assets?
Answer: Resources owned by a business that provide future economic benefit.
,8. What are liabilities?
Answer: Obligations a business owes to others.
9. What is equity?
Answer: The owner’s residual interest in the business after liabilities are deducted from assets.
10. Why must the accounting equation always balance?
Answer: Every transaction affects at least two accounts and preserves the equality.
Section 2: Debits and Credits
11. What is a debit?
Answer: An entry on the left side of an account.
12. What is a credit?
Answer: An entry on the right side of an account.
13. What is the normal balance of an asset account?
Answer: Debit.
14. What is the normal balance of a liability account?
Answer: Credit.
15. What is the normal balance of equity?
Answer: Credit.
16. What is the normal balance of revenue?
Answer: Credit.
,17. What is the normal balance of expense accounts?
Answer: Debit.
18. What is double-entry accounting?
Answer: A system where each transaction affects at least two accounts with equal debits and credits.
19. Which accounts increase with debits?
Answer: Assets and expenses.
20. Which accounts increase with credits?
Answer: Liabilities, equity, and revenues.
Section 3: Financial Statements
21. What are the four main financial statements?
Answer:
1. Income Statement
2. Balance Sheet
3. Statement of Owner’s Equity
4. Statement of Cash Flows
22. What does the income statement show?
Answer: Revenues, expenses, and net income over a period of time.
23. Formula for net income?
Answer:
Net Income = Revenues − Expenses
24. What does the balance sheet show?
Answer: Assets, liabilities, and equity at a specific point in time.
, 25. What does the statement of owner’s equity show?
Answer: Changes in owner’s equity over a period.
26. What does the statement of cash flows show?
Answer: Cash inflows and outflows from operating, investing, and financing activities.
27. What are operating activities?
Answer: Day-to-day business operations (sales, expenses).
28. What are investing activities?
Answer: Buying or selling long-term assets.
29. What are financing activities?
Answer: Owner investments, loans, and distributions.
30. Which statement is prepared first?
Answer: Income Statement.
Section 4: Revenues & Expenses
31. What is revenue?
Answer: Income earned from providing goods or services.
32. What is an expense?
Answer: Costs incurred to generate revenue.
33. What is the matching principle?
Answer: Expenses should be recorded in the same period as the revenues they help generate.
