WGU D196 TEST BANK FOR OA AND PREASSESSMENT REVIEW 2025
WITH 150 ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS (100%
CORRECT ANSWERS) D196 PRACTICE EXAM 2026 (BRAND
NEW!!)>>COVERS MOST TESTED QUESTIONS
1. Which budget should include all production costs other than those for direct materials and direct
labor?
A) Sales budget
B) Direct materials budget
C) Manufacturing overhead budget ☑
D) Production budget
Rationale: The manufacturing overhead budget includes all indirect production costs such as utilities,
depreciation, and factory supplies—everything except direct materials and direct labor.
2. Which account is a common asset account?
A) Accounts payable
B) Equity
C) Accounts receivable ☑
D) Utilities Expense
Rationale: Accounts receivable represents money owed to the company and is classified as an asset.
3. On which financial statement would you see the valuation of a company's asset accounts?
A) Statement of Cash Flows
B) Balance Sheet ☑
C) Income Statement
D) Statement of Retained Earnings
Rationale: The balance sheet presents a company’s assets, liabilities, and equity at a specific point in
time.
4. What is the final step in the accounting cycle?
A) Summarize the effects of transactions
B) Analyze transactions
C) Prepare reports ☑
D) Record the effects of transactions
Rationale: After recording and adjusting entries, the final step is to prepare financial statements for
decision-makers.
5. Which of the following is not an example of a transaction?
A) Receive cash in payment of an invoice
B) Purchase an asset from a supplier
C) Sale on credit to a customer
D) Preparing financial statements ☑
Rationale: Transactions are economic events that affect accounts; preparing financial statements is a
reporting activity, not a transaction.
,6. On which financial statement would you see cash flows from financing activities?
A) Statement of Cash Flows ☑
B) Balance Sheet
C) Income Statement
D) Statement of Retained Earnings
Rationale: Cash flows from financing activities, such as issuing stock or paying dividends, appear on the
statement of cash flows.
7. Whose job is it to make sure that investors are provided with full and fair information about
publicly traded companies?
A) FASB
B) AICPA
C) IASB
D) SEC ☑
Rationale: The Securities and Exchange Commission (SEC) regulates publicly traded companies to ensure
transparency and protect investors.
8. How does a classified balance sheet provide useful information to a decision maker?
A) It distinguishes between current and long-term assets ☑
B) It provides data that are not publicly disclosed
C) It distinguishes liabilities from expenses
D) It provides data for a period of time instead of as a point in time
Rationale: A classified balance sheet organizes assets and liabilities into current and long-term
categories, making it easier to evaluate liquidity and solvency.
9. In some companies, the performance measures for profit center managers are heavily influenced by
cost allocations downward from organizational units (such as company headquarters). Why is this a
mistake?
A) Controllable costs should not be included in the performance evaluation measure of a profit center
manager
B) Revenues should not be included in the performance evaluation measure of a profit center manager
C) Uncontrollable costs should not be included in the performance evaluation measure of a profit
center manager ☑
D) Direct costs should not be included in the performance evaluation measure of a profit center
manager
Rationale: Profit center managers should be evaluated based on costs they can control; allocating
uncontrollable costs from higher organizational units would unfairly affect their performance
measurement.
10. Which is an example of a product cost?
A) Non-manufacturing personnel costs
B) Rent Expense
C) Office Supplies
D) Raw materials to make a product ☑
Rationale: Product costs include direct materials, direct labor, and manufacturing overhead—costs
associated with making the product.
, 11. Which cost is considered a period cost?
A) Direct materials
B) Direct labor
C) Manufacturing overhead
D) Selling and administrative expenses ☑
Rationale: Period costs are not tied to production and are expensed in the period incurred, such
as selling and administrative expenses.
12. Which financial statement shows revenues and expenses for a specific period of time?
A) Balance Sheet
B) Income Statement ☑
C) Statement of Cash Flows
D) Statement of Retained Earnings
Rationale: The income statement reports revenues and expenses over a period of time to
determine net income or loss.
13. Which method assigns costs to products based on the number of units produced?
A) Job-order costing ☑
B) Activity-based costing
C) Process costing
D) Standard costing
Rationale: Job-order costing assigns costs to specific jobs or batches, based on units produced.
14. Which account increases with a credit?
A) Cash
B) Accounts Receivable
C) Equipment
D) Accounts Payable ☑
Rationale: Liability accounts, such as Accounts Payable, increase with credits and decrease with
debits.
15. Which principle dictates that revenue is recognized when earned, not necessarily when
cash is received?
A) Matching principle
B) Revenue recognition principle ☑
C) Cost principle
D) Conservatism principle
Rationale: The revenue recognition principle requires recording revenue when the earning
process is complete, regardless of cash receipt.
16. Which of the following is a characteristic of managerial accounting?
A) Primarily historical
B) Provides internal decision-making information ☑
WITH 150 ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS (100%
CORRECT ANSWERS) D196 PRACTICE EXAM 2026 (BRAND
NEW!!)>>COVERS MOST TESTED QUESTIONS
1. Which budget should include all production costs other than those for direct materials and direct
labor?
A) Sales budget
B) Direct materials budget
C) Manufacturing overhead budget ☑
D) Production budget
Rationale: The manufacturing overhead budget includes all indirect production costs such as utilities,
depreciation, and factory supplies—everything except direct materials and direct labor.
2. Which account is a common asset account?
A) Accounts payable
B) Equity
C) Accounts receivable ☑
D) Utilities Expense
Rationale: Accounts receivable represents money owed to the company and is classified as an asset.
3. On which financial statement would you see the valuation of a company's asset accounts?
A) Statement of Cash Flows
B) Balance Sheet ☑
C) Income Statement
D) Statement of Retained Earnings
Rationale: The balance sheet presents a company’s assets, liabilities, and equity at a specific point in
time.
4. What is the final step in the accounting cycle?
A) Summarize the effects of transactions
B) Analyze transactions
C) Prepare reports ☑
D) Record the effects of transactions
Rationale: After recording and adjusting entries, the final step is to prepare financial statements for
decision-makers.
5. Which of the following is not an example of a transaction?
A) Receive cash in payment of an invoice
B) Purchase an asset from a supplier
C) Sale on credit to a customer
D) Preparing financial statements ☑
Rationale: Transactions are economic events that affect accounts; preparing financial statements is a
reporting activity, not a transaction.
,6. On which financial statement would you see cash flows from financing activities?
A) Statement of Cash Flows ☑
B) Balance Sheet
C) Income Statement
D) Statement of Retained Earnings
Rationale: Cash flows from financing activities, such as issuing stock or paying dividends, appear on the
statement of cash flows.
7. Whose job is it to make sure that investors are provided with full and fair information about
publicly traded companies?
A) FASB
B) AICPA
C) IASB
D) SEC ☑
Rationale: The Securities and Exchange Commission (SEC) regulates publicly traded companies to ensure
transparency and protect investors.
8. How does a classified balance sheet provide useful information to a decision maker?
A) It distinguishes between current and long-term assets ☑
B) It provides data that are not publicly disclosed
C) It distinguishes liabilities from expenses
D) It provides data for a period of time instead of as a point in time
Rationale: A classified balance sheet organizes assets and liabilities into current and long-term
categories, making it easier to evaluate liquidity and solvency.
9. In some companies, the performance measures for profit center managers are heavily influenced by
cost allocations downward from organizational units (such as company headquarters). Why is this a
mistake?
A) Controllable costs should not be included in the performance evaluation measure of a profit center
manager
B) Revenues should not be included in the performance evaluation measure of a profit center manager
C) Uncontrollable costs should not be included in the performance evaluation measure of a profit
center manager ☑
D) Direct costs should not be included in the performance evaluation measure of a profit center
manager
Rationale: Profit center managers should be evaluated based on costs they can control; allocating
uncontrollable costs from higher organizational units would unfairly affect their performance
measurement.
10. Which is an example of a product cost?
A) Non-manufacturing personnel costs
B) Rent Expense
C) Office Supplies
D) Raw materials to make a product ☑
Rationale: Product costs include direct materials, direct labor, and manufacturing overhead—costs
associated with making the product.
, 11. Which cost is considered a period cost?
A) Direct materials
B) Direct labor
C) Manufacturing overhead
D) Selling and administrative expenses ☑
Rationale: Period costs are not tied to production and are expensed in the period incurred, such
as selling and administrative expenses.
12. Which financial statement shows revenues and expenses for a specific period of time?
A) Balance Sheet
B) Income Statement ☑
C) Statement of Cash Flows
D) Statement of Retained Earnings
Rationale: The income statement reports revenues and expenses over a period of time to
determine net income or loss.
13. Which method assigns costs to products based on the number of units produced?
A) Job-order costing ☑
B) Activity-based costing
C) Process costing
D) Standard costing
Rationale: Job-order costing assigns costs to specific jobs or batches, based on units produced.
14. Which account increases with a credit?
A) Cash
B) Accounts Receivable
C) Equipment
D) Accounts Payable ☑
Rationale: Liability accounts, such as Accounts Payable, increase with credits and decrease with
debits.
15. Which principle dictates that revenue is recognized when earned, not necessarily when
cash is received?
A) Matching principle
B) Revenue recognition principle ☑
C) Cost principle
D) Conservatism principle
Rationale: The revenue recognition principle requires recording revenue when the earning
process is complete, regardless of cash receipt.
16. Which of the following is a characteristic of managerial accounting?
A) Primarily historical
B) Provides internal decision-making information ☑
