WGU D196 PRACTICE EXAM 2026
COMPREHENSIVE STUDY SOLUTIONS
◉ Differential Costs. Answer: Future costs that change as a result of
a decision; also called incremental or relevant costs.
◉ Direct Costs. Answer: Costs that are specifically traceable to a unit
of business or segment being analyzed.
◉ Direct Labor. Answer: Wages paid to those who physically work
on direct materials to transform them into a finished product and
are traceable to specific products.
◉ Direct Labor Budget. Answer: A schedule of direct labor
requirements for the budget period.
◉ Direct Materials. Answer: Materials that become part of the
product and are traceable to it.
◉ Direct Materials Budget. Answer: A schedule of direct materials to
be used during the budget period and direct materials to be
purchased during that period.
,◉ Dividends. Answer: A sum of money distributed to the owners
(stockholders) of a corporation.
◉ Earnings (Loss) Per Share (EPS). Answer: The amount of net
income (earnings) related to each share of stock; computed by
dividing net income by the number of shares of stock outstanding
during this period.
◉ Economy of Scale. Answer: A pattern of decreasing costs per unit
as unit volume increases.
◉ Estimated Manufacturing Overhead. Answer: Budgeted
manufacturing overhead costs that are used to establish the
predetermined overhead rate.
◉ Ethics. Answer: The basic moral principles that govern an
individual's behavior.
◉ Evaluating. Answer: Analyzing results, rewarding performance,
and identifying problems.
◉ Expenses. Answer: The amount of assets consumed through
business operations; the costs incurred in normal business
operations to generate revenues.
, ◉ External Transaction. Answer: An exchange that occurs between a
company and an external party and that is recorded in the financial
records of the company.
◉ Financial Accounting. Answer: The area of accounting concerned
with reporting financial information to interested external parties.
◉ Financial Accounting Standards Board (FASB). Answer: The
organization responsible for studying accounting issues and
establishing accounting standards to govern financial reporting in
the United States.
◉ Financial Statement Analysis. Answer: The examination of both
the relationships among financial statement numbers and the trends
in those numbers over time.
◉ Financial Statements. Answer: Reports such as the balance sheet,
income statement, and statement of cash flows, which summarize
the financial status and results of operations of a business entity.
◉ Financing Activities. Answer: Activities whereby cash is obtained
from or repaid to owners and creditors.
◉ Finished Goods Inventory. Answer: Inventory that has completed
the production process and is ready for sale to customers.
COMPREHENSIVE STUDY SOLUTIONS
◉ Differential Costs. Answer: Future costs that change as a result of
a decision; also called incremental or relevant costs.
◉ Direct Costs. Answer: Costs that are specifically traceable to a unit
of business or segment being analyzed.
◉ Direct Labor. Answer: Wages paid to those who physically work
on direct materials to transform them into a finished product and
are traceable to specific products.
◉ Direct Labor Budget. Answer: A schedule of direct labor
requirements for the budget period.
◉ Direct Materials. Answer: Materials that become part of the
product and are traceable to it.
◉ Direct Materials Budget. Answer: A schedule of direct materials to
be used during the budget period and direct materials to be
purchased during that period.
,◉ Dividends. Answer: A sum of money distributed to the owners
(stockholders) of a corporation.
◉ Earnings (Loss) Per Share (EPS). Answer: The amount of net
income (earnings) related to each share of stock; computed by
dividing net income by the number of shares of stock outstanding
during this period.
◉ Economy of Scale. Answer: A pattern of decreasing costs per unit
as unit volume increases.
◉ Estimated Manufacturing Overhead. Answer: Budgeted
manufacturing overhead costs that are used to establish the
predetermined overhead rate.
◉ Ethics. Answer: The basic moral principles that govern an
individual's behavior.
◉ Evaluating. Answer: Analyzing results, rewarding performance,
and identifying problems.
◉ Expenses. Answer: The amount of assets consumed through
business operations; the costs incurred in normal business
operations to generate revenues.
, ◉ External Transaction. Answer: An exchange that occurs between a
company and an external party and that is recorded in the financial
records of the company.
◉ Financial Accounting. Answer: The area of accounting concerned
with reporting financial information to interested external parties.
◉ Financial Accounting Standards Board (FASB). Answer: The
organization responsible for studying accounting issues and
establishing accounting standards to govern financial reporting in
the United States.
◉ Financial Statement Analysis. Answer: The examination of both
the relationships among financial statement numbers and the trends
in those numbers over time.
◉ Financial Statements. Answer: Reports such as the balance sheet,
income statement, and statement of cash flows, which summarize
the financial status and results of operations of a business entity.
◉ Financing Activities. Answer: Activities whereby cash is obtained
from or repaid to owners and creditors.
◉ Finished Goods Inventory. Answer: Inventory that has completed
the production process and is ready for sale to customers.
