WGU D196 PRINCIPLES OF FINANCIAL & MANAGERIAL
ACCOUNTING EXAM 2026 | VERIFIED PRACTICE
QUESTIONS & ACCURATE ANSWERS
1. The assignment of raw material costs to the major end products resulting from refining a
barrel of crude oil is best described as
Differential costing
Indirect costing
Incremental costing
Joint costing
2. What is the effect on liabilities when a company borrows cash?
Liabilities increase by the amount borrowed.
Liabilities remain unchanged.
Liabilities are eliminated.
Liabilities decrease by the amount borrowed.
3. Describe the relationship between the sales budget and the production budget in a
manufacturing business.
The production budget is prepared before the sales budget to
estimate costs.
The production budget does not depend on the sales budget.
, The sales budget estimates expected sales, which informs the
production budget to determine how much to produce.
The sales budget is based on historical production data.
4. What formula is used to calculate the variable cost ratio?
Variable Costs / Price per Unit
, Total Costs / Price per Unit
Fixed Costs / Total Costs
Fixed Costs / Price per Unit
5. Describe how product costs are treated in a job order costing system compared to
other types of expenses.
Product costs are capitalized as inventory and reported as cost of
goods sold when sold, unlike other expenses which are reported
immediately.
Product costs are reported as operating expenses in the period
they are incurred.
Product costs are reported as general expenses as soon as they
are incurred.
Product costs are treated the same as administrative expenses.
6. Which of the following is the correct basic accounting equation?
Assets = Stockholders' Equity - Liabilities
Revenue - Expenses - Dividends
Assets = Liabilities + Stockholders' Equity
Liabilities = Assets + Stockholders' Equity
7. Who sets accounting standards in the United States?
AICPA
, FASB
PCAOB
SEC
8. Describe how expenses influence the overall financial position of a
ACCOUNTING EXAM 2026 | VERIFIED PRACTICE
QUESTIONS & ACCURATE ANSWERS
1. The assignment of raw material costs to the major end products resulting from refining a
barrel of crude oil is best described as
Differential costing
Indirect costing
Incremental costing
Joint costing
2. What is the effect on liabilities when a company borrows cash?
Liabilities increase by the amount borrowed.
Liabilities remain unchanged.
Liabilities are eliminated.
Liabilities decrease by the amount borrowed.
3. Describe the relationship between the sales budget and the production budget in a
manufacturing business.
The production budget is prepared before the sales budget to
estimate costs.
The production budget does not depend on the sales budget.
, The sales budget estimates expected sales, which informs the
production budget to determine how much to produce.
The sales budget is based on historical production data.
4. What formula is used to calculate the variable cost ratio?
Variable Costs / Price per Unit
, Total Costs / Price per Unit
Fixed Costs / Total Costs
Fixed Costs / Price per Unit
5. Describe how product costs are treated in a job order costing system compared to
other types of expenses.
Product costs are capitalized as inventory and reported as cost of
goods sold when sold, unlike other expenses which are reported
immediately.
Product costs are reported as operating expenses in the period
they are incurred.
Product costs are reported as general expenses as soon as they
are incurred.
Product costs are treated the same as administrative expenses.
6. Which of the following is the correct basic accounting equation?
Assets = Stockholders' Equity - Liabilities
Revenue - Expenses - Dividends
Assets = Liabilities + Stockholders' Equity
Liabilities = Assets + Stockholders' Equity
7. Who sets accounting standards in the United States?
AICPA
, FASB
PCAOB
SEC
8. Describe how expenses influence the overall financial position of a
