1|Page
WGU D196 OBJECTIVE ASSESSMENT V1 AND V2 NEWEST 2026
TEST BANK | D196 PRINCIPLES OF FINANCIAL AND
MANAGERIAL ACCOUNTING OA EXAM WITH COMPLETE
QUESTIONS AND CORRECT VERIFIED ANSWERS / ALREADY
GRADED A+ (MOST RECENT!!)
1. A company's accounting department records the purchase of office
equipment for $25,000 paid entirely in cash. Which effect will this
transaction have on the accounting equation?
A. Assets increase and liabilities increase.
B. Assets decrease by $25,000.
C. One asset increases while another asset decreases, with no change in
total assets.
D. Owner's equity increases by $25,000.
Answer: C. One asset increases while another asset decreases, with no
change in total assets.
Rationale: Cash decreases while equipment (another asset) increases
by the same amount, leaving the accounting equation balanced.
2. Which financial statement reports a company's revenues, expenses,
and net income over a specific accounting period?
,2|Page
A. Balance Sheet
B. Statement of Cash Flows
C. Income Statement
D. Statement of Owner's Equity
Answer: C. Income Statement
Rationale: The income statement measures financial performance by
reporting revenues, expenses, and net income for a period.
3. A business provides consulting services on account to a client. Under
the accrual basis of accounting, when should the revenue be
recognized?
A. When cash is received.
B. When the services have been performed.
C. At the end of the fiscal year only.
D. When the invoice is paid.
Answer: B. When the services have been performed.
,3|Page
Rationale: Accrual accounting recognizes revenue when it is earned,
regardless of when payment is received.
4. Which of the following accounts is classified as a current asset?
A. Accounts Payable
B. Equipment
C. Accounts Receivable
D. Notes Payable
Answer: C. Accounts Receivable
Rationale: Accounts receivable represents money owed by customers
and is expected to be collected within one year.
5. A manufacturing company wants to determine the cost of producing
one unit of product. Which managerial accounting concept is most
directly involved?
A. Cost accounting
B. Financial reporting
C. Auditing
D. Tax accounting
, 4|Page
Answer: A. Cost accounting
Rationale: Cost accounting helps managers determine product costs,
control expenses, and improve operational efficiency.
6. Which accounting principle requires expenses to be recognized
during the same period as the revenues they help generate?
A. Historical Cost Principle
B. Matching Principle
C. Full Disclosure Principle
D. Monetary Unit Assumption
Answer: B. Matching Principle
Rationale: The matching principle ensures expenses are recorded in
the same accounting period as the related revenues.
7. A company's total assets equal $950,000, and total liabilities equal
$620,000. What is the owner's equity?
A. $330,000
WGU D196 OBJECTIVE ASSESSMENT V1 AND V2 NEWEST 2026
TEST BANK | D196 PRINCIPLES OF FINANCIAL AND
MANAGERIAL ACCOUNTING OA EXAM WITH COMPLETE
QUESTIONS AND CORRECT VERIFIED ANSWERS / ALREADY
GRADED A+ (MOST RECENT!!)
1. A company's accounting department records the purchase of office
equipment for $25,000 paid entirely in cash. Which effect will this
transaction have on the accounting equation?
A. Assets increase and liabilities increase.
B. Assets decrease by $25,000.
C. One asset increases while another asset decreases, with no change in
total assets.
D. Owner's equity increases by $25,000.
Answer: C. One asset increases while another asset decreases, with no
change in total assets.
Rationale: Cash decreases while equipment (another asset) increases
by the same amount, leaving the accounting equation balanced.
2. Which financial statement reports a company's revenues, expenses,
and net income over a specific accounting period?
,2|Page
A. Balance Sheet
B. Statement of Cash Flows
C. Income Statement
D. Statement of Owner's Equity
Answer: C. Income Statement
Rationale: The income statement measures financial performance by
reporting revenues, expenses, and net income for a period.
3. A business provides consulting services on account to a client. Under
the accrual basis of accounting, when should the revenue be
recognized?
A. When cash is received.
B. When the services have been performed.
C. At the end of the fiscal year only.
D. When the invoice is paid.
Answer: B. When the services have been performed.
,3|Page
Rationale: Accrual accounting recognizes revenue when it is earned,
regardless of when payment is received.
4. Which of the following accounts is classified as a current asset?
A. Accounts Payable
B. Equipment
C. Accounts Receivable
D. Notes Payable
Answer: C. Accounts Receivable
Rationale: Accounts receivable represents money owed by customers
and is expected to be collected within one year.
5. A manufacturing company wants to determine the cost of producing
one unit of product. Which managerial accounting concept is most
directly involved?
A. Cost accounting
B. Financial reporting
C. Auditing
D. Tax accounting
, 4|Page
Answer: A. Cost accounting
Rationale: Cost accounting helps managers determine product costs,
control expenses, and improve operational efficiency.
6. Which accounting principle requires expenses to be recognized
during the same period as the revenues they help generate?
A. Historical Cost Principle
B. Matching Principle
C. Full Disclosure Principle
D. Monetary Unit Assumption
Answer: B. Matching Principle
Rationale: The matching principle ensures expenses are recorded in
the same accounting period as the related revenues.
7. A company's total assets equal $950,000, and total liabilities equal
$620,000. What is the owner's equity?
A. $330,000
