D103 OA2 Intermediate Accounting I (Units 5–7) – 2026 Actual Questions and Answers (WGU) (Updated PDF)

, D103 OA2 Intermediate Accounting I
(Units 5–7) – 2026 Actual Questions and
Answers (WGU) (Updated PDF)
1. A company deposits $20,000 into an account earning simple interest of 6% annually. How
much interest is earned in one year?

A. $600
B. $1,000
C. $1,200
D. $2,400

Correct Answer: C. $1,200

Rationale:

𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 = 𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙 × 𝑅𝑎𝑡𝑒 × 𝑇𝑖𝑚𝑒
20,000 × 0.06 × 1 = $1,200



2. Under simple interest, which amount is used to calculate interest each period?

A. Principal plus accumulated interest
B. Original principal
C. Future value
D. Present value only

Correct Answer: B. Original principal

Rationale: Simple interest is calculated only on the original principal. Compound interest
calculates interest on previously accumulated interest as well.



3. A company will receive $50,000 in three years. If the appropriate annual discount rate is
8%, should the company record the future amount as its present value?

A. Yes, because future and present values are identical
B. No, because the future amount must be discounted to present value

,C. Yes, because interest is ignored
D. No, because receivables cannot be recorded

Correct Answer: B. No, because the future amount must be discounted to present value

Rationale: Money received in the future is worth less today because of the time value of money.



4. Which factor causes a future amount to have a lower present value?

A. A higher discount rate
B. A shorter period
C. A lower discount rate
D. Immediate payment

Correct Answer: A. A higher discount rate

Rationale: Holding the future amount and time constant, increasing the discount rate reduces
present value.



5. A company expects to receive $10,000 two years from now. The present-value factor is
0.82645. What is the present value?

A. $826.45
B. $8,264.50
C. $10,826.45
D. $12,000

Correct Answer: B. $8,264.50

Rationale:

𝑃𝑉 = 𝐹𝑢𝑡𝑢𝑟𝑒 𝑉𝑎𝑙𝑢𝑒 × 𝑃𝑉 𝐹𝑎𝑐𝑡𝑜𝑟
10,000 × 0.82645 = $8,264.50



6. Which transaction is most likely to involve the time value of money?

A. Purchasing office supplies for cash today
B. Receiving cash immediately for a sale
C. A long-term note receivable
D. Paying an employee's wages today

, Correct Answer: C. A long-term note receivable

Rationale: Long-term arrangements involve cash flows occurring at different points in time,
making present-value concepts important. Current D103 study materials specifically identify
long-term arrangements such as leases and notes as time-value-of-money applications.



7. A company receives a $100,000 noninterest-bearing note due in three years. The
appropriate market rate is 5%. Should the note initially be recorded at $100,000?

A. Yes
B. No, it should generally be recorded at its present value
C. Yes, because no interest is stated
D. No, because notes are liabilities

Correct Answer: B. No, it should generally be recorded at its present value

Rationale: When the stated amount differs from the present value because of a significant
financing component, the note is generally initially recognized at present value.



8. A note has a face value of $100,000 and a present value of $86,000. What is the difference?

A. $14,000 discount
B. $14,000 premium
C. $86,000 discount
D. $100,000 premium

Correct Answer: A. $14,000 discount

Rationale:

100,000 − 86,000 = $14,000



UNIT 6 — CASH & RECEIVABLES

9. Which item is generally classified as cash?

A. Accounts receivable
B. Inventory
C. Currency and coins
D. Long-term investments