WGU D105 OA #2 2026/2027 | 150+ Questions & Answers | Leases, Accounting Changes, Pensions, Cash Flows & Disclosures | Western Governors University

The WGU D105 OA #2 2026/2027 is a comprehensive 49-page exam-preparation document containing 150+ questions, correct answers, calculation-based problems, and worked explanations covering advanced financial accounting concepts. The key topics include lease accounting, finance and operating leases, right-of-use assets, lease liabilities, accounting changes and error corrections, pension plans, statements of cash flows, financial statement disclosures, related-party transactions, subsequent events, inventory disclosures, and contingent liabilities. The combination of conceptual questions and numerical accounting scenarios makes the document especially useful for preparing for the D105 Objective Assessment at Western Governors University (WGU). The first major section provides extensive coverage of lease accounting from both lessee and lessor perspectives. Questions examine reasons businesses lease assets, capitalization of long-term leases, operating versus finance leases, lease expenses, present-value calculations, implicit versus incremental borrowing rates, captive leasing companies, residual values, and lease receivables. The material also tests the classification criteria used to determine whether an arrangement qualifies as a finance lease, including transfer of ownership, purchase options, lease term, present value, and specialized-asset considerations. Students work through practical calculations involving right-of-use assets and lease liabilities. The document covers present value of lease payments, guaranteed and unguaranteed residual values, initial direct costs, lease incentives, amortization, interest expense, depreciation, current versus noncurrent lease liabilities, and bargain purchase options. Worked scenarios include numerical calculations for leased machinery, computers, vehicles, boom lifts, scanners, and other equipment, allowing students to practice both conceptual classification and financial-statement measurement. The document then moves into accounting changes and error corrections, distinguishing changes in accounting principles, estimates, and reporting entities. Students review retrospective versus prospective application, beginning retained-earnings adjustments, changes between FIFO and LIFO, changes in depreciation methods and useful-life estimates, and changes in consolidated or combined financial reporting. The questions emphasize determining whether prior financial statements should be restated or whether the accounting effect should instead be recognized in current and future periods. Closely related questions address accounting errors and prior-period adjustments. Examples include failure to record depreciation, incorrect inventory valuation, accrued-wage errors, premature revenue recognition, amortization errors, and improper financial-statement classifications. Students distinguish balance-sheet errors, income-statement errors, counterbalancing errors, and noncounterbalancing errors, while numerical examples demonstrate how corrections affect inventory, accumulated depreciation, retained earnings, net income, and related tax effects. A dedicated section covers pension accounting and retirement plans. The document differentiates defined contribution and defined benefit plans, contributory and noncontributory plans, and qualified pension arrangements. Questions examine employer and employee responsibilities, pension funding, pension trusts, projected benefit obligations, present-value concepts, employee compensation and length of service, 401(k) classification, and which party bears investment or funding risk under different pension structures. Another substantial portion focuses on the statement of cash flows. Students review the purpose of cash-flow reporting and the classification of transactions into operating, investing, and financing activities. Topics include cash received from customers, supplier payments, depreciation and amortization, accounts receivable, accounts payable, prepaid expenses, inventory changes, equipment purchases and sales, borrowing, bond repayments, common-stock issuance, treasury-stock transactions, and dividends. The cash-flow questions also provide multiple worked numerical problems using the indirect method. Students practice reconciling net income to cash provided by operating activities by adding back noncash depreciation and amortization, accounting for gains and losses, and adjusting for changes in working-capital accounts. Other problems calculate net cash from investing and financing activities and the overall change in cash. The document additionally distinguishes the direct and indirect methods and reviews the required presentation order of operating, investing, and financing activities. The final portion concentrates on full disclosure and financial reporting requirements. Students review the full-disclosure principle, significant accounting policies, recognized and nonrecognized subsequent events, related-party transactions, inventory disclosures, long-term borrowing maturities, liens against assets, deferred taxes, and contingent liabilities. The document explains that recognized subsequent events provide additional evidence concerning conditions that existed at the balance-sheet date, whereas certain significant events arising afterward may require disclosure without adjustment. Practical scenarios reinforce these disclosure principles through examples involving customer bankruptcy, lawsuits, mergers, stock issuances after year-end, related-party purchases, factory fires, pledged inventory, and uncertain loss contingencies. The final page specifically addresses inventory reported using FIFO and the lower-of-cost-or-market basis, inventory pledged as collateral, lawsuit contingencies whose amounts cannot be reasonably estimated, and deferred-tax disclosure. This gives students applied practice in deciding what must be recognized, adjusted, disclosed in notes, or treated as a nonrecognized subsequent event. Relevant students: This document is particularly relevant for WGU D105 students, Western Governors University accounting students, Intermediate Accounting students, Bachelor of Science Business Administration–Accounting students, financial accounting students, accounting degree candidates, and students reviewing upper-level financial reporting concepts. It is especially useful for learners preparing for the D105 Objective Assessment (OA #2) who need concentrated practice with lease calculations, accounting changes, pensions, cash-flow classifications, disclosure requirements, and scenario-based accounting questions. 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