WGU D105 Units 5–9 2026/2027 | 100+ Questions & Answers | Leases, Accounting Changes, Pensions, Cash Flows & Disclosures | Western Governors University

The WGU D105 Units 5–9 2026/2027 document is a focused 17-page exam preparation and review resource containing 100+ questions, answers, formulas, journal-entry patterns, and high-yield accounting notes. It covers five major areas: lease accounting, accounting changes and error corrections, pension accounting, statement of cash flows, and financial statement disclosures/subsequent events. The material is organized as concise question-and-answer notes intended to reinforce the rules, classifications, calculations, and journal entries students need to recognize when preparing for the D105 assessment at Western Governors University (WGU). The largest opening section focuses on lease accounting for lessees and lessors. Students review the benefits of leasing, including fixed rates, protection against obsolescence, flexibility, financing considerations, interest revenue, tax incentives, and residual values. The document identifies the five lease-classification tests as the transfer-of-ownership test, purchase-option test, lease-term test, present-value test, and alternative-use test. It also reviews fixed lease payments, variable payments based on an index, purchase options, guaranteed residual values, and the use of the lessor's implicit rate when known versus the lessee's incremental borrowing rate when the implicit rate cannot be determined. A particularly useful component is the comparison of finance leases and operating leases. For finance leases, the document reviews interest expense using the effective-interest method and amortization of the right-of-use asset. For operating leases, it describes recognition of a single lease expense composed of interest on the liability and amortization of the right-of-use asset. Students also review how lease payments reduce liabilities and how lease accounting differs depending on whether the student is working from the lessee or lessor perspective. The resource provides numerous lease journal-entry templates, making it especially useful for calculation and application questions. For lessor operating leases, it covers cash receipt, unearned lease revenue, lease revenue, depreciation expense, and accumulated depreciation. For sales-type leases, students review lease receivable, cost of goods sold, inventory, sales revenue, cash, and interest revenue. Lessee entries cover initial recognition of the right-of-use asset and lease liability, lease payments, interest accrual, lease expense, and amortization expense. Another high-yield area concerns residual values and right-of-use asset measurement. The document differentiates guaranteed from unguaranteed residual values and explains how they are treated differently by lessees and lessors for classification and measurement. It also reviews the effects of lease prepayments, lessor incentives, and initial direct costs on the right-of-use asset. Additional formulas address book value, present value, bargain purchase options, and allocation of initial direct costs associated with operating leases. The second major section addresses changes in accounting principles, accounting estimates, and reporting entities. A change in accounting principle is described as moving from one generally accepted accounting principle to another, while a change in estimate results from new information or experience. The resource associates changes in accounting principles with retrospective application and changes in accounting estimates with prospective treatment. Retrospective treatment includes recasting prior financial statements, adjusting affected assets and liabilities, and recognizing the cumulative effect through beginning retained earnings for the earliest period presented. Students also review circumstances in which retrospective treatment is considered impracticable in the source, including situations where the effects cannot be determined, prior-period management intent would have to be assumed, or significant historical estimates cannot be objectively verified. The material further covers direct and indirect effects of accounting changes, required disclosures, cumulative-effect adjustments, and retrospective treatment of changes in reporting entities. The accounting-error section distinguishes counterbalancing from noncounterbalancing errors and explains how corrections are handled when comparative financial statements are prepared. Counterbalancing errors are described as errors that offset over two periods, whereas noncounterbalancing errors can take longer to correct themselves. Failure to record depreciation is specifically provided as an example of a noncounterbalancing error requiring a correcting entry even after the books have been closed. The pension section provides a compact comparison of contributory, noncontributory, qualified, defined contribution, and defined benefit pension plans. In contributory plans, employees bear part of the cost or voluntarily contribute to increase their benefits, whereas employers bear the entire cost of noncontributory plans. Qualified plans are discussed in connection with tax benefits. The material identifies a 401(k) as an example of a defined contribution plan, where the employer's contribution is defined but the ultimate retirement benefit is not guaranteed and the employee bears investment risk. In contrast, defined benefit plans specify retirement benefits based on factors such as years of service and compensation levels approaching retirement. According to the document, employers bear the risk because they must contribute enough to meet the benefits promised by the plan. The material therefore gives students a concise framework for distinguishing pension plans based on who contributes, who bears investment or funding risk, what amount is defined, and how retirement benefits are determined. The statement of cash flows section reviews both purpose and classification. According to the document, the statement helps users evaluate an entity's ability to generate future cash flows, pay dividends and obligations, understand differences between net income and operating cash flow, and identify cash and noncash investing and financing transactions. The required sequence presented is operating activities, investing activities, financing activities, and noncash activities, while the indirect method begins with net income and adjusts for noncash items. Students also receive a useful breakdown of cash inflows and outflows. Operating activities include cash from sales of goods and certain interest and dividend returns, with outflows involving inventory, employees, taxes, interest, and operating expenses. Investing activities include purchases and sales of property, plant and equipment and securities, as well as loans to others and collections of loan principal. Financing activities include issuing equity securities and debt as inflows and paying dividends, redeeming long-term debt, or reacquiring capital stock as outflows. The final section covers the full disclosure principle, related-party transactions, and subsequent events. Full disclosure is defined in the document as reporting circumstances and events that could make a difference to financial-statement users. Related parties include owners, management, their families, affiliated companies, and other parties capable of significantly influencing or being influenced by the reporting company. These relationships and relevant transactions may therefore require disclosure. The document concludes by distinguishing recognized from nonrecognized subsequent events. Recognized subsequent events concern conditions that existed at the balance-sheet date and require adjustment of the financial statements, whereas nonrecognized events concern conditions that arose after the balance-sheet date but before the financial statements were issued and do not require adjustment under the framework presented in the source. This section ties financial reporting and disclosure concepts directly to exam-style classification decisions. Relevant students: This resource is particularly relevant for WGU D105 students, Western Governors University accounting students, Intermediate Accounting students, BSBA Accounting students, financial accounting students, accounting degree candidates, and learners preparing for objective-assessment questions involving leases, accounting changes, pension plans, cash flows, and financial reporting disclosures. It is especially useful as a concentrated Units 5–9 review because it combines definitions with journal-entry patterns, classification rules, measurement principles, and exam-focused accounting distinctions. 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