WGU D102 FINANCIAL ACCOUNTING UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. What is a balance sheet?
Report of the total of the balances of all of a company's bank accounts Report of the assets, liabilities, and
equity of a company as of a point in time Report of the revenues and expenses of a company during a
period Report of the operating, investing, and financing cash flows of a company during a period
Answer:
Report of the assets, liabilities, and equity of a company as of a point in time
Question:
2. Which item is a liability?
Accounts payable Retained earnings Accounts receivable Capital stock
Answer:
Accounts payable
Question:
3. Which item is an owners' equity item?
Accounts payable Accounts receivable Retained earnings Inventory
Answer:
Retained earnings
Question:
4. Strime Company's assets equal $104,000, and its stockholders' equity totals $68,500.
What is the amount of its liabilities?
$35,500 $172,500 $68,500 $104,000
Answer:
$35,500
Question:
5. The Whole Pine Company's liabilities equal $124,000, and its stockholders' equity totals $68,500. What
is the amount of its assets?
$55,500 $124,000 $68,500 $192,500
Answer:
$192,500
Question:
6. Which is the proper description of the accounting equation?
Owners' Equity = Assets Assets = Liabilities + Owners' Equity Assets = Liabilities Owners' Equity =
Liabilities
Answer:
Assets = Liabilities + Owners' Equity
,Question:
7. After the effects of every transaction are considered and recorded, what must the accounting equation
do?
Equal itself, or balance Equal total owners' equity Equal total liabilities Equal total assets
Answer:
Equal itself, or balance
Question:
8. Which statement best describes the main features of inventories?
Goods due from customers who have purchased on account Goods purchased and held for sale Goods used
by a company on a long-term basis, usually more than five years Goods used by company employees on a
daily basis
Answer:
Goods purchased and held for sale
Question:
9. What is a classified balance sheet?
A balance sheet that is not publicly disclosed A balance sheet that distinguishes between current and
long-term assets A balance sheet that is for a period of time rather than as of a point in time A balance
sheet that separates liabilities from equities
Answer:
A balance sheet that distinguishes between current and long-term assets
Question:
10. What does owners' equity represent?
The difference between total assets and total liabilities The difference between current assets and
long-term assets The difference between total liabilities and total owners' equity The difference between
current liabilities and long-term liabilities
Answer:
The difference between total assets and total liabilities
Question:
11. For most companies, when assets or liabilities are classified as "current" on the balance sheet, it
generally means the related assets or liabilities will be turned into cash or will be required to be paid,
respectively, within what time frame?
The next quarter The next six months The next month The next year
Answer:
The next year
Question:
12. What is owners' equity?
An economic resource that is owned or controlled by a company An obligation to pay cash, transfer other
assets, or provide services to someone else A residual amount representing the net assets available after all
obligations have been satisfied The sum of operating, investing, and financing cash flows
Answer:
A residual amount representing the net assets available after all obligations have been satis■ed
,Question:
13. Which item is an asset?
Accounts receivable Capital stock Retained earnings Accounts payable
Answer:
Accounts receivable
Question:
14. According to the accounting equation, what is the correct computation of owners' equity?
Total Assets + Liabilities Total Assets - Liabilities Cash + Bank Loan Balance Cash - Bank Loan Balance
Answer:
Total Assets - Liabilities
Question:
15. What is an accurate description of accounts payable?
Obligation arising from the purchase of inventory on account Obligation arising from the sale of office
supplies on account Obligation arising from the payment of income taxes on account Obligation arising
from the sale of equipment on account
Answer:
Obligation arising from the purchase of inventory on account
Question:
16. Bullzai Company's financial records include these accounts at the end of the year:
Land Accounts Receivable Buildings Inventory Loans Payable Accounts Payable Retained Earnings
Capital Stock Cash
Which set of items composes a complete listing of Bullzai's current assets?
Cash, retained earnings, and capital stock Cash, buildings, and land Cash, accounts receivable, and
inventory Cash, inventory, and capital stock
Answer:
Cash, accounts receivable, and inventory
Question:
17. What is bad debt expense?
Amount of uncollectible accounts created by credit sales during the year Amount of inventory lost, stolen,
or sold during the year Amount of gross profit divided by sales for the year Amount of wear and tear on
long-lived assets during the year
Answer:
Amount of uncollectible accounts created by credit sales during the year
Question:
18. Which item is an expense item?
Cost of Goods Sold Sales Cash Accounts Payable
Answer:
Cost of Goods Sold
, Question:
19. What is a single-step income statement?
Emphasizes separate computation of gross profit and operating income Groups and total revenues/groups
and total expenses Omits both interest expense and income tax expense Includes all other expenses, but
omits income tax expense
Answer:
Groups and total revenues/groups and total expenses
Question:
20. What is "gross profit"?
Sales − Cost of Goods Sold. Accounts Receivable − Accounts Payable Total Assets − Total Liabilities
Total Revenues − Total Expenses
Answer:
Sales − Cost of Goods Sold.
Question:
21. What is a company's gross profit percentage?
Net Income ÷ Owners' Equity Gross Profit ÷ Sales Net Income ÷ Sales Gross Profit ÷ Net Income
Answer:
Gross Pro■t ÷ Sales
Question:
22. Which item is a revenue item?
Accounts Receivable Cash Loan Payable Sales
Answer:
Sales
Question:
23. What is an income statement?
Report of the assets, liabilities, and equity of a company as of a point in time Report of the operating,
investing, and financing cash flows of a company during a period Report of the revenues and expenses of a
company during a period Report of the total of the balances of all of a company's bank accounts
Answer:
Report of the revenues and expenses of a company during a period Report of the total of the balances of all
of a company's bank accounts
Question:
24. What is an example of an expense that fits under the heading "selling, general, and administrative
expense"?
Wages of company headquarters accounting staff Fees earned by providing services Purchase cost of
inventory items bought from suppliers Cost paid for the use of someone else's money
Answer:
Wages of company headquarters accounting staff
QUESTIONS AND CORRECT ANSWERS
Question:
1. What is a balance sheet?
Report of the total of the balances of all of a company's bank accounts Report of the assets, liabilities, and
equity of a company as of a point in time Report of the revenues and expenses of a company during a
period Report of the operating, investing, and financing cash flows of a company during a period
Answer:
Report of the assets, liabilities, and equity of a company as of a point in time
Question:
2. Which item is a liability?
Accounts payable Retained earnings Accounts receivable Capital stock
Answer:
Accounts payable
Question:
3. Which item is an owners' equity item?
Accounts payable Accounts receivable Retained earnings Inventory
Answer:
Retained earnings
Question:
4. Strime Company's assets equal $104,000, and its stockholders' equity totals $68,500.
What is the amount of its liabilities?
$35,500 $172,500 $68,500 $104,000
Answer:
$35,500
Question:
5. The Whole Pine Company's liabilities equal $124,000, and its stockholders' equity totals $68,500. What
is the amount of its assets?
$55,500 $124,000 $68,500 $192,500
Answer:
$192,500
Question:
6. Which is the proper description of the accounting equation?
Owners' Equity = Assets Assets = Liabilities + Owners' Equity Assets = Liabilities Owners' Equity =
Liabilities
Answer:
Assets = Liabilities + Owners' Equity
,Question:
7. After the effects of every transaction are considered and recorded, what must the accounting equation
do?
Equal itself, or balance Equal total owners' equity Equal total liabilities Equal total assets
Answer:
Equal itself, or balance
Question:
8. Which statement best describes the main features of inventories?
Goods due from customers who have purchased on account Goods purchased and held for sale Goods used
by a company on a long-term basis, usually more than five years Goods used by company employees on a
daily basis
Answer:
Goods purchased and held for sale
Question:
9. What is a classified balance sheet?
A balance sheet that is not publicly disclosed A balance sheet that distinguishes between current and
long-term assets A balance sheet that is for a period of time rather than as of a point in time A balance
sheet that separates liabilities from equities
Answer:
A balance sheet that distinguishes between current and long-term assets
Question:
10. What does owners' equity represent?
The difference between total assets and total liabilities The difference between current assets and
long-term assets The difference between total liabilities and total owners' equity The difference between
current liabilities and long-term liabilities
Answer:
The difference between total assets and total liabilities
Question:
11. For most companies, when assets or liabilities are classified as "current" on the balance sheet, it
generally means the related assets or liabilities will be turned into cash or will be required to be paid,
respectively, within what time frame?
The next quarter The next six months The next month The next year
Answer:
The next year
Question:
12. What is owners' equity?
An economic resource that is owned or controlled by a company An obligation to pay cash, transfer other
assets, or provide services to someone else A residual amount representing the net assets available after all
obligations have been satisfied The sum of operating, investing, and financing cash flows
Answer:
A residual amount representing the net assets available after all obligations have been satis■ed
,Question:
13. Which item is an asset?
Accounts receivable Capital stock Retained earnings Accounts payable
Answer:
Accounts receivable
Question:
14. According to the accounting equation, what is the correct computation of owners' equity?
Total Assets + Liabilities Total Assets - Liabilities Cash + Bank Loan Balance Cash - Bank Loan Balance
Answer:
Total Assets - Liabilities
Question:
15. What is an accurate description of accounts payable?
Obligation arising from the purchase of inventory on account Obligation arising from the sale of office
supplies on account Obligation arising from the payment of income taxes on account Obligation arising
from the sale of equipment on account
Answer:
Obligation arising from the purchase of inventory on account
Question:
16. Bullzai Company's financial records include these accounts at the end of the year:
Land Accounts Receivable Buildings Inventory Loans Payable Accounts Payable Retained Earnings
Capital Stock Cash
Which set of items composes a complete listing of Bullzai's current assets?
Cash, retained earnings, and capital stock Cash, buildings, and land Cash, accounts receivable, and
inventory Cash, inventory, and capital stock
Answer:
Cash, accounts receivable, and inventory
Question:
17. What is bad debt expense?
Amount of uncollectible accounts created by credit sales during the year Amount of inventory lost, stolen,
or sold during the year Amount of gross profit divided by sales for the year Amount of wear and tear on
long-lived assets during the year
Answer:
Amount of uncollectible accounts created by credit sales during the year
Question:
18. Which item is an expense item?
Cost of Goods Sold Sales Cash Accounts Payable
Answer:
Cost of Goods Sold
, Question:
19. What is a single-step income statement?
Emphasizes separate computation of gross profit and operating income Groups and total revenues/groups
and total expenses Omits both interest expense and income tax expense Includes all other expenses, but
omits income tax expense
Answer:
Groups and total revenues/groups and total expenses
Question:
20. What is "gross profit"?
Sales − Cost of Goods Sold. Accounts Receivable − Accounts Payable Total Assets − Total Liabilities
Total Revenues − Total Expenses
Answer:
Sales − Cost of Goods Sold.
Question:
21. What is a company's gross profit percentage?
Net Income ÷ Owners' Equity Gross Profit ÷ Sales Net Income ÷ Sales Gross Profit ÷ Net Income
Answer:
Gross Pro■t ÷ Sales
Question:
22. Which item is a revenue item?
Accounts Receivable Cash Loan Payable Sales
Answer:
Sales
Question:
23. What is an income statement?
Report of the assets, liabilities, and equity of a company as of a point in time Report of the operating,
investing, and financing cash flows of a company during a period Report of the revenues and expenses of a
company during a period Report of the total of the balances of all of a company's bank accounts
Answer:
Report of the revenues and expenses of a company during a period Report of the total of the balances of all
of a company's bank accounts
Question:
24. What is an example of an expense that fits under the heading "selling, general, and administrative
expense"?
Wages of company headquarters accounting staff Fees earned by providing services Purchase cost of
inventory items bought from suppliers Cost paid for the use of someone else's money
Answer:
Wages of company headquarters accounting staff
