WGU D102 FINANCIAL ACCOUNTING OA
FINAL PAPER WITH COMPLETE SOLUTIONS
◉ What are assets?
Answer: Resources controlled by a business that are expected to
provide future economic benefits.
◉ What are liabilities?
Answer: Obligations owed to outside parties that are expected to
require future economic sacrifice.
◉ What is equity?
Answer: The owner's residual interest in the assets of a business
after liabilities are deducted.
◉ What increases equity?
Answer: Revenues and owner investments.
◉ What decreases equity?
Answer: Expenses, losses, and owner withdrawals/dividends.
,◉ What is the basic accounting equation after including revenues
and expenses?
Answer: Assets = Liabilities + Owner's Equity + Revenues −
Expenses.
◉ What is a transaction?
Answer: An economic event that affects the financial position of a
business and can be measured reliably.
◉ What is a debit?
Answer: An entry on the left side of an account.
◉ What is a credit?
Answer: An entry on the right side of an account.
◉ What is the normal balance of an asset account?
Answer: Debit.
◉ What is the normal balance of a liability account?
Answer: Credit.
◉ What is the normal balance of an equity account?
, Answer: Credit.
◉ What is the normal balance of a revenue account?
Answer: Credit.
◉ What is the normal balance of an expense account?
Answer: Debit.
◉ What is the normal balance of a dividend/withdrawal account?
Answer: Debit.
◉ What must be true of every journal entry?
Answer: Total debits must equal total credits.
◉ What does the income statement report?
Answer: Revenues, expenses, and net income or net loss for a period.
◉ What is the basic income statement equation?
Answer: Revenues − Expenses = Net Income.
◉ What does the balance sheet report?
Answer: Assets, liabilities, and equity at a specific point in time.
FINAL PAPER WITH COMPLETE SOLUTIONS
◉ What are assets?
Answer: Resources controlled by a business that are expected to
provide future economic benefits.
◉ What are liabilities?
Answer: Obligations owed to outside parties that are expected to
require future economic sacrifice.
◉ What is equity?
Answer: The owner's residual interest in the assets of a business
after liabilities are deducted.
◉ What increases equity?
Answer: Revenues and owner investments.
◉ What decreases equity?
Answer: Expenses, losses, and owner withdrawals/dividends.
,◉ What is the basic accounting equation after including revenues
and expenses?
Answer: Assets = Liabilities + Owner's Equity + Revenues −
Expenses.
◉ What is a transaction?
Answer: An economic event that affects the financial position of a
business and can be measured reliably.
◉ What is a debit?
Answer: An entry on the left side of an account.
◉ What is a credit?
Answer: An entry on the right side of an account.
◉ What is the normal balance of an asset account?
Answer: Debit.
◉ What is the normal balance of a liability account?
Answer: Credit.
◉ What is the normal balance of an equity account?
, Answer: Credit.
◉ What is the normal balance of a revenue account?
Answer: Credit.
◉ What is the normal balance of an expense account?
Answer: Debit.
◉ What is the normal balance of a dividend/withdrawal account?
Answer: Debit.
◉ What must be true of every journal entry?
Answer: Total debits must equal total credits.
◉ What does the income statement report?
Answer: Revenues, expenses, and net income or net loss for a period.
◉ What is the basic income statement equation?
Answer: Revenues − Expenses = Net Income.
◉ What does the balance sheet report?
Answer: Assets, liabilities, and equity at a specific point in time.
