WGU D102 FINANCIAL ACCOUNTING
COMPREHENSIVE EXAM REVIEW
QUESTIONS AND ANSWERS 100%
VERIFIED 2026/2027
1. A company performs services for a customer on account for $5,000. Which of the following
describes the impact on the accounting equation?
A. Assets increase and Equity increases
B. Assets increase and Liabilities increase
C. Assets decrease and Equity increases
D. Liabilities decrease and Equity increases
Answer: A
Conceptual Explanation: Performing services on account increases Accounts Receivable
(an asset) and Service Revenue, which increases Retained Earnings (part of Equity).
2. Which of the following accounts is considered a ‘permanent’ account?
A. Dividends
B. Service Revenue
C. Utilities Expense
D. Retained Earnings
,Answer: D
Conceptual Explanation: Permanent accounts are balance sheet accounts whose balances
carry over to the next period. Revenue, Expenses, and Dividends are temporary accounts
closed at year-end.
3. A business purchased $1,200 of supplies on April 1. On April 30, a physical count shows
$400 of supplies still on hand. What is the required adjusting entry?
A. Debit Supplies Expense $800; Credit Supplies $800
B. Debit Supplies $400; Credit Supplies Expense $400
C. Debit Supplies Expense $400; Credit Supplies $400
D. Debit Supplies $800; Credit Cash $800
Answer: A
Conceptual Explanation: The amount used is $1,200 - $400 = $800. The expense must be
recognized for the portion consumed.
4. Under the accrual basis of accounting, when is revenue recognized?
A. When cash is received from the customer
B. When the invoice is mailed to the customer
C. At the end of the fiscal year
D. When the service is performed or the goods are delivered
Answer: D
, Conceptual Explanation: The revenue recognition principle states revenue should be
recorded when the performance obligation is satisfied, regardless of cash timing.
5. If a company has a current ratio of 2.5, what does this indicate?
A. The company has $2.50 in long-term assets for every $1 of current debt
B. The company has $2.50 in current assets for every $1 of current liabilities
C. The company’s net income is 2.5 times its total revenue
D. The company’s debt is 2.5 times its total equity
Answer: B
Conceptual Explanation: The current ratio is calculated as Current Assets divided by
Current Liabilities, measuring short-term liquidity.
6. Which financial statement reports the financial position of a company at a specific point in
time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: C
Conceptual Explanation: The Balance Sheet provides a snapshot of assets, liabilities, and
equity at a specific date, unlike other statements that cover a period.
COMPREHENSIVE EXAM REVIEW
QUESTIONS AND ANSWERS 100%
VERIFIED 2026/2027
1. A company performs services for a customer on account for $5,000. Which of the following
describes the impact on the accounting equation?
A. Assets increase and Equity increases
B. Assets increase and Liabilities increase
C. Assets decrease and Equity increases
D. Liabilities decrease and Equity increases
Answer: A
Conceptual Explanation: Performing services on account increases Accounts Receivable
(an asset) and Service Revenue, which increases Retained Earnings (part of Equity).
2. Which of the following accounts is considered a ‘permanent’ account?
A. Dividends
B. Service Revenue
C. Utilities Expense
D. Retained Earnings
,Answer: D
Conceptual Explanation: Permanent accounts are balance sheet accounts whose balances
carry over to the next period. Revenue, Expenses, and Dividends are temporary accounts
closed at year-end.
3. A business purchased $1,200 of supplies on April 1. On April 30, a physical count shows
$400 of supplies still on hand. What is the required adjusting entry?
A. Debit Supplies Expense $800; Credit Supplies $800
B. Debit Supplies $400; Credit Supplies Expense $400
C. Debit Supplies Expense $400; Credit Supplies $400
D. Debit Supplies $800; Credit Cash $800
Answer: A
Conceptual Explanation: The amount used is $1,200 - $400 = $800. The expense must be
recognized for the portion consumed.
4. Under the accrual basis of accounting, when is revenue recognized?
A. When cash is received from the customer
B. When the invoice is mailed to the customer
C. At the end of the fiscal year
D. When the service is performed or the goods are delivered
Answer: D
, Conceptual Explanation: The revenue recognition principle states revenue should be
recorded when the performance obligation is satisfied, regardless of cash timing.
5. If a company has a current ratio of 2.5, what does this indicate?
A. The company has $2.50 in long-term assets for every $1 of current debt
B. The company has $2.50 in current assets for every $1 of current liabilities
C. The company’s net income is 2.5 times its total revenue
D. The company’s debt is 2.5 times its total equity
Answer: B
Conceptual Explanation: The current ratio is calculated as Current Assets divided by
Current Liabilities, measuring short-term liquidity.
6. Which financial statement reports the financial position of a company at a specific point in
time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: C
Conceptual Explanation: The Balance Sheet provides a snapshot of assets, liabilities, and
equity at a specific date, unlike other statements that cover a period.
