WGU D774 — Introduction to Business Accounting
Expanded Objective Assessment (OA) Study Guide • 2026/2027
Original practice questions, answers, rationales, calculations, journal-entry drills, financial-statement
interpretation, managerial accounting, budgeting, controls, and exam traps.
This guide is independently authored from the publicly visible topic structure of the referenced study-material listing and current WGU course descriptions. It
does not reproduce or claim to provide leaked/actual WGU assessment questions.
How to use this guide
1) Learn the rule or formula. 2) Answer each question before revealing the answer. 3) Explain why the other choices are wrong.
4) Rework every calculation without looking. 5) Finish with the rapid-review section and mixed practice.
Course focus
WGU describes D774 as an introduction to accounting in the business environment, including financial and managerial
accounting, financial statements, budgeting, and managing costs and profits. WGU's related accounting materials emphasize
accounting-cycle concepts, assets, liabilities, equity, and financial-statement basics.
Core areas covered
• Accounting purpose, users, ethics, GAAP concepts, and the accounting equation
• Transaction analysis, debits/credits, journal entries, ledgers, and trial balances
• Adjusting entries, accruals/deferrals, depreciation, and the accounting cycle
• Income statement, balance sheet, statement of equity, and cash-flow statement
• Merchandising/inventory fundamentals and cost-flow concepts
• Receivables, bad-debt concepts, notes, and cash controls
• Internal controls, fraud prevention, bank reconciliation, and ethics
• Managerial accounting, cost behavior, contribution margin, CVP, and pricing
• Budgets, variance thinking, relevant costs, and operational decisions
• Basic financial analysis: liquidity, profitability, leverage, efficiency, and interpretation
• Spreadsheets/data interpretation and integrated business scenarios
WGU D774 — Independent OA Study Guide • 2026/2027 Page 1
, 1. Accounting Fundamentals & Transaction Analysis
Q1. Which accounting equation is fundamental to double-entry accounting?
A. Assets = Revenue − Expenses
B. Assets = Liabilities + Equity
C. Equity = Assets + Liabilities
D. Liabilities = Assets + Revenue
Answer: B
Rationale: Every transaction must preserve Assets = Liabilities + Equity. Revenue and expenses affect equity through net income.
Q2. Which user is primarily an internal user of accounting information?
A. Bank lender
B. Supplier
C. Operations manager
D. Potential investor
Answer: C
Rationale: Managers use accounting information to plan, control, evaluate performance, and make operating decisions.
Q3. A business owner contributes $30,000 cash to a new company. What is the immediate effect?
A. Assets +$30,000; liabilities +$30,000
B. Assets +$30,000; equity +$30,000
C. Revenue +$30,000; equity +$30,000
D. Assets unchanged; equity +$30,000
Answer: B
Rationale: Cash increases an asset and the owner's capital/equity increases. A contribution is not revenue.
Q4. A company buys equipment for $8,000 cash. Which statement is correct?
A. Total assets increase $8,000
B. Total assets decrease $8,000
C. One asset increases $8,000 while another decreases $8,000
D. Equity decreases $8,000
Answer: C
Rationale: Equipment rises while cash falls by the same amount. Total assets are unchanged at the purchase date.
Q5. A company provides $4,000 of services on account. Which accounts change?
A. Cash and revenue
B. Accounts receivable and revenue
C. Accounts payable and cash
D. Equipment and revenue
Answer: B
Rationale: The customer owes the company, so Accounts Receivable increases; earned revenue increases equity.
Q6. A business pays $1,500 toward an accounts payable balance. What is the effect?
A. Assets decrease and liabilities decrease
B. Assets decrease and equity decreases
C. Liabilities increase and assets decrease
D. Revenue decreases and assets decrease
WGU D774 — Independent OA Study Guide • 2026/2027 Page 2
, Answer: A
Rationale: Cash, an asset, falls; the payable, a liability, also falls. The payment itself does not create an expense.
Q7. Which account normally has a credit balance?
A. Cash
B. Supplies
C. Accounts payable
D. Prepaid insurance
Answer: C
Rationale: Liabilities normally carry credit balances. Assets normally carry debit balances.
Q8. Which group contains only accounts with normal debit balances?
A. Cash, equipment, supplies
B. Accounts payable, revenue, capital
C. Revenue, cash, retained earnings
D. Notes payable, equipment, revenue
Answer: A
Rationale: Assets normally have debit balances and are increased by debits.
Q9. If assets are $125,000 and liabilities are $48,000, equity is:
A. $77,000
B. $173,000
C. $48,000
D. $125,000
Answer: A
Rationale: Equity = Assets − Liabilities = $125,000 − $48,000 = $77,000.
Q10. Which transaction increases both an asset and a liability?
A. Paying rent in cash
B. Buying equipment on account
C. Collecting a receivable
D. Owner withdrawal
Answer: B
Rationale: Equipment increases as an asset and Accounts Payable/Notes Payable increases as a liability.
Q11. Why is an owner's cash contribution not recorded as revenue?
A. Cash cannot be revenue
B. Contributions are financing/equity transactions rather than earned operating income
C. Equity never changes when cash is received
D. Revenue is recorded only when a check clears
Answer: B
Rationale: Revenue comes from earning income through business activities; owner contributions increase equity directly.
Q12. Which event decreases equity through an income-statement account?
A. Owner contribution
B. Borrowing from a bank
C. Incurring an expense
D. Collecting accounts receivable
WGU D774 — Independent OA Study Guide • 2026/2027 Page 3
Expanded Objective Assessment (OA) Study Guide • 2026/2027
Original practice questions, answers, rationales, calculations, journal-entry drills, financial-statement
interpretation, managerial accounting, budgeting, controls, and exam traps.
This guide is independently authored from the publicly visible topic structure of the referenced study-material listing and current WGU course descriptions. It
does not reproduce or claim to provide leaked/actual WGU assessment questions.
How to use this guide
1) Learn the rule or formula. 2) Answer each question before revealing the answer. 3) Explain why the other choices are wrong.
4) Rework every calculation without looking. 5) Finish with the rapid-review section and mixed practice.
Course focus
WGU describes D774 as an introduction to accounting in the business environment, including financial and managerial
accounting, financial statements, budgeting, and managing costs and profits. WGU's related accounting materials emphasize
accounting-cycle concepts, assets, liabilities, equity, and financial-statement basics.
Core areas covered
• Accounting purpose, users, ethics, GAAP concepts, and the accounting equation
• Transaction analysis, debits/credits, journal entries, ledgers, and trial balances
• Adjusting entries, accruals/deferrals, depreciation, and the accounting cycle
• Income statement, balance sheet, statement of equity, and cash-flow statement
• Merchandising/inventory fundamentals and cost-flow concepts
• Receivables, bad-debt concepts, notes, and cash controls
• Internal controls, fraud prevention, bank reconciliation, and ethics
• Managerial accounting, cost behavior, contribution margin, CVP, and pricing
• Budgets, variance thinking, relevant costs, and operational decisions
• Basic financial analysis: liquidity, profitability, leverage, efficiency, and interpretation
• Spreadsheets/data interpretation and integrated business scenarios
WGU D774 — Independent OA Study Guide • 2026/2027 Page 1
, 1. Accounting Fundamentals & Transaction Analysis
Q1. Which accounting equation is fundamental to double-entry accounting?
A. Assets = Revenue − Expenses
B. Assets = Liabilities + Equity
C. Equity = Assets + Liabilities
D. Liabilities = Assets + Revenue
Answer: B
Rationale: Every transaction must preserve Assets = Liabilities + Equity. Revenue and expenses affect equity through net income.
Q2. Which user is primarily an internal user of accounting information?
A. Bank lender
B. Supplier
C. Operations manager
D. Potential investor
Answer: C
Rationale: Managers use accounting information to plan, control, evaluate performance, and make operating decisions.
Q3. A business owner contributes $30,000 cash to a new company. What is the immediate effect?
A. Assets +$30,000; liabilities +$30,000
B. Assets +$30,000; equity +$30,000
C. Revenue +$30,000; equity +$30,000
D. Assets unchanged; equity +$30,000
Answer: B
Rationale: Cash increases an asset and the owner's capital/equity increases. A contribution is not revenue.
Q4. A company buys equipment for $8,000 cash. Which statement is correct?
A. Total assets increase $8,000
B. Total assets decrease $8,000
C. One asset increases $8,000 while another decreases $8,000
D. Equity decreases $8,000
Answer: C
Rationale: Equipment rises while cash falls by the same amount. Total assets are unchanged at the purchase date.
Q5. A company provides $4,000 of services on account. Which accounts change?
A. Cash and revenue
B. Accounts receivable and revenue
C. Accounts payable and cash
D. Equipment and revenue
Answer: B
Rationale: The customer owes the company, so Accounts Receivable increases; earned revenue increases equity.
Q6. A business pays $1,500 toward an accounts payable balance. What is the effect?
A. Assets decrease and liabilities decrease
B. Assets decrease and equity decreases
C. Liabilities increase and assets decrease
D. Revenue decreases and assets decrease
WGU D774 — Independent OA Study Guide • 2026/2027 Page 2
, Answer: A
Rationale: Cash, an asset, falls; the payable, a liability, also falls. The payment itself does not create an expense.
Q7. Which account normally has a credit balance?
A. Cash
B. Supplies
C. Accounts payable
D. Prepaid insurance
Answer: C
Rationale: Liabilities normally carry credit balances. Assets normally carry debit balances.
Q8. Which group contains only accounts with normal debit balances?
A. Cash, equipment, supplies
B. Accounts payable, revenue, capital
C. Revenue, cash, retained earnings
D. Notes payable, equipment, revenue
Answer: A
Rationale: Assets normally have debit balances and are increased by debits.
Q9. If assets are $125,000 and liabilities are $48,000, equity is:
A. $77,000
B. $173,000
C. $48,000
D. $125,000
Answer: A
Rationale: Equity = Assets − Liabilities = $125,000 − $48,000 = $77,000.
Q10. Which transaction increases both an asset and a liability?
A. Paying rent in cash
B. Buying equipment on account
C. Collecting a receivable
D. Owner withdrawal
Answer: B
Rationale: Equipment increases as an asset and Accounts Payable/Notes Payable increases as a liability.
Q11. Why is an owner's cash contribution not recorded as revenue?
A. Cash cannot be revenue
B. Contributions are financing/equity transactions rather than earned operating income
C. Equity never changes when cash is received
D. Revenue is recorded only when a check clears
Answer: B
Rationale: Revenue comes from earning income through business activities; owner contributions increase equity directly.
Q12. Which event decreases equity through an income-statement account?
A. Owner contribution
B. Borrowing from a bank
C. Incurring an expense
D. Collecting accounts receivable
WGU D774 — Independent OA Study Guide • 2026/2027 Page 3
