WGU D774 - INTRO TO BUSINESS ACCOUNTING
PA (LATEST 2026/2027 UPDATE) QUESTIONS AND
VERIFIED ANSWERS 100% CORRECT GRADE A
50 QUESTIONS
TABLE OF CONTENTS
# TOPIC
1 Apply the double-entry accounting system to record, adjust, and close transactions across the accounting
cycle
2 Prepare and interpret the income statement, balance sheet, statement of cash flows, and statement of
retained earnings in accordance with GAAP
3 Analyze financial statements using ratio analysis to evaluate liquidity, solvency, profitability, and
operational efficiency
4 Evaluate internal control procedures and apply the fraud triangle to assess control weaknesses
5 Compute inventory and cost of goods sold under FIFO, LIFO, and weighted-average methods and
explain financial statement impacts
6 Apply depreciation methods for long-term assets and account for disposals and impairments
7 Distinguish between debt and equity financing and account for related transactions including bonds and
stock issuances
8 Classify costs and apply cost-volume-profit analysis and budgeting concepts to managerial
decision-making
9 WGU D774
10 Intro to Business Accounting PA
11 Latest 2026
12 2027 Update
13 Questions and Verified Answers 100% Correct Grade A
14 Foundations of Business Accounting (Financial & Managerial Accounting Fundamentals)
15 Applied Business Accounting (Financial & Managerial Accounting Fundamentals)
16 Advanced Business Accounting (Financial & Managerial Accounting Fundamentals)
17 Business Accounting (Financial & Managerial Accounting Fundamentals) Review
Page 1
,ABSTRACT
This study document brings together 50 carefully worded exam questions drawn from WGU D774 -
Intro to Business Accounting PA (Latest 2026/2027 Update) Questions and Verified Answers 100%
Correct Grade A, with the strongest emphasis placed on Apply the double-entry accounting system
to record, adjust, and close transactions across the accounting cycle, Prepare and interpret the
income statement, balance sheet, statement of cash flows, and statement of retained earnings in
accordance with GAAP, Analyze financial statements using ratio analysis to evaluate liquidity,
solvency, profitability and and operational efficiency. Every item follows the wording style and level
of reasoning you meet in the real paper, and each one is paired with a clear rationale so the
correct choice is never a guess. Work through the set at your own pace, mark the questions that
slow you down, then come back to them until the reasoning feels automatic. Learners who revise
this way walk into the exam room recognising the pattern behind the questions instead of meeting
them for the first time. Keep going - steady, honest practice is what turns a difficult paper into a
comfortable pass.
Q1 APPLY THE DOUBLE-ENTRY ACCOUNTING SYSTEM TO RECORD, ADJUST, AND CLOSE
TRANSACTIONS ACROSS THE ACCOUNTING CYCLE
A company uses the allowance method. It writes off a $5,000 uncollectible
account. What is the immediate effect on the accounting equation?
A. Assets decrease $5,000; equity decreases $5,000.
B. Assets decrease $5,000; expenses increase $5,000.
C. Assets decrease $5,000; allowance increases $5,000.
D. No net change in assets, liabilities, or equity. CORRECT
RATIONALE: Writing off an account under the allowance method debits Allowance for Doubtful
Accounts and credits Accounts Receivable, both contra-asset and asset accounts, so total
assets are unchanged; expenses were recognized when the allowance was estimated, so equity
is unaffected.
Page 2
, Q2 APPLY THE DOUBLE-ENTRY ACCOUNTING SYSTEM TO RECORD, ADJUST, AND CLOSE
TRANSACTIONS ACROSS THE ACCOUNTING CYCLE
A company reports net income of $80,000, depreciation expense of $12,000, and a
$6,000 increase in accounts receivable. Under the indirect method, what is cash
flow from operating activities?
A. $86,000 CORRECT
B. $98,000
C. $74,000
D. $92,000
RATIONALE: Start with net income $80,000; add back non-cash depreciation $12,000; subtract
the increase in accounts receivable $6,000 because revenue exceeded cash collections. Result:
$80,000 + $12,000 $6,000 = $86,000.
Q3 APPLY THE DOUBLE-ENTRY ACCOUNTING SYSTEM TO RECORD, ADJUST, AND CLOSE
TRANSACTIONS ACROSS THE ACCOUNTING CYCLE
A company uses LIFO during rising prices. Compared to FIFO, which statement is
correct?
A. LIFO reports higher net income and higher ending inventory.
B. LIFO reports lower net income and lower ending inventory. CORRECT
C. LIFO reports lower net income but higher ending inventory.
D. LIFO reports higher net income but lower ending inventory.
RATIONALE: In rising prices, LIFO assigns the most recent, higher costs to cost of goods sold,
reducing net income, and leaves older, lower costs in ending inventory, reducing inventory value
relative to FIFO.
Page 3
PA (LATEST 2026/2027 UPDATE) QUESTIONS AND
VERIFIED ANSWERS 100% CORRECT GRADE A
50 QUESTIONS
TABLE OF CONTENTS
# TOPIC
1 Apply the double-entry accounting system to record, adjust, and close transactions across the accounting
cycle
2 Prepare and interpret the income statement, balance sheet, statement of cash flows, and statement of
retained earnings in accordance with GAAP
3 Analyze financial statements using ratio analysis to evaluate liquidity, solvency, profitability, and
operational efficiency
4 Evaluate internal control procedures and apply the fraud triangle to assess control weaknesses
5 Compute inventory and cost of goods sold under FIFO, LIFO, and weighted-average methods and
explain financial statement impacts
6 Apply depreciation methods for long-term assets and account for disposals and impairments
7 Distinguish between debt and equity financing and account for related transactions including bonds and
stock issuances
8 Classify costs and apply cost-volume-profit analysis and budgeting concepts to managerial
decision-making
9 WGU D774
10 Intro to Business Accounting PA
11 Latest 2026
12 2027 Update
13 Questions and Verified Answers 100% Correct Grade A
14 Foundations of Business Accounting (Financial & Managerial Accounting Fundamentals)
15 Applied Business Accounting (Financial & Managerial Accounting Fundamentals)
16 Advanced Business Accounting (Financial & Managerial Accounting Fundamentals)
17 Business Accounting (Financial & Managerial Accounting Fundamentals) Review
Page 1
,ABSTRACT
This study document brings together 50 carefully worded exam questions drawn from WGU D774 -
Intro to Business Accounting PA (Latest 2026/2027 Update) Questions and Verified Answers 100%
Correct Grade A, with the strongest emphasis placed on Apply the double-entry accounting system
to record, adjust, and close transactions across the accounting cycle, Prepare and interpret the
income statement, balance sheet, statement of cash flows, and statement of retained earnings in
accordance with GAAP, Analyze financial statements using ratio analysis to evaluate liquidity,
solvency, profitability and and operational efficiency. Every item follows the wording style and level
of reasoning you meet in the real paper, and each one is paired with a clear rationale so the
correct choice is never a guess. Work through the set at your own pace, mark the questions that
slow you down, then come back to them until the reasoning feels automatic. Learners who revise
this way walk into the exam room recognising the pattern behind the questions instead of meeting
them for the first time. Keep going - steady, honest practice is what turns a difficult paper into a
comfortable pass.
Q1 APPLY THE DOUBLE-ENTRY ACCOUNTING SYSTEM TO RECORD, ADJUST, AND CLOSE
TRANSACTIONS ACROSS THE ACCOUNTING CYCLE
A company uses the allowance method. It writes off a $5,000 uncollectible
account. What is the immediate effect on the accounting equation?
A. Assets decrease $5,000; equity decreases $5,000.
B. Assets decrease $5,000; expenses increase $5,000.
C. Assets decrease $5,000; allowance increases $5,000.
D. No net change in assets, liabilities, or equity. CORRECT
RATIONALE: Writing off an account under the allowance method debits Allowance for Doubtful
Accounts and credits Accounts Receivable, both contra-asset and asset accounts, so total
assets are unchanged; expenses were recognized when the allowance was estimated, so equity
is unaffected.
Page 2
, Q2 APPLY THE DOUBLE-ENTRY ACCOUNTING SYSTEM TO RECORD, ADJUST, AND CLOSE
TRANSACTIONS ACROSS THE ACCOUNTING CYCLE
A company reports net income of $80,000, depreciation expense of $12,000, and a
$6,000 increase in accounts receivable. Under the indirect method, what is cash
flow from operating activities?
A. $86,000 CORRECT
B. $98,000
C. $74,000
D. $92,000
RATIONALE: Start with net income $80,000; add back non-cash depreciation $12,000; subtract
the increase in accounts receivable $6,000 because revenue exceeded cash collections. Result:
$80,000 + $12,000 $6,000 = $86,000.
Q3 APPLY THE DOUBLE-ENTRY ACCOUNTING SYSTEM TO RECORD, ADJUST, AND CLOSE
TRANSACTIONS ACROSS THE ACCOUNTING CYCLE
A company uses LIFO during rising prices. Compared to FIFO, which statement is
correct?
A. LIFO reports higher net income and higher ending inventory.
B. LIFO reports lower net income and lower ending inventory. CORRECT
C. LIFO reports lower net income but higher ending inventory.
D. LIFO reports higher net income but lower ending inventory.
RATIONALE: In rising prices, LIFO assigns the most recent, higher costs to cost of goods sold,
reducing net income, and leaves older, lower costs in ending inventory, reducing inventory value
relative to FIFO.
Page 3
