Exam (elaborations)

WGU D196 ACCOUNTING FINAL EXAM QUESTIONS WITH ANSWERS A+ 2025

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You read in the newspaper that a local company you are familiar with has been found guilty in court of publishing financial statements that are false and misleading to users of those financial statements. In this situation, what could the American Institute of Certified Public Accountants (AICPA...

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WGU D196 ACCOUNTING FINAL EXAM QUESTIONS WITH
ANSWERS A+ 2025
You read in the newspaper that a local company you are familiar with has been found
guilty in court of publishing financial statements that are false and misleading to users of
those financial statements. In this situation, what could the American Institute of
Certified Public Accountants (AICPA) do in response to the accountants who were
found guilty of unethical conduct in accounting practices?

A. Implement professional sanctions
B. Cover up the unethical conduct with flattering news reports
C. Enforce legal punishments
D. Report the business to the FASB - ✔✔A. Implement professional sanctions
(The AICPA can enforce professional sanctions by taking away the CPA designation
from an accountant who has acted unethically.)

What is the Accounting Cycle and how does it work? Explain - ✔✔The accounting cycle
is a process of identifying, analyzing, and recording the accounting events of a
company. It is a standard process that begins when a transaction occurs and ends with
its inclusion in the financial statements

What is the basic and expanded Accounting Equation? - ✔✔assets = liabilities + equity

assets = L + OE (SE) -->capital stock + retained earnings---> revenues - expenses-
dividends

In the context of the financial accounting cycle, what is the definition of an account?

a. A purchase of an item without paying cash immediately, agreeing to pay later
b. A relationship with a customer reflecting past sales, cash collections, and future
orders
c. A specific accounting record that provides an efficient way to categorize similar types
of transactions
d. A written description of an event, summarizing both the positive and the negative
aspects of the event - ✔✔c. A specific accounting record that provides an efficient way
to categorize similar types of transactions

What is an arm's-length transaction?

a. An exchange between two related parties
b. An exchange between two independent parties
c. An exchange of cash for some other asset
d. An exchange of inventory for employee wages - ✔✔b. An exchange between two
independent parties

,Which event represents a transaction recorded as part of the financial accounting
cycle?

a. The hiring of a new employee
b. The marketing department's press release about a new product
c. The company's press release announcing a new factory
d. The sale of a product for cash or on account - ✔✔d. The sale of a product for cash or
on account

A company sells a product to a customer on account. Which part(s) of the accounting
equation does this particular transaction change?

a. Both assets and owners' equity
b. Both assets and liabilities
c. Liabilities only
d. Assets only - ✔✔a. Both assets and owners' equity
This transaction changes both assets and owners' equity to keep the accounting
equation in balance.

What is an example of an internal transaction?

a. An employee is transferred from one department to another.
b. A company sells goods to a customer.
c. A company pays rent to its landlord.
d. An employee purchases supplies from another company. - ✔✔a. An employee is
transferred from one department to another.
An internal transaction occurs within the company instead of with an external party, and
it is not recorded in the company's books

Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
What is the first step of the financial accounting cycle that Oliver will perform?

a. Analyze transactions
b. Prepare reports
c. Summarize the effects of transactions
d. Record the effects of transactions - ✔✔a. Analyze transactions

Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.

, Which item is a liability?

a. Inventory
b. Cash
c. Buildings
d. Mortgage - ✔✔d. Mortgage

Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
Which of the items listed should Oliver record as an external transaction?

a. Announcement of the building of a new facility
b. Transfers of cash from one department to another
c. Payments of wages to employees
d. Purchases of inventory from suppliers - ✔✔d. Purchases of inventory from suppliers

Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
After Oliver records each transaction, how should he ensure that the accounting
equation remains in balance?

a. Add up the balances in all of the liability accounts and compare them to the sum of all
the assets and owners' equity accounts
b. Add up the balance in all of the owners' equity accounts
c. Add up the balances in all of the asset accounts and compare them to the sum of all
the liability and owners' equity accounts
Correct! Because Assets = Liabilities + Owners' Equity, this is the correct way to
determine the equality of the accounting equation.
d. Add u - ✔✔c. Add up the balances in all of the asset accounts and compare them to
the sum of all the liability and owners' equity accounts
Because Assets = Liabilities + Owners' Equity, this is the correct way to determine the
equality of the accounting equation.

Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
After determining the company's financial position, Oliver recommends that the
company borrow money from the bank for the next accounting period. What is the effect

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Exam (elaborations)

WGU D196 ACCOUNTING FINAL EXAM QUESTIONS WITH ANSWERS A+ 2025

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