WGU D774 Exam | Introduction to
Business Accounting Exam |
Questions and Answers Rated A+ |
100% Verified | Latest 2025/20026
Guide
How does net income impact the computed amount of ending retained
earnings?
-Increases ending retained earnings
-Decreases ending retained earnings
-Converts ending retained earnings to a liability
-Converts ending retained earnings to an asset
- Correct Answer - Increases ending retained earnings
How are revenues included in the computations that impact the
articulation of the balance sheet, the income statement, and the
statement of cash flows?
-Revenues are used in computing cash from operating activities; cash
from operating activities is used in computing retained earnings.
-Revenues are used in computing net income; net income is used in
computing the ending cash balance.
-Revenues are used in computing net income; net income is used in
computing retained earnings.
-Revenues are used in computing cash from operating activities; cash
from operating activities is used in computing the amount of dividends.
,- Correct Answer - Revenues are used in computing net income; net
income is used in computing retained earnings.
What are the advantages of incremental budgeting over zero-based
budgeting?
-Zero-based budgeting does not allow for forecasting, while incremental
budgeting does.
-Starting with last year’s numbers as zero-based budgeting does is more
difficult than starting from scratch, and most companies change
dramatically from one year to the next.
-Incremental budgeting results in higher profits and reduces the risk of
fraud.
-Starting with last year’s numbers, as incremental budgeting does, is
easier than starting from scratch, and most companies do not change
much from one year to the next.
- Correct Answer - Starting with last year's numbers, as incremental
budgeting does, is easier than starting from scratch, and most
companies do not change much from one year to the next.
Why is determining the right sales estimate the most important part of
the budgeting process?
-The sales estimate is the final item prepared in a company’s budget.
-Unused budget funds from last year are allocated based on the sales
estimate.
-All other budgets are developed based on projected sales.
-A company’s budgeted property tax obligation is based on projected
sales.
- Correct Answer - All other budgets are developed based on projected
sales.
,What are two of the controllable internal variables that affect sales?
-Selling price and economic conditions
-Advertising expenditure and customer tastes
-Selling price and sales effort
-Economic conditions and advertising expenditure
- Correct Answer - Selling price and sales effort
What is one way the annual budget is used, in addition to managing a
company’s spending and resources?
-To reward key employees and identify changes that must be made to
operations
-To reward key employees and forecast the company’s share price for
the coming year
-To comply with environmental regulations and set legal limits on
company spending
-To identify changes that must be made to operations and comply with
environmental regulations
- Correct Answer - To reward key employees and identify changes that
must be made to operations
The budgeting process for a merchandising company is less
complicated than for a manufacturing company. Four manufacturing
budgets are replaced by just one merchandising budget.
What is the single budget used in a merchandising company?
Purchases
Direct materials
Direct labor
Manufacturing overhead
, - Correct Answer - Purchases
How does zero-based budgeting differ from incremental budgeting?
-With zero-based budgeting, the difference between the actual amount
and the requested amount is zero.
-With zero-based budgeting, the amount assigned to employee bonuses
is zero.
-With zero-based budgeting, the difference from last year’s budget is
zero.
-With zero-based budgeting, the starting point for each expense is zero.
- Correct Answer - With zero-based budgeting, the starting point for each
expense is zero.
What are some of the advantages of zero-based budgeting?
-It reduces the need for detailed expense tracking, and there is instant
approval for all budget increases.
-Every cost must be justified, and there is a reduced need for detailed
expense tracking.
-It maximizes profit control and eliminates the need for budget cuts.
-Every cost must be justified, and it is easier to get rid of costs that have
become obsolete.
- Correct Answer - Every cost must be justified, and it is easier to get rid
of costs that have become obsolete
What are the major disadvantages of zero-based budgeting?
-It provides no ability to make changes and it is time-consuming.
-It lacks detailed analysis and can be expensive.
-It requires only annual profit targets and lacks detailed analysis.
-It is time-consuming and expensive.
Business Accounting Exam |
Questions and Answers Rated A+ |
100% Verified | Latest 2025/20026
Guide
How does net income impact the computed amount of ending retained
earnings?
-Increases ending retained earnings
-Decreases ending retained earnings
-Converts ending retained earnings to a liability
-Converts ending retained earnings to an asset
- Correct Answer - Increases ending retained earnings
How are revenues included in the computations that impact the
articulation of the balance sheet, the income statement, and the
statement of cash flows?
-Revenues are used in computing cash from operating activities; cash
from operating activities is used in computing retained earnings.
-Revenues are used in computing net income; net income is used in
computing the ending cash balance.
-Revenues are used in computing net income; net income is used in
computing retained earnings.
-Revenues are used in computing cash from operating activities; cash
from operating activities is used in computing the amount of dividends.
,- Correct Answer - Revenues are used in computing net income; net
income is used in computing retained earnings.
What are the advantages of incremental budgeting over zero-based
budgeting?
-Zero-based budgeting does not allow for forecasting, while incremental
budgeting does.
-Starting with last year’s numbers as zero-based budgeting does is more
difficult than starting from scratch, and most companies change
dramatically from one year to the next.
-Incremental budgeting results in higher profits and reduces the risk of
fraud.
-Starting with last year’s numbers, as incremental budgeting does, is
easier than starting from scratch, and most companies do not change
much from one year to the next.
- Correct Answer - Starting with last year's numbers, as incremental
budgeting does, is easier than starting from scratch, and most
companies do not change much from one year to the next.
Why is determining the right sales estimate the most important part of
the budgeting process?
-The sales estimate is the final item prepared in a company’s budget.
-Unused budget funds from last year are allocated based on the sales
estimate.
-All other budgets are developed based on projected sales.
-A company’s budgeted property tax obligation is based on projected
sales.
- Correct Answer - All other budgets are developed based on projected
sales.
,What are two of the controllable internal variables that affect sales?
-Selling price and economic conditions
-Advertising expenditure and customer tastes
-Selling price and sales effort
-Economic conditions and advertising expenditure
- Correct Answer - Selling price and sales effort
What is one way the annual budget is used, in addition to managing a
company’s spending and resources?
-To reward key employees and identify changes that must be made to
operations
-To reward key employees and forecast the company’s share price for
the coming year
-To comply with environmental regulations and set legal limits on
company spending
-To identify changes that must be made to operations and comply with
environmental regulations
- Correct Answer - To reward key employees and identify changes that
must be made to operations
The budgeting process for a merchandising company is less
complicated than for a manufacturing company. Four manufacturing
budgets are replaced by just one merchandising budget.
What is the single budget used in a merchandising company?
Purchases
Direct materials
Direct labor
Manufacturing overhead
, - Correct Answer - Purchases
How does zero-based budgeting differ from incremental budgeting?
-With zero-based budgeting, the difference between the actual amount
and the requested amount is zero.
-With zero-based budgeting, the amount assigned to employee bonuses
is zero.
-With zero-based budgeting, the difference from last year’s budget is
zero.
-With zero-based budgeting, the starting point for each expense is zero.
- Correct Answer - With zero-based budgeting, the starting point for each
expense is zero.
What are some of the advantages of zero-based budgeting?
-It reduces the need for detailed expense tracking, and there is instant
approval for all budget increases.
-Every cost must be justified, and there is a reduced need for detailed
expense tracking.
-It maximizes profit control and eliminates the need for budget cuts.
-Every cost must be justified, and it is easier to get rid of costs that have
become obsolete.
- Correct Answer - Every cost must be justified, and it is easier to get rid
of costs that have become obsolete
What are the major disadvantages of zero-based budgeting?
-It provides no ability to make changes and it is time-consuming.
-It lacks detailed analysis and can be expensive.
-It requires only annual profit targets and lacks detailed analysis.
-It is time-consuming and expensive.
