1
WGU D196
WGU D196| Final | (NEW 2025/ 2026) | Objective
Assessment Principles of Financial & Managerial
Accounting| Qs & As| Grade A| 100% Correct
What is the impact of expenses on the accounting equation?
Expenses increase owners' equity.
Expenses decrease liabilities.
Expenses decrease owners' equity.
Expenses increase liabilities. - ANS ✓Expenses decrease owners' equity.
Which type of account are accounts payable and notes payable both examples of?
Liability
Asset
Expense
Equity - ANS ✓Liability
What is the purpose of the financial accounting cycle?
To collect confidential information for management to use as a competitive tool
To turn information about transactions into financial statements
To gather information related to the expenses and income generated by a company
To produce and analyze a company's monthly bank statement - ANS ✓To turn
information about transactions into financial statements
According to the accounting equation, the amount of liabilities and equity must always
be equal to another amount.
What is that other amount?
Cash
WGU D196
, 2
WGU D196
The sum of revenues and expenses
Assets
The sum of expenses and dividends - ANS ✓Assets
Which item is an expense item?
Cost of goods sold
Loans payable
Accounts receivable
Accounts payable - ANS ✓Cost of goods sold
How is gross profit computed?
Total revenues minus total expenses
Sales minus cost of goods sold
Total assets minus total liabilities
Accounts receivable minus accounts payable - ANS ✓Sales minus cost of goods sold
Which type of account is retained earnings?
Asset
Revenue
Equity
Liability - ANS ✓Equity
For purposes of cash flow classification in the statement of cash flows, which item is an
operating activity?
Distributing dividends
Paying employees
Buying equipment
Selling bonds - ANS ✓Paying employees
WGU D196
WGU D196
WGU D196| Final | (NEW 2025/ 2026) | Objective
Assessment Principles of Financial & Managerial
Accounting| Qs & As| Grade A| 100% Correct
What is the impact of expenses on the accounting equation?
Expenses increase owners' equity.
Expenses decrease liabilities.
Expenses decrease owners' equity.
Expenses increase liabilities. - ANS ✓Expenses decrease owners' equity.
Which type of account are accounts payable and notes payable both examples of?
Liability
Asset
Expense
Equity - ANS ✓Liability
What is the purpose of the financial accounting cycle?
To collect confidential information for management to use as a competitive tool
To turn information about transactions into financial statements
To gather information related to the expenses and income generated by a company
To produce and analyze a company's monthly bank statement - ANS ✓To turn
information about transactions into financial statements
According to the accounting equation, the amount of liabilities and equity must always
be equal to another amount.
What is that other amount?
Cash
WGU D196
, 2
WGU D196
The sum of revenues and expenses
Assets
The sum of expenses and dividends - ANS ✓Assets
Which item is an expense item?
Cost of goods sold
Loans payable
Accounts receivable
Accounts payable - ANS ✓Cost of goods sold
How is gross profit computed?
Total revenues minus total expenses
Sales minus cost of goods sold
Total assets minus total liabilities
Accounts receivable minus accounts payable - ANS ✓Sales minus cost of goods sold
Which type of account is retained earnings?
Asset
Revenue
Equity
Liability - ANS ✓Equity
For purposes of cash flow classification in the statement of cash flows, which item is an
operating activity?
Distributing dividends
Paying employees
Buying equipment
Selling bonds - ANS ✓Paying employees
WGU D196
