,WGU D196 For OA and Pre Assessment Review Test
Bank All Chapters A+ Expected Questions And
Detailed Answers And Rationales 2025-2026
D196 Test Bank – Accounting Fundamentals (Accounting Equation)
Q1. If Assets = $120,000 and Liabilities = $80,000, what is Equity?
A. $50,000
B. $40,000
C. $200,000
D. $80,000
Correct Answer: B ($40,000)
• A ($50,000): Incorrect. This suggests subtracting incorrectly (perhaps mixing up
amounts). Equity is Assets − Liabilities = 120,000 − 80,000 = 40,000, not 50,000.
• B ($40,000): Correct. Using the accounting equation: Equity = Assets − Liabilities. So
120,000 − 80,000 = 40,000.
• C ($200,000): Incorrect. This mistakenly adds Assets + Liabilities instead of subtracting.
That would misapply the equation.
• D ($80,000): Incorrect. Liabilities are given as 80,000, but equity is not equal to
liabilities.
Q2. If a company has Equity of $90,000 and Liabilities of $30,000, what are its
Assets?
A. $60,000
B. $90,000
C. $120,000
D. $30,000
Correct Answer: C ($120,000)
• A ($60,000): Incorrect. That only equals equity minus liabilities, which does not
represent assets.
, • B ($90,000): Incorrect. This repeats equity only, ignoring liabilities.
• C ($120,000): Correct. Assets = Liabilities + Equity = 30,000 + 90,000 = 120,000.
• D ($30,000): Incorrect. That repeats liabilities, not total assets.
Q3. If Assets = $150,000 and Equity = $100,000, what are Liabilities?
A. $50,000
B. $150,000
C. $100,000
D. $250,000
Correct Answer: A ($50,000)
• A ($50,000): Correct. Liabilities = Assets − Equity = 150,000 − 100,000 = 50,000.
• B ($150,000): Incorrect. That just restates assets, not liabilities.
• C ($100,000): Incorrect. That repeats equity, already provided.
• D ($250,000): Incorrect. This mistakenly adds assets and equity together.
Q4. Which of the following properly represents the accounting equation?
A. Assets = Equity − Liabilities
B. Assets = Equity × Liabilities
C. Assets + Liabilities = Equity
D. Assets = Liabilities + Equity
Correct Answer: D
• A (Assets = Equity − Liabilities): Incorrect. Liabilities are added to equity, not
subtracted.
• B (Assets = Equity × Liabilities): Incorrect. The equation is not multiplicative.
• C (Assets + Liabilities = Equity): Incorrect. This reverses the correct structure.
• D (Assets = Liabilities + Equity): Correct. This is the fundamental accounting equation.
Q5. A company’s assets are $500,000 and its liabilities are $350,000. What is the
company’s equity?
A. $850,000
B. $150,000
C. $500,000
D. $350,000
, Correct Answer: B ($150,000)
• A ($850,000): Incorrect. This adds assets and liabilities instead of finding the difference.
• B ($150,000): Correct. Equity = Assets − Liabilities = 500,000 − 350,000 = 150,000.
• C ($500,000): Incorrect. That just repeats assets, not equity.
• D ($350,000): Incorrect. That repeats liabilities, not equity.
Q6. Assets increase by $40,000 and Liabilities increase by $25,000. What must
happen to Equity for the equation to balance?
A. Decrease by $15,000
B. Increase by $15,000
C. Stay the same
D. Decrease by $25,000
Correct Answer: B (Increase by $15,000)
• A: Incorrect. If assets ↑ by 40,000 and liabilities ↑ by 25,000, equity must ↑ by the
difference (15,000), not decrease.
• B: Correct. To keep Assets = Liabilities + Equity: 40,000 = 25,000 + 15,000 → Equity ↑
15,000.
• C: Incorrect. If equity stayed the same, the right side would rise only 25,000, not
matching the 40,000 asset increase.
• D: Incorrect. A decrease would push the sides further out of balance.
Q7. Which transaction increases both Assets and Liabilities?
A. Borrowing cash from a bank
B. Paying off a supplier
C. Owner withdrawing cash
D. Recording depreciation
Correct Answer: A (Borrowing cash from a bank)
• A: Correct. Cash (asset) ↑ and Notes Payable (liability) ↑.
• B: Incorrect. Paying a supplier reduces both assets (cash) and liabilities (A/P).
• C: Incorrect. An owner withdrawal reduces assets (cash) and equity.
• D: Incorrect. Depreciation reduces assets and equity, not liabilities.
Bank All Chapters A+ Expected Questions And
Detailed Answers And Rationales 2025-2026
D196 Test Bank – Accounting Fundamentals (Accounting Equation)
Q1. If Assets = $120,000 and Liabilities = $80,000, what is Equity?
A. $50,000
B. $40,000
C. $200,000
D. $80,000
Correct Answer: B ($40,000)
• A ($50,000): Incorrect. This suggests subtracting incorrectly (perhaps mixing up
amounts). Equity is Assets − Liabilities = 120,000 − 80,000 = 40,000, not 50,000.
• B ($40,000): Correct. Using the accounting equation: Equity = Assets − Liabilities. So
120,000 − 80,000 = 40,000.
• C ($200,000): Incorrect. This mistakenly adds Assets + Liabilities instead of subtracting.
That would misapply the equation.
• D ($80,000): Incorrect. Liabilities are given as 80,000, but equity is not equal to
liabilities.
Q2. If a company has Equity of $90,000 and Liabilities of $30,000, what are its
Assets?
A. $60,000
B. $90,000
C. $120,000
D. $30,000
Correct Answer: C ($120,000)
• A ($60,000): Incorrect. That only equals equity minus liabilities, which does not
represent assets.
, • B ($90,000): Incorrect. This repeats equity only, ignoring liabilities.
• C ($120,000): Correct. Assets = Liabilities + Equity = 30,000 + 90,000 = 120,000.
• D ($30,000): Incorrect. That repeats liabilities, not total assets.
Q3. If Assets = $150,000 and Equity = $100,000, what are Liabilities?
A. $50,000
B. $150,000
C. $100,000
D. $250,000
Correct Answer: A ($50,000)
• A ($50,000): Correct. Liabilities = Assets − Equity = 150,000 − 100,000 = 50,000.
• B ($150,000): Incorrect. That just restates assets, not liabilities.
• C ($100,000): Incorrect. That repeats equity, already provided.
• D ($250,000): Incorrect. This mistakenly adds assets and equity together.
Q4. Which of the following properly represents the accounting equation?
A. Assets = Equity − Liabilities
B. Assets = Equity × Liabilities
C. Assets + Liabilities = Equity
D. Assets = Liabilities + Equity
Correct Answer: D
• A (Assets = Equity − Liabilities): Incorrect. Liabilities are added to equity, not
subtracted.
• B (Assets = Equity × Liabilities): Incorrect. The equation is not multiplicative.
• C (Assets + Liabilities = Equity): Incorrect. This reverses the correct structure.
• D (Assets = Liabilities + Equity): Correct. This is the fundamental accounting equation.
Q5. A company’s assets are $500,000 and its liabilities are $350,000. What is the
company’s equity?
A. $850,000
B. $150,000
C. $500,000
D. $350,000
, Correct Answer: B ($150,000)
• A ($850,000): Incorrect. This adds assets and liabilities instead of finding the difference.
• B ($150,000): Correct. Equity = Assets − Liabilities = 500,000 − 350,000 = 150,000.
• C ($500,000): Incorrect. That just repeats assets, not equity.
• D ($350,000): Incorrect. That repeats liabilities, not equity.
Q6. Assets increase by $40,000 and Liabilities increase by $25,000. What must
happen to Equity for the equation to balance?
A. Decrease by $15,000
B. Increase by $15,000
C. Stay the same
D. Decrease by $25,000
Correct Answer: B (Increase by $15,000)
• A: Incorrect. If assets ↑ by 40,000 and liabilities ↑ by 25,000, equity must ↑ by the
difference (15,000), not decrease.
• B: Correct. To keep Assets = Liabilities + Equity: 40,000 = 25,000 + 15,000 → Equity ↑
15,000.
• C: Incorrect. If equity stayed the same, the right side would rise only 25,000, not
matching the 40,000 asset increase.
• D: Incorrect. A decrease would push the sides further out of balance.
Q7. Which transaction increases both Assets and Liabilities?
A. Borrowing cash from a bank
B. Paying off a supplier
C. Owner withdrawing cash
D. Recording depreciation
Correct Answer: A (Borrowing cash from a bank)
• A: Correct. Cash (asset) ↑ and Notes Payable (liability) ↑.
• B: Incorrect. Paying a supplier reduces both assets (cash) and liabilities (A/P).
• C: Incorrect. An owner withdrawal reduces assets (cash) and equity.
• D: Incorrect. Depreciation reduces assets and equity, not liabilities.
