WGU D774 - Section 2 Exam Questions with Correct Answers Latest Update 2025-2026
What is the accounting equation, and what are its elements? - Answers The accounting equation
shows what a company owns and how what it owns was financed -- through either debt or
equity.
ASSETS = LIABILITIES + OWNER'S EQUITY (Accounting Equation)
What are common Assets? - Answers Cash, Accounts Receivable, Inventory, and Land, Buildings,
and Equipment.
Asset - Cash - Answers Coins, currency, check accounts
The amount in a company's bank accounts is cash.
Asset - Accounts Receivable - Answers Amounts due from customers for goods or services
sold to them on credit.
If you have a balance on your credit card, the credit card company classifies the amount you
owe them as an account receivable.
Asset - Inventory - Answers Items purchased or manufactured by a company that are being held
for resale.
Asset - Land, Buildings, and Equipment - Answers Structures used in the operations of a
business.
A physical store is classified as a building, the land the building sits on is classified as land, and
the truck delivering inventory to the store would be equipment.
Current Assets - Answers Cash and cash equivalents, marketable securities, accounts
receivable, prepaid expenses.
Non-Current Assets - Answers Non-marketable securities, property and equipment, intangible
assets, goodwill
What is a classified balance sheet? - Answers A classified balance sheet distinguishes between
current and long-term assets and current and long-term liabilities.
What is a comparative balance sheet? - Answers included information for both the current year
, and one or more preceding years allowing users to identify any significant changes in particular
items from year to year.
What are common Liabilities? - Answers Accounts payable, Taxes payable, Mortgage payable,
Unearned revenue.
Liability - Accounts Payable - Answers Amounts owed as a result of the purchase of goods and
services on credit.
The amount a company owes for inventory that it purchased on credit and has not yet paid for.
Liability - Taxes payable - Answers Amounts owed to federal, state, and local governments
resulting from the application of tax laws.
Corporate income tax or employment taxes a company owes but has not yet paid.
Liability - Mortgage payable - Answers Amounts owed relating to the purchase of property.
The loan associated with the purchase of a building.
Liability - Unearned revenue - Answers Amounts owed in services or products (not money) to a
customer who paid in advance.
Magazines a company owes a customer who bought a 12-month magazine subscription.
Current liabilities - Answers accounts payable, partners payable, operating lease liabilities
(current), accrued expenses and other current liabilities
Long-term Liabilities - Answers operating lease liabilities (non-current), long-term debt, other
liabilities
Assets and liabilities are usually listed in what order on the balance sheet? - Answers Assets
and liabilities are usually listed on a balance sheet in order of their liquidity, that is, how fast and
easily they can be converted to cash.
What are sources of Owners' Equity? - Answers Capital stock and retained earnings
Owners' Equity - Capital Stock - Answers The amount paid to a corporation by shareholders to
obtain shares of stock.
What is the accounting equation, and what are its elements? - Answers The accounting equation
shows what a company owns and how what it owns was financed -- through either debt or
equity.
ASSETS = LIABILITIES + OWNER'S EQUITY (Accounting Equation)
What are common Assets? - Answers Cash, Accounts Receivable, Inventory, and Land, Buildings,
and Equipment.
Asset - Cash - Answers Coins, currency, check accounts
The amount in a company's bank accounts is cash.
Asset - Accounts Receivable - Answers Amounts due from customers for goods or services
sold to them on credit.
If you have a balance on your credit card, the credit card company classifies the amount you
owe them as an account receivable.
Asset - Inventory - Answers Items purchased or manufactured by a company that are being held
for resale.
Asset - Land, Buildings, and Equipment - Answers Structures used in the operations of a
business.
A physical store is classified as a building, the land the building sits on is classified as land, and
the truck delivering inventory to the store would be equipment.
Current Assets - Answers Cash and cash equivalents, marketable securities, accounts
receivable, prepaid expenses.
Non-Current Assets - Answers Non-marketable securities, property and equipment, intangible
assets, goodwill
What is a classified balance sheet? - Answers A classified balance sheet distinguishes between
current and long-term assets and current and long-term liabilities.
What is a comparative balance sheet? - Answers included information for both the current year
, and one or more preceding years allowing users to identify any significant changes in particular
items from year to year.
What are common Liabilities? - Answers Accounts payable, Taxes payable, Mortgage payable,
Unearned revenue.
Liability - Accounts Payable - Answers Amounts owed as a result of the purchase of goods and
services on credit.
The amount a company owes for inventory that it purchased on credit and has not yet paid for.
Liability - Taxes payable - Answers Amounts owed to federal, state, and local governments
resulting from the application of tax laws.
Corporate income tax or employment taxes a company owes but has not yet paid.
Liability - Mortgage payable - Answers Amounts owed relating to the purchase of property.
The loan associated with the purchase of a building.
Liability - Unearned revenue - Answers Amounts owed in services or products (not money) to a
customer who paid in advance.
Magazines a company owes a customer who bought a 12-month magazine subscription.
Current liabilities - Answers accounts payable, partners payable, operating lease liabilities
(current), accrued expenses and other current liabilities
Long-term Liabilities - Answers operating lease liabilities (non-current), long-term debt, other
liabilities
Assets and liabilities are usually listed in what order on the balance sheet? - Answers Assets
and liabilities are usually listed on a balance sheet in order of their liquidity, that is, how fast and
easily they can be converted to cash.
What are sources of Owners' Equity? - Answers Capital stock and retained earnings
Owners' Equity - Capital Stock - Answers The amount paid to a corporation by shareholders to
obtain shares of stock.
