WGU D774 INTRODUCTION TO BUSINESS
ACCOUNTING OA ACTUAL EXAM
2025/2026 COMPLETE QUESTIONS WITH
CORRECT DETAILED ANSWERS GRADED
A+ || 100% GUARANTEED PASS <RECENT
VERSION>
1. Why do businesses use both the income statement and the statement of cash
flows? - ANSWER The income statement includes non-cash items, while
the cash flow statement tracks actual cash movements. A company can be
profitable on the income statement but still experience cash flow problems.
2. Which financial statement is prepared first and provides net income, which
then flows into other statements? - ANSWER Income statement
3. Advantages to zero-based budgeting? - ANSWER cost efficiency,
encourages innovation, resource allocation based on need
4. Disadvantages to zero-based budgeting? - ANSWER time-consuming,
disruptive, and may undervalue long-term investments
5. A company's sales forecast predicts higher demand, leading to an increase in
manufacturing levels. As these levels increase, so do material and labor
costs.
,6. Which budget is directly impacted by these changes? -
ANSWER Production budget
A company that has been in business for 20 years with consistent revenue
growth uses incremental budgeting.
7. How does incremental budgeting simplify forecasting for this company? -
ANSWER It builds on previous budgets, which helps in making
projections.
A start-up company experiencing rapid growth finds that its budget increases
are not aligned with new business demands.
8. Why might a rapidly growing business find incremental budgeting
ineffective? - ANSWER It assumes financial stability.
9. Why is incremental budgeting considered a traditional budgeting method? -
ANSWER It has been widely used due to its simplicity and consistency.
A seasonal business that experiences changes in revenue and cost, especially
during peak months, is implementing zero-based budgeting.
10.Which challenge might the business experience from using zero-based
budgeting? - ANSWER It is difficult to adjust for fluctuating costs.
,11.Which method is recommended for tracking spending in a zero-based
budget? - ANSWER Using budgeting apps, spreadsheets, or paper
tracking
A retail store tracks its quarterly sales and notices that revenue consistently
increases by 5% each quarter.
12.What does this trend suggest? - ANSWER The growth demand for its
products is steady.
13.How can trend analysis be used in stock market analysis? - ANSWER To
analyze historical stock price movements and project future trends
A company's exception reporting system flags an invoice for $20,000, while
most invoices are under $5,000.
14.What is the next step for management? - ANSWER Investigate the reason
for the unusually high amount
A company budgets $50,000 for monthly overhead costs but incurs actual
expenses of $47,500.
15.How would the report user interpret these results? - ANSWER $2,500
favorable, meaning the company spent less than planned
, 16.Profit centers - ANSWER Responsible for both revenues and costs to
track profitability. EX: Global Franchise Store location
17.Cost centers - ANSWER Controls expenses but does not generate
revenue. EX: Maintenance Dept.
18.What is the fundamental accounting equation - ANSWER Assets =
Liabilities + Equity
19.Which side of an account increases assets and expenses - ANSWER Debit
(Dr)
20.Which side of an account increases liabilities, equity, and revenues -
ANSWER Credit (Cr)
21.What is a ledger - ANSWER A collection of all accounts in the
accounting system
22.Which statement shows revenues â€" expenses = net income -
ANSWER Income Statement
23.Which statement is a snapshot of assets, liabilities, and equity at a point in
time - ANSWER Balance Sheet
24.What does the Retained Earnings Statement show - ANSWER Beg. RE +
Net Income â€" Dividends = End RE
ACCOUNTING OA ACTUAL EXAM
2025/2026 COMPLETE QUESTIONS WITH
CORRECT DETAILED ANSWERS GRADED
A+ || 100% GUARANTEED PASS <RECENT
VERSION>
1. Why do businesses use both the income statement and the statement of cash
flows? - ANSWER The income statement includes non-cash items, while
the cash flow statement tracks actual cash movements. A company can be
profitable on the income statement but still experience cash flow problems.
2. Which financial statement is prepared first and provides net income, which
then flows into other statements? - ANSWER Income statement
3. Advantages to zero-based budgeting? - ANSWER cost efficiency,
encourages innovation, resource allocation based on need
4. Disadvantages to zero-based budgeting? - ANSWER time-consuming,
disruptive, and may undervalue long-term investments
5. A company's sales forecast predicts higher demand, leading to an increase in
manufacturing levels. As these levels increase, so do material and labor
costs.
,6. Which budget is directly impacted by these changes? -
ANSWER Production budget
A company that has been in business for 20 years with consistent revenue
growth uses incremental budgeting.
7. How does incremental budgeting simplify forecasting for this company? -
ANSWER It builds on previous budgets, which helps in making
projections.
A start-up company experiencing rapid growth finds that its budget increases
are not aligned with new business demands.
8. Why might a rapidly growing business find incremental budgeting
ineffective? - ANSWER It assumes financial stability.
9. Why is incremental budgeting considered a traditional budgeting method? -
ANSWER It has been widely used due to its simplicity and consistency.
A seasonal business that experiences changes in revenue and cost, especially
during peak months, is implementing zero-based budgeting.
10.Which challenge might the business experience from using zero-based
budgeting? - ANSWER It is difficult to adjust for fluctuating costs.
,11.Which method is recommended for tracking spending in a zero-based
budget? - ANSWER Using budgeting apps, spreadsheets, or paper
tracking
A retail store tracks its quarterly sales and notices that revenue consistently
increases by 5% each quarter.
12.What does this trend suggest? - ANSWER The growth demand for its
products is steady.
13.How can trend analysis be used in stock market analysis? - ANSWER To
analyze historical stock price movements and project future trends
A company's exception reporting system flags an invoice for $20,000, while
most invoices are under $5,000.
14.What is the next step for management? - ANSWER Investigate the reason
for the unusually high amount
A company budgets $50,000 for monthly overhead costs but incurs actual
expenses of $47,500.
15.How would the report user interpret these results? - ANSWER $2,500
favorable, meaning the company spent less than planned
, 16.Profit centers - ANSWER Responsible for both revenues and costs to
track profitability. EX: Global Franchise Store location
17.Cost centers - ANSWER Controls expenses but does not generate
revenue. EX: Maintenance Dept.
18.What is the fundamental accounting equation - ANSWER Assets =
Liabilities + Equity
19.Which side of an account increases assets and expenses - ANSWER Debit
(Dr)
20.Which side of an account increases liabilities, equity, and revenues -
ANSWER Credit (Cr)
21.What is a ledger - ANSWER A collection of all accounts in the
accounting system
22.Which statement shows revenues â€" expenses = net income -
ANSWER Income Statement
23.Which statement is a snapshot of assets, liabilities, and equity at a point in
time - ANSWER Balance Sheet
24.What does the Retained Earnings Statement show - ANSWER Beg. RE +
Net Income â€" Dividends = End RE
