WGU D774 Intro to Business Accounting
| OA | Objective Assessment | 2026
Update | 100% Correct|| Questions and
Well Detailed Answers Plus Rationales
2026/2027 – Verified Q&As with
Detailed Rationales (Test Bank Bundle -
70 Questions)
---
*QUESTION 1:*
Which of the following is the fundamental accounting equation?
A) Assets = Liabilities + Owner's Equity
B) Assets + Liabilities = Owner's Equity
C) Assets = Revenues - Expenses
D) Assets + Owner's Equity = Liabilities
> 🎯 *CORRECT ANSWER:* A) Assets = Liabilities + Owner's Equity
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Core equation.
> * *Why Distractors Fail:* Addition/subtraction errors; revenue/expenses are income.
> * *Core Takeaway:* A = L + OE.
,---
*QUESTION 2:*
Which account has a normal debit balance?
A) Accounts Payable
B) Common Stock
C) Supplies Expense
D) Service Revenue
> 🎯 *CORRECT ANSWER:* C) Supplies Expense
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Expenses increase with debits.
> * *Why Distractors Fail:* A/P, stock, revenue have normal credit balances.
> * *Core Takeaway:* Expenses = debit.
---
*QUESTION 3:*
A company receives cash from a customer for services to be performed next month. This transaction:
A) Increases assets and increases liabilities
B) Increases assets and increases revenue
C) Decreases assets and increases liabilities
D) Increases assets and decreases equity
> 🎯 *CORRECT ANSWER:* A) Increases assets and increases liabilities
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Cash (asset) up, Unearned Revenue (liability) up.
> * *Why Distractors Fail:* Revenue not earned yet; equity not affected.
> * *Core Takeaway:* Unearned revenue = liability.
,---
*QUESTION 4:*
Which financial statement reports a company's profitability over a period of time?
A) Balance Sheet
B) Statement of Cash Flows
C) Income Statement
D) Statement of Retained Earnings
> 🎯 *CORRECT ANSWER:* C) Income Statement
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Revenues and expenses.
> * *Why Distractors Fail:* Balance sheet is position; cash flows is cash; RE is equity changes.
> * *Core Takeaway:* Income statement = profitability.
---
*QUESTION 5:*
The accrual basis of accounting recognizes revenue when:
A) Cash is received
B) It is earned, regardless of when cash is received
C) The invoice is sent
D) The customer places an order
> 🎯 *CORRECT ANSWER:* B) It is earned, regardless of when cash is received
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Revenue recognition principle.
> * *Why Distractors Fail:* Cash receipt is cash basis; invoice/order are not.
, > * *Core Takeaway:* Accrual = earned.
---
*QUESTION 6:*
A company has total assets of $150,000 and total liabilities of $70,000. Owner's equity is:
A) $220,000
B) $80,000
C) $70,000
D) $150,000
> 🎯 *CORRECT ANSWER:* B) $80,000
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* OE = Assets - Liabilities.
> * *Why Distractors Fail:* 220k is sum; 70k is liabilities; 150k is assets.
> * *Core Takeaway:* OE = 150k - 70k = 80k.
---
*QUESTION 7:*
A credit entry will:
A) Increase an asset account
B) Increase a liability account
C) Increase an expense account
D) Increase a dividend account
> 🎯 *CORRECT ANSWER:* B) Increase a liability account
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Liabilities have normal credit balances.
| OA | Objective Assessment | 2026
Update | 100% Correct|| Questions and
Well Detailed Answers Plus Rationales
2026/2027 – Verified Q&As with
Detailed Rationales (Test Bank Bundle -
70 Questions)
---
*QUESTION 1:*
Which of the following is the fundamental accounting equation?
A) Assets = Liabilities + Owner's Equity
B) Assets + Liabilities = Owner's Equity
C) Assets = Revenues - Expenses
D) Assets + Owner's Equity = Liabilities
> 🎯 *CORRECT ANSWER:* A) Assets = Liabilities + Owner's Equity
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Core equation.
> * *Why Distractors Fail:* Addition/subtraction errors; revenue/expenses are income.
> * *Core Takeaway:* A = L + OE.
,---
*QUESTION 2:*
Which account has a normal debit balance?
A) Accounts Payable
B) Common Stock
C) Supplies Expense
D) Service Revenue
> 🎯 *CORRECT ANSWER:* C) Supplies Expense
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Expenses increase with debits.
> * *Why Distractors Fail:* A/P, stock, revenue have normal credit balances.
> * *Core Takeaway:* Expenses = debit.
---
*QUESTION 3:*
A company receives cash from a customer for services to be performed next month. This transaction:
A) Increases assets and increases liabilities
B) Increases assets and increases revenue
C) Decreases assets and increases liabilities
D) Increases assets and decreases equity
> 🎯 *CORRECT ANSWER:* A) Increases assets and increases liabilities
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Cash (asset) up, Unearned Revenue (liability) up.
> * *Why Distractors Fail:* Revenue not earned yet; equity not affected.
> * *Core Takeaway:* Unearned revenue = liability.
,---
*QUESTION 4:*
Which financial statement reports a company's profitability over a period of time?
A) Balance Sheet
B) Statement of Cash Flows
C) Income Statement
D) Statement of Retained Earnings
> 🎯 *CORRECT ANSWER:* C) Income Statement
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Revenues and expenses.
> * *Why Distractors Fail:* Balance sheet is position; cash flows is cash; RE is equity changes.
> * *Core Takeaway:* Income statement = profitability.
---
*QUESTION 5:*
The accrual basis of accounting recognizes revenue when:
A) Cash is received
B) It is earned, regardless of when cash is received
C) The invoice is sent
D) The customer places an order
> 🎯 *CORRECT ANSWER:* B) It is earned, regardless of when cash is received
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Revenue recognition principle.
> * *Why Distractors Fail:* Cash receipt is cash basis; invoice/order are not.
, > * *Core Takeaway:* Accrual = earned.
---
*QUESTION 6:*
A company has total assets of $150,000 and total liabilities of $70,000. Owner's equity is:
A) $220,000
B) $80,000
C) $70,000
D) $150,000
> 🎯 *CORRECT ANSWER:* B) $80,000
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* OE = Assets - Liabilities.
> * *Why Distractors Fail:* 220k is sum; 70k is liabilities; 150k is assets.
> * *Core Takeaway:* OE = 150k - 70k = 80k.
---
*QUESTION 7:*
A credit entry will:
A) Increase an asset account
B) Increase a liability account
C) Increase an expense account
D) Increase a dividend account
> 🎯 *CORRECT ANSWER:* B) Increase a liability account
> 💡 *CLINICAL RATIONALE:*
> * *Why It's Right:* Liabilities have normal credit balances.
