WGU D774 OBJECTIVE ASSESSMENT 2 2026
EXAM COMPLETE (150) CURRENT TESTING
QUESTIONS AND CORRECT ANSWERS WITH
DETAILED EXPLANATIONS|GUARANTEED
PASS.
ACCOUNTING
Prepare for the WGU D774 Objective Assessment 2 with practice
questions covering accounting principles, financial statements,
bookkeeping, journal entries, assets and liabilities, and foundational
business accounting concepts. This study guide helps reinforce
essential accounting knowledge and supports effective objective
assessment preparation. Designed to improve analytical thinking and
boost confidence in business accounting coursework. Suitable for
business, finance, and WGU students.
MULTIPLE CHOICE.
SECTION 1: ACCOUNTING EQUATION & DOUBLE-ENTRY
BASICS (Qs 1–20)
1. A company has assets of 150,000andliabilitiesof150,000andliabilitiesof80,000.
What is owner’s equity?
• A) $70,000
• B) $80,000
• C) $150,000
• D) $230,000
Answer: A – Equity = Assets – Liabilities = 150,000–150,000–80,000 = $70,000.
,2. If a business buys equipment for $10,000 cash, what is the effect on the accounting
equation?
• A) Assets increase, liabilities increase
• B) Assets decrease, equity decreases
• C) One asset increases, another asset decreases
• D) Liabilities increase, equity decreases
Answer: C – Cash decreases, Equipment increases; total assets unchanged.
3. Which of the following transactions decreases both assets and equity?
• A) Paying a liability
• B) Owner withdraws cash for personal use
, • C) Purchasing inventory on credit
• D) Receiving cash from a bank loan
Answer: B – Owner withdrawal (drawing) reduces cash (asset) and reduces equity.
4. Recording a sale on account will:
• A) Increase assets and increase equity
• B) Increase assets and increase liabilities
• C) Decrease assets and decrease equity
• D) Increase liabilities and decrease equity
Answer: A – Accounts Receivable (asset) increases; Revenue increases equity.
5. The accounting equation must balance after every transaction.
• A) True
• B) False
Answer: A – The double-entry system ensures the equation always balances.
6. Liabilities are best defined as:
• A) Resources owned by the business
• B) Debts or obligations owed to outsiders
• C) The owner’s claim on assets
• D) Future expenses
Answer: B – Liabilities represent obligations.
7. Which of the following is an asset?
• A) Accounts Payable
• B) Notes Payable
• C) Prepaid Rent
, • D) Owner’s Capital
Answer: C – Prepaid Rent is a future benefit → asset.
8. If total liabilities increase
by 5,000andtotalassetsincreaseby5,000andtotalassetsincreaseby5,000, equity:
• A) Increases by $5,000
• B) Decreases by $5,000
• C) Remains unchanged
• D) Increases by $10,000
Answer: C – Assets = Liabilities + Equity ⇒ Equity unchanged (5,000–5,000–5,000 = 0
change).
9. A debit entry will:
• A) Increase liabilities
• B) Increase equity
• C) Increase assets
• D) Decrease expenses
Answer: C – Debits increase assets and expenses; decrease liabilities, equity, revenue.
10. Which accounts have a normal credit balance?
• A) Assets and expenses
• B) Liabilities and revenues
• C) Dividends and expenses
• D) Assets and dividends
Answer: B – Liabilities, equity (except dividends), and revenues are credit normal.
11. A credit to Cash indicates:
EXAM COMPLETE (150) CURRENT TESTING
QUESTIONS AND CORRECT ANSWERS WITH
DETAILED EXPLANATIONS|GUARANTEED
PASS.
ACCOUNTING
Prepare for the WGU D774 Objective Assessment 2 with practice
questions covering accounting principles, financial statements,
bookkeeping, journal entries, assets and liabilities, and foundational
business accounting concepts. This study guide helps reinforce
essential accounting knowledge and supports effective objective
assessment preparation. Designed to improve analytical thinking and
boost confidence in business accounting coursework. Suitable for
business, finance, and WGU students.
MULTIPLE CHOICE.
SECTION 1: ACCOUNTING EQUATION & DOUBLE-ENTRY
BASICS (Qs 1–20)
1. A company has assets of 150,000andliabilitiesof150,000andliabilitiesof80,000.
What is owner’s equity?
• A) $70,000
• B) $80,000
• C) $150,000
• D) $230,000
Answer: A – Equity = Assets – Liabilities = 150,000–150,000–80,000 = $70,000.
,2. If a business buys equipment for $10,000 cash, what is the effect on the accounting
equation?
• A) Assets increase, liabilities increase
• B) Assets decrease, equity decreases
• C) One asset increases, another asset decreases
• D) Liabilities increase, equity decreases
Answer: C – Cash decreases, Equipment increases; total assets unchanged.
3. Which of the following transactions decreases both assets and equity?
• A) Paying a liability
• B) Owner withdraws cash for personal use
, • C) Purchasing inventory on credit
• D) Receiving cash from a bank loan
Answer: B – Owner withdrawal (drawing) reduces cash (asset) and reduces equity.
4. Recording a sale on account will:
• A) Increase assets and increase equity
• B) Increase assets and increase liabilities
• C) Decrease assets and decrease equity
• D) Increase liabilities and decrease equity
Answer: A – Accounts Receivable (asset) increases; Revenue increases equity.
5. The accounting equation must balance after every transaction.
• A) True
• B) False
Answer: A – The double-entry system ensures the equation always balances.
6. Liabilities are best defined as:
• A) Resources owned by the business
• B) Debts or obligations owed to outsiders
• C) The owner’s claim on assets
• D) Future expenses
Answer: B – Liabilities represent obligations.
7. Which of the following is an asset?
• A) Accounts Payable
• B) Notes Payable
• C) Prepaid Rent
, • D) Owner’s Capital
Answer: C – Prepaid Rent is a future benefit → asset.
8. If total liabilities increase
by 5,000andtotalassetsincreaseby5,000andtotalassetsincreaseby5,000, equity:
• A) Increases by $5,000
• B) Decreases by $5,000
• C) Remains unchanged
• D) Increases by $10,000
Answer: C – Assets = Liabilities + Equity ⇒ Equity unchanged (5,000–5,000–5,000 = 0
change).
9. A debit entry will:
• A) Increase liabilities
• B) Increase equity
• C) Increase assets
• D) Decrease expenses
Answer: C – Debits increase assets and expenses; decrease liabilities, equity, revenue.
10. Which accounts have a normal credit balance?
• A) Assets and expenses
• B) Liabilities and revenues
• C) Dividends and expenses
• D) Assets and dividends
Answer: B – Liabilities, equity (except dividends), and revenues are credit normal.
11. A credit to Cash indicates:
