WGU D102 Financial Accounting OA PA Review
Official Practice Exam Actual Exam 2026/2027
with Detailed Rationales | Complete Exam-Style
Questions | Pass Guaranteed – A+ Graded
TABLE OF CONTENTS
Section 1 | The Accounting Equation & Transaction Analysis | Q1 – Q10
Section 2 | Financial Statements | Q11 – Q20
Section 3 | Assets, Liabilities & Equity | Q21 – Q30
Section 4 | Transaction Analysis & Financial Statement Preparation | Q31 – Q40
Section 5 | NGN-Style Integrated Case Analysis | Q41 – Q50
Instructions: Choose the single best answer. Pass: 40 in 90 minutes.
══════════════════════════════════════
SECTION 1: THE ACCOUNTING EQUATION & TRANSACTION ANALYSIS
Q1 – Q10
══════════════════════════════════════
Question 1 of 50
A regional bakery reports total assets of $150,000 and total liabilities of $60,000
on its opening day. The owner wants to determine the company's initial equity to
ensure the books balance before recording daily sales.
A. $210,000
B. $90,000 ✓ CORRECT
,C. $60,000
D. $150,000
Correct Answer: B
Rationale: According to the accounting equation, equity equals assets minus
liabilities, so $150,000 minus $60,000 equals $90,000. A common error is adding
liabilities to assets, which violates the fundamental balance sheet equation. Always
rearrange the equation to isolate the unknown variable before computing.
Question 2 of 50
Pinnacle Consulting purchases $4,500 of office supplies on account from a vendor.
The accounting manager must record this transaction and determine its immediate
impact on the accounting equation.
A. Assets increase and equity increases
B. Assets increase and liabilities increase ✓ CORRECT
C. Liabilities increase and equity decreases
D. Assets decrease and liabilities increase
Correct Answer: B
Rationale: Purchasing supplies on account increases the Supplies asset and
increases the Accounts Payable liability, keeping the equation in balance. A
tempting trap is thinking equity decreases because cash is spent, but cash is not
affected in an "on account" purchase. Distinguish between cash outflows and
liability creations when analyzing transactions.
Question 3 of 50
,The controller for Mesa Manufacturing reviews the trial balance and notes an
abnormal balance in the Accumulated Depreciation account. The controller must
identify the normal balance of this account to correct the error.
A. Debit
B. Credit ✓ CORRECT
C. Zero balance
D. Contra-equity
Correct Answer: B
Rationale: Accumulated Depreciation is a contra-asset account, meaning it reduces
an asset but carries a normal credit balance opposite to its paired asset's debit
balance. A frequent mistake is classifying it as a normal debit because it is
associated with assets. Remember that contra accounts always carry a normal
balance opposite to the account category they reduce.
Question 4 of 50
GlobalTech Inc. declares and pays a cash dividend of $12,000 to its shareholders.
The CFO needs to evaluate how this distribution affects the fundamental
accounting equation.
A. Assets decrease and liabilities increase
B. Liabilities decrease and equity increases
C. Assets decrease and equity decreases ✓ CORRECT
D. Equity decreases and liabilities decrease
, Correct Answer: C
Rationale: Paying a cash dividend decreases the Cash asset and decreases the
Retained Earnings equity account, maintaining the balance of Assets = Liabilities +
Equity. A common misconception is that declaring a dividend increases liabilities,
but this scenario involves the actual payment, bypassing the declaration phase.
Track the timeline of dividends to know whether to hit Dividends Payable or Cash.
Question 5 of 50
A local auto repair shop completes a $2,800 engine replacement for a customer on
account. The shop owner is recording the revenue and analyzing the transaction's
effect on the accounting equation.
A. Accounts Receivable decreases and Revenue increases
B. Cash increases and Revenue increases
C. Assets increase and Equity increases ✓ CORRECT
D. Liabilities increase and Equity decreases
Correct Answer: C
Rationale: Providing services on account increases Accounts Receivable (an asset)
and increases Service Revenue (which increases equity). An easy trap is selecting
that Cash increases, but cash is not received until the customer pays later.
Differentiate between recording revenue earned and collecting the cash from that
revenue.
Question 6 of 50
A boutique marketing agency pays $3,000 for the current month's rent. The
bookkeeper must determine how this expense recognition affects total equity.
Official Practice Exam Actual Exam 2026/2027
with Detailed Rationales | Complete Exam-Style
Questions | Pass Guaranteed – A+ Graded
TABLE OF CONTENTS
Section 1 | The Accounting Equation & Transaction Analysis | Q1 – Q10
Section 2 | Financial Statements | Q11 – Q20
Section 3 | Assets, Liabilities & Equity | Q21 – Q30
Section 4 | Transaction Analysis & Financial Statement Preparation | Q31 – Q40
Section 5 | NGN-Style Integrated Case Analysis | Q41 – Q50
Instructions: Choose the single best answer. Pass: 40 in 90 minutes.
══════════════════════════════════════
SECTION 1: THE ACCOUNTING EQUATION & TRANSACTION ANALYSIS
Q1 – Q10
══════════════════════════════════════
Question 1 of 50
A regional bakery reports total assets of $150,000 and total liabilities of $60,000
on its opening day. The owner wants to determine the company's initial equity to
ensure the books balance before recording daily sales.
A. $210,000
B. $90,000 ✓ CORRECT
,C. $60,000
D. $150,000
Correct Answer: B
Rationale: According to the accounting equation, equity equals assets minus
liabilities, so $150,000 minus $60,000 equals $90,000. A common error is adding
liabilities to assets, which violates the fundamental balance sheet equation. Always
rearrange the equation to isolate the unknown variable before computing.
Question 2 of 50
Pinnacle Consulting purchases $4,500 of office supplies on account from a vendor.
The accounting manager must record this transaction and determine its immediate
impact on the accounting equation.
A. Assets increase and equity increases
B. Assets increase and liabilities increase ✓ CORRECT
C. Liabilities increase and equity decreases
D. Assets decrease and liabilities increase
Correct Answer: B
Rationale: Purchasing supplies on account increases the Supplies asset and
increases the Accounts Payable liability, keeping the equation in balance. A
tempting trap is thinking equity decreases because cash is spent, but cash is not
affected in an "on account" purchase. Distinguish between cash outflows and
liability creations when analyzing transactions.
Question 3 of 50
,The controller for Mesa Manufacturing reviews the trial balance and notes an
abnormal balance in the Accumulated Depreciation account. The controller must
identify the normal balance of this account to correct the error.
A. Debit
B. Credit ✓ CORRECT
C. Zero balance
D. Contra-equity
Correct Answer: B
Rationale: Accumulated Depreciation is a contra-asset account, meaning it reduces
an asset but carries a normal credit balance opposite to its paired asset's debit
balance. A frequent mistake is classifying it as a normal debit because it is
associated with assets. Remember that contra accounts always carry a normal
balance opposite to the account category they reduce.
Question 4 of 50
GlobalTech Inc. declares and pays a cash dividend of $12,000 to its shareholders.
The CFO needs to evaluate how this distribution affects the fundamental
accounting equation.
A. Assets decrease and liabilities increase
B. Liabilities decrease and equity increases
C. Assets decrease and equity decreases ✓ CORRECT
D. Equity decreases and liabilities decrease
, Correct Answer: C
Rationale: Paying a cash dividend decreases the Cash asset and decreases the
Retained Earnings equity account, maintaining the balance of Assets = Liabilities +
Equity. A common misconception is that declaring a dividend increases liabilities,
but this scenario involves the actual payment, bypassing the declaration phase.
Track the timeline of dividends to know whether to hit Dividends Payable or Cash.
Question 5 of 50
A local auto repair shop completes a $2,800 engine replacement for a customer on
account. The shop owner is recording the revenue and analyzing the transaction's
effect on the accounting equation.
A. Accounts Receivable decreases and Revenue increases
B. Cash increases and Revenue increases
C. Assets increase and Equity increases ✓ CORRECT
D. Liabilities increase and Equity decreases
Correct Answer: C
Rationale: Providing services on account increases Accounts Receivable (an asset)
and increases Service Revenue (which increases equity). An easy trap is selecting
that Cash increases, but cash is not received until the customer pays later.
Differentiate between recording revenue earned and collecting the cash from that
revenue.
Question 6 of 50
A boutique marketing agency pays $3,000 for the current month's rent. The
bookkeeper must determine how this expense recognition affects total equity.
