WGU D102 FINANCIAL ACCOUNTING
COMPREHENSIVE EXAM STUDY GUIDE
COMPLETE QUESTIONS AND SOLUTIONS
●● What are assets?
Answer: Resources controlled by a business that are expected to provide
future economic benefits.
●● What are liabilities?
Answer: Obligations owed to outside parties that are expected to require
future economic sacrifice.
●● What is equity?
Answer: The owner's residual interest in the assets of a business after
liabilities are deducted.
●● What increases equity?
Answer: Revenues and owner investments.
●● What decreases equity?
Answer: Expenses, losses, and owner withdrawals/dividends.
,●● What is the basic accounting equation after including revenues and
expenses?
Answer: Assets = Liabilities + Owner's Equity + Revenues − Expenses.
●● What is a transaction?
Answer: An economic event that affects the financial position of a
business and can be measured reliably.
●● What is a debit?
Answer: An entry on the left side of an account.
●● What is a credit?
Answer: An entry on the right side of an account.
●● What is the normal balance of an asset account?
Answer: Debit.
●● What is the normal balance of a liability account?
Answer: Credit.
●● What is the normal balance of an equity account?
Answer: Credit.
, ●● What is the normal balance of a revenue account?
Answer: Credit.
●● What is the normal balance of an expense account?
Answer: Debit.
●● What is the normal balance of a dividend/withdrawal account?
Answer: Debit.
●● What must be true of every journal entry?
Answer: Total debits must equal total credits.
●● What does the income statement report?
Answer: Revenues, expenses, and net income or net loss for a period.
●● What is the basic income statement equation?
Answer: Revenues − Expenses = Net Income.
●● What does the balance sheet report?
Answer: Assets, liabilities, and equity at a specific point in time.
●● What does the statement of owner's equity show?
COMPREHENSIVE EXAM STUDY GUIDE
COMPLETE QUESTIONS AND SOLUTIONS
●● What are assets?
Answer: Resources controlled by a business that are expected to provide
future economic benefits.
●● What are liabilities?
Answer: Obligations owed to outside parties that are expected to require
future economic sacrifice.
●● What is equity?
Answer: The owner's residual interest in the assets of a business after
liabilities are deducted.
●● What increases equity?
Answer: Revenues and owner investments.
●● What decreases equity?
Answer: Expenses, losses, and owner withdrawals/dividends.
,●● What is the basic accounting equation after including revenues and
expenses?
Answer: Assets = Liabilities + Owner's Equity + Revenues − Expenses.
●● What is a transaction?
Answer: An economic event that affects the financial position of a
business and can be measured reliably.
●● What is a debit?
Answer: An entry on the left side of an account.
●● What is a credit?
Answer: An entry on the right side of an account.
●● What is the normal balance of an asset account?
Answer: Debit.
●● What is the normal balance of a liability account?
Answer: Credit.
●● What is the normal balance of an equity account?
Answer: Credit.
, ●● What is the normal balance of a revenue account?
Answer: Credit.
●● What is the normal balance of an expense account?
Answer: Debit.
●● What is the normal balance of a dividend/withdrawal account?
Answer: Debit.
●● What must be true of every journal entry?
Answer: Total debits must equal total credits.
●● What does the income statement report?
Answer: Revenues, expenses, and net income or net loss for a period.
●● What is the basic income statement equation?
Answer: Revenues − Expenses = Net Income.
●● What does the balance sheet report?
Answer: Assets, liabilities, and equity at a specific point in time.
●● What does the statement of owner's equity show?
