WGU D102 FINANCIAL ACCOUNTING Complete
Exam Study Questions with Verified Answers
(Expert Graded A+)
1. Business documents - ANSWER records of transactions used as the basis
for recording accounting entries; include invoices, check stubs, receipts, and
similar business papers
2. 4 steps of accounting cycle - ANSWER 1. analyze transactions
record the effects of transactions
summarize the effects of transactions
prepare reports
3. Journal entry - ANSWER a recording of a transaction where debits equal
credits; usually includes a date and an explanation of the transaction
4. Journal entry three step process - ANSWER 1. identify which accounts are
involved
2. for each account, determine if it is increased or decreased
3. for each account, determine by how much it has changed
5. Compound journal entry - ANSWER a journal entry that involves more
than one debit or more than one credit or both
6. Trial balance - ANSWER a listing of all account balances; provides a means
of testing whether total debits equal total credits for all accounts
7. Five basic steps that allow for a systematic approach to constructing journal
entries - ANSWER 1. find the Cash. it is usually pretty easy to determine
, whether Cash increased or decreased. Code this information as a debit or a
credit. The journal entry is now well underway.
2. Look for other assets involved in the transaction. Again, it is easy to
figure out if assets have increased or decreased. Code this information as a
debit or a credit.
3. Now look for liabilities and equities. By this point, much of the
transaction information is recorded.
4. Consider whether the transaction involves actual business operations. If
so, asset increases are paired with the recording of Revenue, and asset
decreases are paired with the recording of an Expense.
5. Make sure that total debits equal total credits
8. chart of accounts - ANSWER a systematic listing of all accounts used by a
company
9. account - ANSWER an accounting record in which the results of
transactions are accumulated; shows increases, decreases, and a balance
10.accounts receivable - ANSWER a current asset representing money due for
services performed or merchandise sold on credit
11.accrual accounting - ANSWER the process of recording expenses and
revenues when incurred and earned, regardless of when cash is received, and
of adjusting original transaction data into refined measures of a firm's past
economic performance and current economic condition
12.accrual basis accounting - ANSWER a system of accounting in which
revenues and expenses are recorded as they are earned and incurred, not
necessarily when cash is received or paid
, 13.accumulated depreciation - ANSWER reflects the wear and tear, or
depreciation, of items since they were originally purchased
14.additional paid-in capital - ANSWER capital invested by stockholders that
exceeds the par value of the issued shares
15.account - ANSWER an accounting record in which the results of
transactions are accumulated; shows increases, decreases, and a balance
16.t-account - ANSWER a simplified depiction of an account in the form of a
letter T
17.debit (abbreviated Dr) - ANSWER an entry on the left side of a T-account
18.credit (abbreviated Cr) - ANSWER an entry on the right side of a T-account
19.three basic facts regarding double-entry accounting - ANSWER 1. debits
are always entered on the left side of an account and credits on the right side
2. for every transaction, there must be at least one debit and one credit
3. debits mus always equal credits for each transaction
20.transaction analysis - ANSWER the process of determining how an
economic event impacts the financial statements
21.excretory contract - ANSWER it is an exchange of promises about the
future
22.assets can be acquired in four basic ways - ANSWER 1. in exchange of
another asset
2. by borrowing the money to buy the asset
3. by owners investing the money to buy the asset
Exam Study Questions with Verified Answers
(Expert Graded A+)
1. Business documents - ANSWER records of transactions used as the basis
for recording accounting entries; include invoices, check stubs, receipts, and
similar business papers
2. 4 steps of accounting cycle - ANSWER 1. analyze transactions
record the effects of transactions
summarize the effects of transactions
prepare reports
3. Journal entry - ANSWER a recording of a transaction where debits equal
credits; usually includes a date and an explanation of the transaction
4. Journal entry three step process - ANSWER 1. identify which accounts are
involved
2. for each account, determine if it is increased or decreased
3. for each account, determine by how much it has changed
5. Compound journal entry - ANSWER a journal entry that involves more
than one debit or more than one credit or both
6. Trial balance - ANSWER a listing of all account balances; provides a means
of testing whether total debits equal total credits for all accounts
7. Five basic steps that allow for a systematic approach to constructing journal
entries - ANSWER 1. find the Cash. it is usually pretty easy to determine
, whether Cash increased or decreased. Code this information as a debit or a
credit. The journal entry is now well underway.
2. Look for other assets involved in the transaction. Again, it is easy to
figure out if assets have increased or decreased. Code this information as a
debit or a credit.
3. Now look for liabilities and equities. By this point, much of the
transaction information is recorded.
4. Consider whether the transaction involves actual business operations. If
so, asset increases are paired with the recording of Revenue, and asset
decreases are paired with the recording of an Expense.
5. Make sure that total debits equal total credits
8. chart of accounts - ANSWER a systematic listing of all accounts used by a
company
9. account - ANSWER an accounting record in which the results of
transactions are accumulated; shows increases, decreases, and a balance
10.accounts receivable - ANSWER a current asset representing money due for
services performed or merchandise sold on credit
11.accrual accounting - ANSWER the process of recording expenses and
revenues when incurred and earned, regardless of when cash is received, and
of adjusting original transaction data into refined measures of a firm's past
economic performance and current economic condition
12.accrual basis accounting - ANSWER a system of accounting in which
revenues and expenses are recorded as they are earned and incurred, not
necessarily when cash is received or paid
, 13.accumulated depreciation - ANSWER reflects the wear and tear, or
depreciation, of items since they were originally purchased
14.additional paid-in capital - ANSWER capital invested by stockholders that
exceeds the par value of the issued shares
15.account - ANSWER an accounting record in which the results of
transactions are accumulated; shows increases, decreases, and a balance
16.t-account - ANSWER a simplified depiction of an account in the form of a
letter T
17.debit (abbreviated Dr) - ANSWER an entry on the left side of a T-account
18.credit (abbreviated Cr) - ANSWER an entry on the right side of a T-account
19.three basic facts regarding double-entry accounting - ANSWER 1. debits
are always entered on the left side of an account and credits on the right side
2. for every transaction, there must be at least one debit and one credit
3. debits mus always equal credits for each transaction
20.transaction analysis - ANSWER the process of determining how an
economic event impacts the financial statements
21.excretory contract - ANSWER it is an exchange of promises about the
future
22.assets can be acquired in four basic ways - ANSWER 1. in exchange of
another asset
2. by borrowing the money to buy the asset
3. by owners investing the money to buy the asset
