WGU D102 PRE ASSESSMENT EXAMS SCRIPT 2025/2026
QUESTIONS WITH ANSWERS RATED A+
✔✔A company was started last year when the shareholders invested $70,000 cash into
it. At that time, the company also borrowed $100,000 cash from a local bank. The
company used $140,000 cash to purchase inventory for $140,000. This year the
company sold all of the inventory for $95,000 cash (and that is not a typographical error;
the amount received for all of the inventory was only $95,000 cash).
Which account balance is correct with respect to this company's balance sheet after the
sale of the inventory?
Total owners' equity is $115,000.
Total owners' equity is $25,000.
Cash is $45,000.
Total owners' equity is $70,000. - ✔✔Total owners' equity is $25,000.
✔✔On January 1, a company had these assets, liabilities, and equities:
Cash$100
Inventory$140
Accounts payable$70
Paid-in capital$150
Retained earnings$20
During the year, the company entered into these transactions:
Selling inventory costing $140 for a total of $200; cash of $30 was received, and the
remaining $170 was put on account.
Paying cash for rent of $45.
Paying cash dividends of $30.
What is this company's total equity at the end of the year?
$130
$150
$155
$210 - ✔✔$155
✔✔A company made a $3,000 cash payment on a loan. Of the $3,000 cash paid,
$2,400 was for interest expense and $600 was a payment to reduce the loan balance.
What is included in the journal entry necessary to record this loan payment?
Debit to interest expense for $2,400.
Credit to loan payable for $600.
Debit to loan payable for $3,000.
Credit to interest expense for $2,400. - ✔✔Debit to interest expense for $2,400.
,✔✔A company was started last year when the shareholders invested $70 cash into the
company. At that time, the organization also borrowed $30 cash from a local bank. The
organization used $80 cash to purchase inventory for $80. This year the company sold
all of the inventory for $55 cash. (That is not a typographical error; the amount received
for all of the inventory was only $55 cash.)
Assuming that there is no interest on the loan, what is true with respect to this
company's balance sheet after the sale of the inventory?
Total owners' equity is $45.
Total owners' equity is $95.
Inventory is $25.
Cash is $55. - ✔✔Total owners' equity is $45.
✔✔How are expenses typically recorded with debits and credits?
As a credit, representing an increase in equity.
As a credit, representing a reduction in assets.
As a debit, representing a reduction in equity.
As a debit, representing an increase in assets. - ✔✔As a debit, representing a reduction
in equity.
✔✔A company purchased inventory for $5,000. The company paid $1,000 cash and the
remainder of the purchase was made on account.
What is included in the journal entry necessary to record this inventory purchase?
Debit to accounts payable for $4,000.
Credit to accounts payable for $4,000.
Credit to accounts receivable for $4,000.
Debit to accounts receivable for $4,000. - ✔✔Credit to accounts payable for $4,000.
✔✔A company sold inventory that cost $1,300 for $2,000. It received $500 cash and the
remainder was on account.
What is included in the journal entry or entries necessary to record this sale of
inventory?
Debit to accounts receivable for $1,500.
Credit to cost of goods sold for $1,300.
Debit to sales for $1,300.
Debit to accounts payable for $1,500. - ✔✔Debit to accounts receivable for $1,500.
, ✔✔On August 1 of Year 1, a company paid $7,200 for two years' rent. The rental period
starts on August 1 of Year 1.
Which debit or credit is correctly included in the adjusting journal entry necessary on
December 31 of Year 1?
Credit to rent expense for $1,500.
Debit to rent expense for $1,500.
Debit to rent expense for $5,100.
Credit to prepaid rent for $5,100. - ✔✔Debit to rent expense for $1,500.
✔✔The revenue recognition principle states that revenues are recorded when two main
criteria have been met. One of those criteria is that cash has been collected or
collectability is reasonably assured.
What is the other criterion?
Overhead has been properly allocated.
Expense targets for the period have been reached.
You Selected
All taxes - sales tax, income tax, and value-added tax - have been paid.
The earnings process is substantially complete. - ✔✔The earnings process is
substantially complete.
✔✔What is the matching principle?
Retained earnings are recorded in the same period in which the corresponding asset is
recorded.
Expenses are recorded in the same period in which the corresponding revenue is
recorded.
Liabilities are recorded in the same period in which the corresponding asset is recorded.
Revenues are recorded in the same period in which the earnings process becomes
complete. - ✔✔Expenses are recorded in the same period in which the corresponding
revenue is recorded.
✔✔For large, publicly traded companies, why is accrual basis accounting preferred over
cash basis accounting?
Accrual basis accounting provides a more accurate picture of a company's economic
profitability.
Cash basis accounting requires complex estimates and judgments that make the
reported numbers less reliable.
Accrual basis accounting is much easier to implement because no estimates are
needed and internal controls are not necessary.
QUESTIONS WITH ANSWERS RATED A+
✔✔A company was started last year when the shareholders invested $70,000 cash into
it. At that time, the company also borrowed $100,000 cash from a local bank. The
company used $140,000 cash to purchase inventory for $140,000. This year the
company sold all of the inventory for $95,000 cash (and that is not a typographical error;
the amount received for all of the inventory was only $95,000 cash).
Which account balance is correct with respect to this company's balance sheet after the
sale of the inventory?
Total owners' equity is $115,000.
Total owners' equity is $25,000.
Cash is $45,000.
Total owners' equity is $70,000. - ✔✔Total owners' equity is $25,000.
✔✔On January 1, a company had these assets, liabilities, and equities:
Cash$100
Inventory$140
Accounts payable$70
Paid-in capital$150
Retained earnings$20
During the year, the company entered into these transactions:
Selling inventory costing $140 for a total of $200; cash of $30 was received, and the
remaining $170 was put on account.
Paying cash for rent of $45.
Paying cash dividends of $30.
What is this company's total equity at the end of the year?
$130
$150
$155
$210 - ✔✔$155
✔✔A company made a $3,000 cash payment on a loan. Of the $3,000 cash paid,
$2,400 was for interest expense and $600 was a payment to reduce the loan balance.
What is included in the journal entry necessary to record this loan payment?
Debit to interest expense for $2,400.
Credit to loan payable for $600.
Debit to loan payable for $3,000.
Credit to interest expense for $2,400. - ✔✔Debit to interest expense for $2,400.
,✔✔A company was started last year when the shareholders invested $70 cash into the
company. At that time, the organization also borrowed $30 cash from a local bank. The
organization used $80 cash to purchase inventory for $80. This year the company sold
all of the inventory for $55 cash. (That is not a typographical error; the amount received
for all of the inventory was only $55 cash.)
Assuming that there is no interest on the loan, what is true with respect to this
company's balance sheet after the sale of the inventory?
Total owners' equity is $45.
Total owners' equity is $95.
Inventory is $25.
Cash is $55. - ✔✔Total owners' equity is $45.
✔✔How are expenses typically recorded with debits and credits?
As a credit, representing an increase in equity.
As a credit, representing a reduction in assets.
As a debit, representing a reduction in equity.
As a debit, representing an increase in assets. - ✔✔As a debit, representing a reduction
in equity.
✔✔A company purchased inventory for $5,000. The company paid $1,000 cash and the
remainder of the purchase was made on account.
What is included in the journal entry necessary to record this inventory purchase?
Debit to accounts payable for $4,000.
Credit to accounts payable for $4,000.
Credit to accounts receivable for $4,000.
Debit to accounts receivable for $4,000. - ✔✔Credit to accounts payable for $4,000.
✔✔A company sold inventory that cost $1,300 for $2,000. It received $500 cash and the
remainder was on account.
What is included in the journal entry or entries necessary to record this sale of
inventory?
Debit to accounts receivable for $1,500.
Credit to cost of goods sold for $1,300.
Debit to sales for $1,300.
Debit to accounts payable for $1,500. - ✔✔Debit to accounts receivable for $1,500.
, ✔✔On August 1 of Year 1, a company paid $7,200 for two years' rent. The rental period
starts on August 1 of Year 1.
Which debit or credit is correctly included in the adjusting journal entry necessary on
December 31 of Year 1?
Credit to rent expense for $1,500.
Debit to rent expense for $1,500.
Debit to rent expense for $5,100.
Credit to prepaid rent for $5,100. - ✔✔Debit to rent expense for $1,500.
✔✔The revenue recognition principle states that revenues are recorded when two main
criteria have been met. One of those criteria is that cash has been collected or
collectability is reasonably assured.
What is the other criterion?
Overhead has been properly allocated.
Expense targets for the period have been reached.
You Selected
All taxes - sales tax, income tax, and value-added tax - have been paid.
The earnings process is substantially complete. - ✔✔The earnings process is
substantially complete.
✔✔What is the matching principle?
Retained earnings are recorded in the same period in which the corresponding asset is
recorded.
Expenses are recorded in the same period in which the corresponding revenue is
recorded.
Liabilities are recorded in the same period in which the corresponding asset is recorded.
Revenues are recorded in the same period in which the earnings process becomes
complete. - ✔✔Expenses are recorded in the same period in which the corresponding
revenue is recorded.
✔✔For large, publicly traded companies, why is accrual basis accounting preferred over
cash basis accounting?
Accrual basis accounting provides a more accurate picture of a company's economic
profitability.
Cash basis accounting requires complex estimates and judgments that make the
reported numbers less reliable.
Accrual basis accounting is much easier to implement because no estimates are
needed and internal controls are not necessary.
