WGU D196 PRE-ASSESSMENT EXAM
QUESTIONS WITH 100% CORRECT
ANSWERS
\.A company borrowed $80,000 cash from a bank.
How does this transaction affect the accounting equation of the borrowing company?
Assets increase by $80,000; liabilities increase by $80,000.
Assets increase by $80,000; owners' equity increases by $80,000.
Assets increase by $80,000; liabilities decrease by $80,000.
Assets increase by $80,000; revenues increase by $80,000. - Answer-✔Assets increase by
$80,000; liabilities increase by $80,000.
\.A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equation?
Assets decrease by $5,000; liabilities increase by $5,000.
Assets increase by $5,000; expenses increase by $5,000.
Assets decrease by $5,000; expenses increase by $5,000.
Assets decrease by $5,000; revenues increase by $5,000. - Answer-✔Assets decrease by $5,000;
expenses increase by $5,000.
\.A company reports these data:
Price per unit = $25
Variable costs per unit = $15
Fixed costs = $15,000
,Given these data, what is the variable cost ratio?
60%
50%
40%
20% - Answer-✔60%
\.A company reports these data:
Total sales revenue = $250,000
Number of units sold = 50,000 units
Variable costs = $100,000
If the company is operating at its break-even point, what is the company's total contribution
margin?
$100,000
$200,000
$150,000
$50,000 - Answer-✔$150,000
\.A retail company purchased inventory costing $100,000. By the end of the year, inventory
costing $75,000 had been sold.
How is the remaining $25,000 in inventory reported in the financial statements?
As a liability in the balance sheet
As an administrative expense in the income statement
As an asset in the balance sheet
As manufacturing overhead in the income statement - Answer-✔As an asset in the balance
sheet
, \.According to the accounting equation, the amount of liabilities and equity must always be
equal to another amount.
What is that other amount?
The sum of expenses and dividends
Cash
Assets
The sum of revenues and expenses - Answer-✔Assets
\.Based on your analysis, what should management be concerned about?
The increase in interest expenses over the past two years
The increase in operating expenses over the past two years
The increase in income taxes over the past two years
The increase in production cost over the past two years - Answer-✔The increase in operating
expenses over the past two years
You Selected
\.For purposes of cash flow classification in the statement of cash flows, which item is an
operating activity?
Buying equipment
Selling bonds
Distributing dividends
Paying employees - Answer-✔Paying employees
\.For which production process is process costing the appropriate costing method to use?
Refining gasoline in a petroleum facility
Producing made-to-order industrial equipment
QUESTIONS WITH 100% CORRECT
ANSWERS
\.A company borrowed $80,000 cash from a bank.
How does this transaction affect the accounting equation of the borrowing company?
Assets increase by $80,000; liabilities increase by $80,000.
Assets increase by $80,000; owners' equity increases by $80,000.
Assets increase by $80,000; liabilities decrease by $80,000.
Assets increase by $80,000; revenues increase by $80,000. - Answer-✔Assets increase by
$80,000; liabilities increase by $80,000.
\.A company paid $5,000 cash in advertising costs.
How does this transaction affect the paying company's accounting equation?
Assets decrease by $5,000; liabilities increase by $5,000.
Assets increase by $5,000; expenses increase by $5,000.
Assets decrease by $5,000; expenses increase by $5,000.
Assets decrease by $5,000; revenues increase by $5,000. - Answer-✔Assets decrease by $5,000;
expenses increase by $5,000.
\.A company reports these data:
Price per unit = $25
Variable costs per unit = $15
Fixed costs = $15,000
,Given these data, what is the variable cost ratio?
60%
50%
40%
20% - Answer-✔60%
\.A company reports these data:
Total sales revenue = $250,000
Number of units sold = 50,000 units
Variable costs = $100,000
If the company is operating at its break-even point, what is the company's total contribution
margin?
$100,000
$200,000
$150,000
$50,000 - Answer-✔$150,000
\.A retail company purchased inventory costing $100,000. By the end of the year, inventory
costing $75,000 had been sold.
How is the remaining $25,000 in inventory reported in the financial statements?
As a liability in the balance sheet
As an administrative expense in the income statement
As an asset in the balance sheet
As manufacturing overhead in the income statement - Answer-✔As an asset in the balance
sheet
, \.According to the accounting equation, the amount of liabilities and equity must always be
equal to another amount.
What is that other amount?
The sum of expenses and dividends
Cash
Assets
The sum of revenues and expenses - Answer-✔Assets
\.Based on your analysis, what should management be concerned about?
The increase in interest expenses over the past two years
The increase in operating expenses over the past two years
The increase in income taxes over the past two years
The increase in production cost over the past two years - Answer-✔The increase in operating
expenses over the past two years
You Selected
\.For purposes of cash flow classification in the statement of cash flows, which item is an
operating activity?
Buying equipment
Selling bonds
Distributing dividends
Paying employees - Answer-✔Paying employees
\.For which production process is process costing the appropriate costing method to use?
Refining gasoline in a petroleum facility
Producing made-to-order industrial equipment
