WGU D366 SECTION 2 EXAM 93 QUESTIONS WITH
VERIFIED ANSWERS 2025/2026
An error-free accounts receivable balance - CORRECT ANSWER What constitutes
representational fairness of financial information?
Deciding on the proper valuation method of certain assets and liabilities
Valuation methods include historical, fair value, and mixes of the two. Each
method will give different results, affecting both the balance sheet and income
statement. - CORRECT ANSWER What is one challenge in valuing assets and
liabilities under the mixed attribute measurement model?
$194,000 - CORRECT ANSWER A company purchased a truck with a list price of
$200,000 subject to a 5% discount if paid within 30 days. The company paid within
30 days, so it received the discount. It paid $3,000 to obtain the title to the truck
and a $700 license fee for the first year of operation. It paid $1,000 to paint the
firm's name on the truck and $2,000 for property and liability insurance for the
first year of operation.
What is the acquisition cost of this truck that the company should record in its
accounting records?
$10,594,014 - CORRECT ANSWER An aircraft manufacturer sold a plane to an
airline on January 1, 2020. The sales agreement required the airline to pay $1
million immediately and $1 million on December 31 of each year for 20 years,
beginning on December 31, 2020. The aircraft manufacturer and airline agree that
7% is an appropriate interest rate for this arrangement.
What is the present value of the receivable on the aircraft manufacturer's books
on January 1, 2020, immediately after receiving the $1 million down payment?
,$285,500 - CORRECT ANSWER A company purchased land, prepared it for use, and
constructed a building on it. The costs were as follows:
Purchase price of the land$250,000Commission paid to real estate
agent$10,000Rezoning permit fee$7,500Cost of razing and removing existing
building$25,000Cash received for scraps of old building
materials$7,000Construction cost of new building$500,000Cost of landscaping the
property$28,000Cost of property taxes for first year of occupation$15,000
What should the company record as the cost of the land on the balance sheet?
An increase in the value of stocks of another company held as an investment -
CORRECT ANSWER Which of these would be recorded on a company's balance
sheet as an asset?
Comprehensive income is realized in a market transaction - CORRECT ANSWER
What represents an exchange of economic value in terms of revenue recognition?
$13,000 - CORRECT ANSWER Two friends contribute $40,000 each to form a new
business. The owners use this amount to purchase a piece of equipment for
$80,000 cash. They estimated that the useful life of the equipment is five years,
and the salvage value is $15,000. They rent out the equipment to a customer for
an annual rental of $20,000 per year for five years. Annual cash operating costs for
insurance, taxes, and the other items total $5,000 annually. At the end of the fifth
year, the owners sell the equipment for $18,000 instead of the original estimated
$15,000 salvage value.
What is the total net income for the five-year period?
$93,000
, Total cash flows for the five-year period is calculated as: Contributions by owners -
Purchase of equipment + (Annual rent revenue x 5) - (Annual operating expenses x
5) + Sale of equipment= $80,000 - $80,000 + ($20,000 x 5) - ($5,000 x 5) +
$18,000= $80,000 - $80,000 + $100,000 - $25,000 + $18,000= $93,000 - CORRECT
ANSWER Two friends contribute $40,000 each to form a new business. The
owners use the contributions to purchase a piece of equipment for $80,000 cash.
They estimate that the useful life of the equipment is five years, and the salvage
value is $15,000. They rent out the equipment to a customer for an annual rental
of $20,000 per year for five years. Annual cash operating costs for insurance,
taxes, and other items totals $5,000 annually. At the end of the fifth year, the
owners sell the equipment for $18,000 instead of the $15,000 salvage value
initially estimated.
What is the total amount of cash flows for the five-year period?
$120,000 - CORRECT ANSWER A company purchases a tract of land on January 1,
2018. The following information summarizes the changes in value:
Cash purchase price on Jan 1, 2018$150,000Market value on Dec 31,
2018$200,000Market value on Dec 31, 2019$180,000Market value on Dec 31,
2020$250,000Cash sales price on Dec 31, 2021$270,000
Which amount of gain would the company report on its income statement for
2021?
$15,000
The amount of gain reported is calculated as the difference between the selling
price ($105,000) and the market value reflected on the 2020 balance sheet
($90,000). - CORRECT ANSWER A company purchases marketable securities on
January 1, 2018. The following information summarizes the changes in value:
VERIFIED ANSWERS 2025/2026
An error-free accounts receivable balance - CORRECT ANSWER What constitutes
representational fairness of financial information?
Deciding on the proper valuation method of certain assets and liabilities
Valuation methods include historical, fair value, and mixes of the two. Each
method will give different results, affecting both the balance sheet and income
statement. - CORRECT ANSWER What is one challenge in valuing assets and
liabilities under the mixed attribute measurement model?
$194,000 - CORRECT ANSWER A company purchased a truck with a list price of
$200,000 subject to a 5% discount if paid within 30 days. The company paid within
30 days, so it received the discount. It paid $3,000 to obtain the title to the truck
and a $700 license fee for the first year of operation. It paid $1,000 to paint the
firm's name on the truck and $2,000 for property and liability insurance for the
first year of operation.
What is the acquisition cost of this truck that the company should record in its
accounting records?
$10,594,014 - CORRECT ANSWER An aircraft manufacturer sold a plane to an
airline on January 1, 2020. The sales agreement required the airline to pay $1
million immediately and $1 million on December 31 of each year for 20 years,
beginning on December 31, 2020. The aircraft manufacturer and airline agree that
7% is an appropriate interest rate for this arrangement.
What is the present value of the receivable on the aircraft manufacturer's books
on January 1, 2020, immediately after receiving the $1 million down payment?
,$285,500 - CORRECT ANSWER A company purchased land, prepared it for use, and
constructed a building on it. The costs were as follows:
Purchase price of the land$250,000Commission paid to real estate
agent$10,000Rezoning permit fee$7,500Cost of razing and removing existing
building$25,000Cash received for scraps of old building
materials$7,000Construction cost of new building$500,000Cost of landscaping the
property$28,000Cost of property taxes for first year of occupation$15,000
What should the company record as the cost of the land on the balance sheet?
An increase in the value of stocks of another company held as an investment -
CORRECT ANSWER Which of these would be recorded on a company's balance
sheet as an asset?
Comprehensive income is realized in a market transaction - CORRECT ANSWER
What represents an exchange of economic value in terms of revenue recognition?
$13,000 - CORRECT ANSWER Two friends contribute $40,000 each to form a new
business. The owners use this amount to purchase a piece of equipment for
$80,000 cash. They estimated that the useful life of the equipment is five years,
and the salvage value is $15,000. They rent out the equipment to a customer for
an annual rental of $20,000 per year for five years. Annual cash operating costs for
insurance, taxes, and the other items total $5,000 annually. At the end of the fifth
year, the owners sell the equipment for $18,000 instead of the original estimated
$15,000 salvage value.
What is the total net income for the five-year period?
$93,000
, Total cash flows for the five-year period is calculated as: Contributions by owners -
Purchase of equipment + (Annual rent revenue x 5) - (Annual operating expenses x
5) + Sale of equipment= $80,000 - $80,000 + ($20,000 x 5) - ($5,000 x 5) +
$18,000= $80,000 - $80,000 + $100,000 - $25,000 + $18,000= $93,000 - CORRECT
ANSWER Two friends contribute $40,000 each to form a new business. The
owners use the contributions to purchase a piece of equipment for $80,000 cash.
They estimate that the useful life of the equipment is five years, and the salvage
value is $15,000. They rent out the equipment to a customer for an annual rental
of $20,000 per year for five years. Annual cash operating costs for insurance,
taxes, and other items totals $5,000 annually. At the end of the fifth year, the
owners sell the equipment for $18,000 instead of the $15,000 salvage value
initially estimated.
What is the total amount of cash flows for the five-year period?
$120,000 - CORRECT ANSWER A company purchases a tract of land on January 1,
2018. The following information summarizes the changes in value:
Cash purchase price on Jan 1, 2018$150,000Market value on Dec 31,
2018$200,000Market value on Dec 31, 2019$180,000Market value on Dec 31,
2020$250,000Cash sales price on Dec 31, 2021$270,000
Which amount of gain would the company report on its income statement for
2021?
$15,000
The amount of gain reported is calculated as the difference between the selling
price ($105,000) and the market value reflected on the 2020 balance sheet
($90,000). - CORRECT ANSWER A company purchases marketable securities on
January 1, 2018. The following information summarizes the changes in value:
