WGU D775 Intro to Business
Accounting Questions and Actual
Answers 2025-2026 Set.
Security and Exchange Commission (SEC) - Answer A publicly traded company is preparing to
issue stock to its investors. As part of the process, the company must submit financial
disclosures and filings to the regulatory agency overseeing securities markets. Which federal
agency is responsible for this regulation?
Financial Accounting Standards Board (FASB) - Answer Which organization is an
independent, nonprofit entity responsible for setting financial accounting and reporting
standards for public and private sector businesses in the United States that use generally
accepted accounting principles (GAAP)?
It oversees the audits of public companies to protect investors. - Answer What is the
purpose of the Public Company Accounting Oversight Board (PCAOB)?
Big Four - Answer A multinational corporation wants to hire an audit firm with extensive
experience in financial statement auditing for publicly traded companies. Which type of firm
would be the most suitable choice?
Ancient Mesopotamia (c. 3000 BCE) - Answer Which ancient civilization dates to the early
development of accounting?
1929 - Answer Which year is associated with the stock market crash that had a profound
economic impact?
The Sarbanes-Oxley Act was introduced, requiring stricter financial controls and oversight. -
Answer What was the regulatory outcome of accounting scandals such as Enron, WorldCom,
and Tyco?
Financial accounting focuses on external reporting, while managerial accounting focuses on
internal decision-making. - Answer A business owner is trying to better understand their
company's financial performance and operations. The owner recently learned that two types of
accounting—financial accounting and managerial accounting—serve different purposes. What is
one difference between them?
Improving future results based on an analysis of past performance - Answer Which
statement describes the focus of managerial accounting?
, They include monetary and nonmonetary information. - Answer A company is preparing
annual financial statements to share with investors. Which characteristic of financial accounting
reports applies in this situation?
Revenues - expenses - Answer Which accounting formula does the income statement
represent?
The day-to-day operational costs not associated with the direct selling of products or services -
Answer What does a company's operating expense on the income statement represent?
General and administrative expenses - Answer A business pays rent for its office space,
which is reported as an expense on its income statement. Which category includes this
expense?
Income statement - Answer Which financial statement reports the profit or loss using the
accrual basis of accounting?
It categorizes revenue based on operating and non-operating activities. - Answer How do the
income statement categories allow for different income streams when a company earns money
from multiple sources?
Revenues - Answer shopkeeper receives $500 from selling products in their store. Where
should this be reported on the income statement?
Income statement - Answer The investors of Kretsmart are interested in whether Kretsmart
has been profitable for the last year. The investors received the complete financial statements
for the company. Which report should they review to see if the company was profitable?
Revenue - Answer A bakery sells $10,000 worth of cakes in one month, but after subtracting
the cost of ingredients, rent, and wages, the business is left with $3,500. Where should the user
of the income statement expect to see the $10,000?
Higher expenses offset the revenue increase. - Answer A retailer reports an increase in
revenue but a decrease in income from the previous year. Why can income decrease while
revenue increases?
It highlights the impact of expenses on overall profitability. - Answer A company reports high
revenue but low net income. Which financial insight does the income statement provide in this
scenario?
Accounting Questions and Actual
Answers 2025-2026 Set.
Security and Exchange Commission (SEC) - Answer A publicly traded company is preparing to
issue stock to its investors. As part of the process, the company must submit financial
disclosures and filings to the regulatory agency overseeing securities markets. Which federal
agency is responsible for this regulation?
Financial Accounting Standards Board (FASB) - Answer Which organization is an
independent, nonprofit entity responsible for setting financial accounting and reporting
standards for public and private sector businesses in the United States that use generally
accepted accounting principles (GAAP)?
It oversees the audits of public companies to protect investors. - Answer What is the
purpose of the Public Company Accounting Oversight Board (PCAOB)?
Big Four - Answer A multinational corporation wants to hire an audit firm with extensive
experience in financial statement auditing for publicly traded companies. Which type of firm
would be the most suitable choice?
Ancient Mesopotamia (c. 3000 BCE) - Answer Which ancient civilization dates to the early
development of accounting?
1929 - Answer Which year is associated with the stock market crash that had a profound
economic impact?
The Sarbanes-Oxley Act was introduced, requiring stricter financial controls and oversight. -
Answer What was the regulatory outcome of accounting scandals such as Enron, WorldCom,
and Tyco?
Financial accounting focuses on external reporting, while managerial accounting focuses on
internal decision-making. - Answer A business owner is trying to better understand their
company's financial performance and operations. The owner recently learned that two types of
accounting—financial accounting and managerial accounting—serve different purposes. What is
one difference between them?
Improving future results based on an analysis of past performance - Answer Which
statement describes the focus of managerial accounting?
, They include monetary and nonmonetary information. - Answer A company is preparing
annual financial statements to share with investors. Which characteristic of financial accounting
reports applies in this situation?
Revenues - expenses - Answer Which accounting formula does the income statement
represent?
The day-to-day operational costs not associated with the direct selling of products or services -
Answer What does a company's operating expense on the income statement represent?
General and administrative expenses - Answer A business pays rent for its office space,
which is reported as an expense on its income statement. Which category includes this
expense?
Income statement - Answer Which financial statement reports the profit or loss using the
accrual basis of accounting?
It categorizes revenue based on operating and non-operating activities. - Answer How do the
income statement categories allow for different income streams when a company earns money
from multiple sources?
Revenues - Answer shopkeeper receives $500 from selling products in their store. Where
should this be reported on the income statement?
Income statement - Answer The investors of Kretsmart are interested in whether Kretsmart
has been profitable for the last year. The investors received the complete financial statements
for the company. Which report should they review to see if the company was profitable?
Revenue - Answer A bakery sells $10,000 worth of cakes in one month, but after subtracting
the cost of ingredients, rent, and wages, the business is left with $3,500. Where should the user
of the income statement expect to see the $10,000?
Higher expenses offset the revenue increase. - Answer A retailer reports an increase in
revenue but a decrease in income from the previous year. Why can income decrease while
revenue increases?
It highlights the impact of expenses on overall profitability. - Answer A company reports high
revenue but low net income. Which financial insight does the income statement provide in this
scenario?
