Principles of Financial and Managerial
Accounting - D196 WGU Test
Questions and Correct Answers 2025-
2026 Updated.
the production budget - Answer Sales budget + ending finished goods inventory - beginning
finished goods inventory
direct materials production budget - Answer Production budget × direct materials per unit
the direct materials purchases budget - Answer Direct materials production budget + ending
direct materials inventory - beginning direct materials inventory
Cash collected from customers - Answer (current period revenue × current period collection
rate) + cash collected from previous period sales
Cash payments to suppliers - Answer (current period purchases × current period payment
rate) + cash paid on previous period purchases
Cost Variance - Answer Difference between actual costs and budgeted costs
Contribution Margin - Answer = Sales Revenue - Variable Costs
The difference between total sales and variable costs; the portion of sales revenue available to
cover fixed costs and provide a profit.
Target Income - Answer = Sales Revenue - Variable Costs - Fixed Costs
A profit level desired by management.
At break-even - Answer Target income = 0
Sales Revenue - Answer = Sales Price x Number of Units
Variable Costs - Answer = Variable Cost per Unit x Number of Units
Costs that change in total in direct proportion to changes in activity level.
Variable Cost Ratio x Sales Revenue - Answer Variable Costs
, Unit-level activities - Answer Activities that take place each time a unit of product is
produced.
Batch-level activities - Answer Activities that take place in order to support a batch or
production run, regardless of the size of the batch.
Product-line Activities - Answer Activities that take place in order to support a product line,
regardless of the number of batches or individual units produced.
cost pool - Answer Total cost being generated by a specific overhead cost activity.
cost driver - Answer A numerical measure used to reflect the amount of a specific cost that is
associated with a particular activity
Activity rate - Answer The amount of the estimated cost pool divided by the estimated
number of cost driver events
How do expenses impact the accounting equation? - Answer Expenses decrease owners'
equity
Purpose of the accounting cycle? - Answer To turn information about transactions into
financial statements
How is gross profit computed? - Answer Sales minus cost of good sold
Which type of account is retained earnings? - Answer Equity
How does a classified balance sheet provide useful info to a decision maker? - Answer It
distinguishes between current and long-term assets
What are the three primary functions that company managers use managerial accounting info
for? - Answer Planning, controlling, evaluating
How could a period cost be reported in an income statement? - Answer As an admin
expense
Accounting - D196 WGU Test
Questions and Correct Answers 2025-
2026 Updated.
the production budget - Answer Sales budget + ending finished goods inventory - beginning
finished goods inventory
direct materials production budget - Answer Production budget × direct materials per unit
the direct materials purchases budget - Answer Direct materials production budget + ending
direct materials inventory - beginning direct materials inventory
Cash collected from customers - Answer (current period revenue × current period collection
rate) + cash collected from previous period sales
Cash payments to suppliers - Answer (current period purchases × current period payment
rate) + cash paid on previous period purchases
Cost Variance - Answer Difference between actual costs and budgeted costs
Contribution Margin - Answer = Sales Revenue - Variable Costs
The difference between total sales and variable costs; the portion of sales revenue available to
cover fixed costs and provide a profit.
Target Income - Answer = Sales Revenue - Variable Costs - Fixed Costs
A profit level desired by management.
At break-even - Answer Target income = 0
Sales Revenue - Answer = Sales Price x Number of Units
Variable Costs - Answer = Variable Cost per Unit x Number of Units
Costs that change in total in direct proportion to changes in activity level.
Variable Cost Ratio x Sales Revenue - Answer Variable Costs
, Unit-level activities - Answer Activities that take place each time a unit of product is
produced.
Batch-level activities - Answer Activities that take place in order to support a batch or
production run, regardless of the size of the batch.
Product-line Activities - Answer Activities that take place in order to support a product line,
regardless of the number of batches or individual units produced.
cost pool - Answer Total cost being generated by a specific overhead cost activity.
cost driver - Answer A numerical measure used to reflect the amount of a specific cost that is
associated with a particular activity
Activity rate - Answer The amount of the estimated cost pool divided by the estimated
number of cost driver events
How do expenses impact the accounting equation? - Answer Expenses decrease owners'
equity
Purpose of the accounting cycle? - Answer To turn information about transactions into
financial statements
How is gross profit computed? - Answer Sales minus cost of good sold
Which type of account is retained earnings? - Answer Equity
How does a classified balance sheet provide useful info to a decision maker? - Answer It
distinguishes between current and long-term assets
What are the three primary functions that company managers use managerial accounting info
for? - Answer Planning, controlling, evaluating
How could a period cost be reported in an income statement? - Answer As an admin
expense
