2026 UPDATED QUESTIONS DOWNLOAD
Ultimate WGU D102 Financial Accounting Mastery Exam
Comprehensive Q&A with Verified Rationales (2026-2027 Edition)
This definitive study resource features 200 original practice questions specifically
designed to mirror the WGU D102 Objective Assessment, covering the complete
accounting cycle from journal entries to financial statement preparation. Each question
includes a verified correct answer and detailed professional rationale, ensuring
mastery of high-yield topics like FIFO/LIFO inventory, bank reconciliations, and cash
flow analysis. Perfect for students aiming for a distinction, this guide simplifies
complex GAAP principles into a scannable, exam-ready format that guarantees a
deeper understanding of financial mechanics.
1. Which account has a normal debit balance?
A. Accounts Payable
B. Service Revenue
C. Prepaid Rent
D. Common Stock
Answer: C
Rationale: Prepaid Rent is an asset. Assets normally have a debit balance (DEAD: Debits ↑
Expenses, Assets, Dividends).
2. A company purchases equipment for $10,000 on account. How does this affect
the accounting equation?
A. Assets ↑ $10,000; Equity ↑ $10,000
B. Assets ↑ $10,000; Liabilities ↑ $10,000
C. Assets ↓ $10,000; Liabilities ↑ $10,000
D. No effect
Answer: B
Rationale: Equipment (asset) increases, and Accounts Payable (liability) increases. Equation
stays balanced.
,2026 UPDATED QUESTIONS DOWNLOAD
3. Which financial statement is prepared for a specific point in time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: C
Rationale: Balance Sheet is a snapshot at a specific date. All others cover a period.
4. Company receives $2,000 in advance for services next year. Journal entry
today?
A. Debit Cash $2,000; Credit Service Revenue $2,000
B. Debit Cash $2,000; Credit Unearned Revenue $2,000
C. Debit Unearned Revenue $2,000; Credit Cash $2,000
D. Debit Accounts Receivable $2,000; Credit Service Revenue $2,000
Answer: B
Rationale: Work hasn’t been done, so it is a liability (Unearned Revenue). Cash (asset)
increases.
5. Primary purpose of adjusting entries:
A. Correct errors
B. Close temporary accounts
C. Ensure revenue recognition & matching principles
D. Prepare bank reconciliation
Answer: C
Rationale: Adjusting entries update accounts to follow the revenue recognition and matching
principles.
6. Which is a temporary account?
A. Accounts Receivable
B. Dividends
C. Accumulated Depreciation
D. Retained Earnings
,2026 UPDATED QUESTIONS DOWNLOAD
Answer: B
Rationale: Temporary accounts (RED: Revenues, Expenses, Dividends) reset each period.
7. Closing an Expense account:
A. Debit Expense; Credit Retained Earnings
B. Debit Income Summary; Credit Expense
C. Debit Retained Earnings; Credit Cash
D. Debit Expense; Credit Income Summary
Answer: B
Rationale: Expenses (debit balance) are credited and transferred to Income Summary.
8. Revenue recognition under accrual accounting:
A. When cash is collected
B. When contract signed
C. When service performed or good delivered
D. End of fiscal year
Answer: C
Rationale: Revenue is recognized when earned, not necessarily when cash is received.
9. Straight-Line Depreciation Formula:
A. (Cost + Salvage Value) / Useful Life
B. (Cost – Salvage Value) / Useful Life
C. Cost / Salvage Value
D. Book Value × Depreciation Rate
Answer: B
Rationale: Depreciable base = Cost – Salvage Value, spread evenly over useful life.
10. Accumulated Depreciation is classified as:
A. Liability
B. Expense
, 2026 UPDATED QUESTIONS DOWNLOAD
C. Contra-Asset
D. Equity
Answer: C
Rationale: Contra-asset reduces the associated asset’s book value, normal credit balance.
11. Inventory method assuming newest items sold first:
A. FIFO
B. LIFO
C. Weighted Average
D. Specific Identification
Answer: B
Rationale: LIFO = Last-In, First-Out; newest inventory costs → COGS.
12. In inflation, which inventory method results in lowest net income?
A. FIFO
B. LIFO
C. Weighted Average
D. Specific Identification
Answer: B
Rationale: LIFO uses higher recent costs for COGS → lower profit → lower taxes.
13. Example of internal control over cash:
A. Maximize cash on hand
B. One person handles receipts & record-keeping
C. Monthly bank reconciliations
D. Sticky-note safe combination
Answer: C
Rationale: Reconciling bank ensures accuracy and prevents fraud.
14. Outstanding checks are:
Ultimate WGU D102 Financial Accounting Mastery Exam
Comprehensive Q&A with Verified Rationales (2026-2027 Edition)
This definitive study resource features 200 original practice questions specifically
designed to mirror the WGU D102 Objective Assessment, covering the complete
accounting cycle from journal entries to financial statement preparation. Each question
includes a verified correct answer and detailed professional rationale, ensuring
mastery of high-yield topics like FIFO/LIFO inventory, bank reconciliations, and cash
flow analysis. Perfect for students aiming for a distinction, this guide simplifies
complex GAAP principles into a scannable, exam-ready format that guarantees a
deeper understanding of financial mechanics.
1. Which account has a normal debit balance?
A. Accounts Payable
B. Service Revenue
C. Prepaid Rent
D. Common Stock
Answer: C
Rationale: Prepaid Rent is an asset. Assets normally have a debit balance (DEAD: Debits ↑
Expenses, Assets, Dividends).
2. A company purchases equipment for $10,000 on account. How does this affect
the accounting equation?
A. Assets ↑ $10,000; Equity ↑ $10,000
B. Assets ↑ $10,000; Liabilities ↑ $10,000
C. Assets ↓ $10,000; Liabilities ↑ $10,000
D. No effect
Answer: B
Rationale: Equipment (asset) increases, and Accounts Payable (liability) increases. Equation
stays balanced.
,2026 UPDATED QUESTIONS DOWNLOAD
3. Which financial statement is prepared for a specific point in time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: C
Rationale: Balance Sheet is a snapshot at a specific date. All others cover a period.
4. Company receives $2,000 in advance for services next year. Journal entry
today?
A. Debit Cash $2,000; Credit Service Revenue $2,000
B. Debit Cash $2,000; Credit Unearned Revenue $2,000
C. Debit Unearned Revenue $2,000; Credit Cash $2,000
D. Debit Accounts Receivable $2,000; Credit Service Revenue $2,000
Answer: B
Rationale: Work hasn’t been done, so it is a liability (Unearned Revenue). Cash (asset)
increases.
5. Primary purpose of adjusting entries:
A. Correct errors
B. Close temporary accounts
C. Ensure revenue recognition & matching principles
D. Prepare bank reconciliation
Answer: C
Rationale: Adjusting entries update accounts to follow the revenue recognition and matching
principles.
6. Which is a temporary account?
A. Accounts Receivable
B. Dividends
C. Accumulated Depreciation
D. Retained Earnings
,2026 UPDATED QUESTIONS DOWNLOAD
Answer: B
Rationale: Temporary accounts (RED: Revenues, Expenses, Dividends) reset each period.
7. Closing an Expense account:
A. Debit Expense; Credit Retained Earnings
B. Debit Income Summary; Credit Expense
C. Debit Retained Earnings; Credit Cash
D. Debit Expense; Credit Income Summary
Answer: B
Rationale: Expenses (debit balance) are credited and transferred to Income Summary.
8. Revenue recognition under accrual accounting:
A. When cash is collected
B. When contract signed
C. When service performed or good delivered
D. End of fiscal year
Answer: C
Rationale: Revenue is recognized when earned, not necessarily when cash is received.
9. Straight-Line Depreciation Formula:
A. (Cost + Salvage Value) / Useful Life
B. (Cost – Salvage Value) / Useful Life
C. Cost / Salvage Value
D. Book Value × Depreciation Rate
Answer: B
Rationale: Depreciable base = Cost – Salvage Value, spread evenly over useful life.
10. Accumulated Depreciation is classified as:
A. Liability
B. Expense
, 2026 UPDATED QUESTIONS DOWNLOAD
C. Contra-Asset
D. Equity
Answer: C
Rationale: Contra-asset reduces the associated asset’s book value, normal credit balance.
11. Inventory method assuming newest items sold first:
A. FIFO
B. LIFO
C. Weighted Average
D. Specific Identification
Answer: B
Rationale: LIFO = Last-In, First-Out; newest inventory costs → COGS.
12. In inflation, which inventory method results in lowest net income?
A. FIFO
B. LIFO
C. Weighted Average
D. Specific Identification
Answer: B
Rationale: LIFO uses higher recent costs for COGS → lower profit → lower taxes.
13. Example of internal control over cash:
A. Maximize cash on hand
B. One person handles receipts & record-keeping
C. Monthly bank reconciliations
D. Sticky-note safe combination
Answer: C
Rationale: Reconciling bank ensures accuracy and prevents fraud.
14. Outstanding checks are:
