WGU D366 EXAM QUESTIONS ANSWERED CCORRECTLY LATEST UPDATE 2026

WGU D366 EXAM QUESTIONS ANSWERED CCORRECTLY LATEST UPDATE 2026 Income Statement (P&L Statement) - Answers A financial statement showing the revenue and expenses for a fiscal period. Basic Income Statement Formula - Answers Revenue - Total Expenses = Net Income Operating Revenue - Answers The revenue earned by a business from its core business operations (e.g. Products sold, service fees) Non-Operating Revenue - Answers income which does not come from the core business operations (e.g. Interest income, asset sales) Revenue Recognition - Answers Real & realizable, not when cash is received Revenue Adjustments - Answers Returns and allowances Deferred Revenue (pending payments) COGS (Cost of Goods Sold) - Answers Costs directly tied to production of goods (e.g. cost of labor directly linked to production, raw materials, manufacturing overhead) COGS Formula - Answers COGS = Beginning Inventory + Purchases (Costs of Production) - Ending Inventory Gross Profit Formula - Answers Gross profit = revenue - cost of sales Gross Profit Margin Formula - Answers Gross profit / revenue Operating Expenses - Answers Day to day expenses incurred, regardless of the number of products sold, excluding COGS, Interest, Taxes, or Non-Cash Op expenses. (e.g. Sales, Marketing, shipping, Admin expenses EBITDA - Answers Earnings before interest, taxes, depreciation, and amortization EBITDA Formula - Answers EBIDTA = Gross profit - Operating expenses (excluding Depreciation and Amortization) EBITDA Margin - Answers EBDITA / Revenue Depreciation and Amortization - Answers Non-cash expenses for wear and tear on assets allocated across the life of the asset (Depreciation for tangible assets, Amortization for intangible assets) EBIT (Operating Profit) - Answers Earnings before interest and taxes Interest Expense / Income - Answers Earnings or costs related to interest from investments or cost of borrowing Net Interest - Answers Interest Income - Interest Expense After Tax Cost of Debt - Answers interest rate * (1 - tax rate) EBT - Answers Taxable income, pretax income EBT formula - Answers EBIT - Interest Expense + Interest Income EBT Margin - Answers EBT / Revenue Income Tax Formula - Answers EBT * Tax Rate Net Income - Answers EBT - Income Taxes Net Margin - Answers Net Income/Revenue Top Down Income Statement Formula Progression - Answers Gross Margin = Rev - COGS EBITDA = Gross Margin - Op Expenses EBIT = EBITDA - Depreciation & Amortization EBT = EBIT - Interest Expenses + Interest Income Net Income = EBT - Income Taxes Bottom Up Income Statement Formula Progression - Answers EBT = Net Income + Taxes EBIT = EBT + Interest Expenses + Interest Income or EBIT = EBT + Interest Expenses + Interest Income + Taxes EBITDA = EBIT + Depreciation & Amortization Gross Margin = EBITDA + Op Expenses Income Statement Margins - Answers Gross Profit Margin = Gross Profit / Rev EBITDA Margin = EBITDA / Rev EBIT Margin = EBIT / Rev EBT Margin = EBT / Rev Net Margin = Net Income / Rev Use of Net Income (Public Companies) - Answers 1. Reinvest into the company 2. Pay dividends to shareholders Dividend Payout Ratio - Answers % of net income Dividend Payouts - Answers Net Income * Dividend Payout Ratio Plowback (Retention) Ratio Formula - Answers 1 - Dividend Payout Ratio Retained Earnings - Answers Cumulative net income (or loss) not distributed as dividends Additions to Retained Earnings Formula - Answers Net Income - Dividend Payouts Detecting Dividend Payouts - Answers IF Net Income = Retained Earnings - No Payout IF Net Income =/ Retained Earnings - Payout Dividend Payouts Calculation - Answers Net Income - Additions to Retained Earnings Income Statement Step 1 - Answers Operating Rev - COGS = Gross Profit Income Statement Step 2 - Answers Gross Profit - Op Costs = EBIDTA Income Statement Step 3 - Answers EBIDTA - Depreciation & Amortization = EBIT Income Statement Step 4 - Answers EBIT - Interest Income & Other Income/Expenses = EBT Income Statement Step 5 - Answers EBT - Taxes = Net Income Balance Sheet - Answers Snapshot of a firms assets and claims on those assets (liabilities) at a specific point in time Assets - Answers Resources owned by a company Liabilities - Answers Capital raised with debt Equity - Answers Owner's residual interest in the assets after liabilities e.g. Common Stock, Preferred Stock, Retained Earnings 2 ways equity capital raised - Answers 1. Retained earnings (net income) 2. Other Financing activities (Investment by business owners) Basic Balance Sheet Equation - Answers Assets = Liabilities + Equity (ALE) 5 Sections of a Balance Sheet - Answers 1. Current Assets 2. Long Term/Fixed Assets (Non-current) 3. Current Liabilities 4. Long-Term Debt/Liabilities (Non-current) 5. Equity Current Assets - Answers Short term economic resources that are expected to be converted to cash or used within a year Examples of Current Assets - Answers cash, marketable securities, accounts receivable, inventory Cash and Cash Equivalents - Answers Currency, checks, short-term bank accounts, and investments that mature within three months or less. *Most liquid current asset Marketable Securities - Answers Stocks, bonds, government securities, and money market certificates, which can be easily converted to cash Accounts Recieveable - Answers The total amount of money owed to a business and expected to be collected in near term Inventory - Answers The raw materials, work-in-progress and finished goods held by a business. *Least liquid current asset Long-Term/Fixed (Non-Current) Assets - Answers Assets expected to provide economic benefits beyond one year or operating cycle, not intended for short-term sale, used for daily operations Examples of Long-Term/Fixed (Non-Current) Assets - Answers Property, Plant and Equipment (PP&E), Long-Term Investments, and Intangible assets Property, Plant and Equipment (PP&E) - Answers Long-lived, tangible assets, such as land, buildings, machinery and equipment, used in the operation of a business. Gross PP&E - Answers Original cost associated with PP&E assets Accumulated PP&E - Answers Total depreciation expense recorded to date, offsets the gross PP&E to arrive at net book value Net PP&E - Answers Gross PP&E - Accumulated Depreciation Long-Term Investments - Answers investments in stocks and bonds of other corporations that are held for more than one year Intangible Assets - Answers Non-physical long-term assets (e.g., patents, trademarks, copyrights) with a useful life 1 year Current Obligations - Answers Liabilities due within one year (or one operating cycle, whichever is longer). E.g. Accounts Payable, Short-Term Debt, & Accrued expenses Accounts Payable - Answers Amounts owed to suppliers/vendors for goods or services already acquired on credit Short Term Debt - Answers Any debt that must be paid in less than one year from the date of the financial statement on which it is reported. Accrued Expenses - Answers Expenses incurred but not yet paid (e.g. wages, utilities, interest) Long-Term (Non-current) Liabilities - Answers Liabilities that are expected to be satisfied after a year or operating cycle E.g. Loans, bonds Assets - Cash Relationship - Answers Inverse Relationship