WGU D102 Practice Exam Questions and
Answers | Complete Exam Prep Resource |
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• What is reported in a multiple-step income statement that is not reported in a single-
step income statement?
Gross profit
Dividends
Retained earnings
Cash collected from customers -✓✓Gross profit
• How is gross profit computed?
Sales minus cost of goods sold.
Sales minus operating expenses.
Cash minus dividends.
Total revenues minus total expenses. -✓✓Sales minus cost of goods sold.
• The following are some accounts from a company's financial statements:
-accounts receivable
-cost of goods sold
-cash
-retained earnings
-sales
-inventory
-income tax expense
-accounts payable
Which set is a list of all of the items that are used in computing this company's net
income?
Cash, accounts receivable, and accounts payable.
Cash, retained earnings, and accounts payable.
Sales, cost of goods sold, and income tax expense.
Inventory, accounts payable, and retained earnings. -✓✓Sales, cost of goods sold, and
income tax expense.
• What cash flow category contains activities whereby cash is obtained from or repaid to
owners or creditors?
Financing
Investing
,Equity
Revenue -✓✓Financing
• Here are some financial statement items for the year for a company.
-Cash received from customers
-Cash received from the sale of land
-Cash paid for dividends
-Cash paid to employees for wages
-Cash paid to purchase a new building
-Cash paid for rent
-Cash received as new investment from owners
Which set of items is a list of items that are used in computing the company's financing
cash flow for the year?
Cash received from customers and cash paid for rent.
Cash paid to purchase a new building and cash received from the sale of land.
Cash paid for dividends and cash received as new investment from owners.
Cash received from customers, and cash paid to employees for wages. -✓✓Cash paid
for dividends and cash received as new investment from owners.
• Here are some financial statement items for a company.
-Net income
-Cash flow from financing activities
-Cash balance at the beginning of the year
-Sales Cash flow from investing activities
-Accounts receivable
-Retained earnings at the beginning of the year
-Cash flow from operating activities
What items are used in computing the company's ending cash balance for the year?
Cash balance at the beginning of the year, net income, cash flow from investing
activities, and retained earnings at the beginning of the year.
Retained earnings at the beginning of the year, cash flow from operating activities,
accounts receivable, cash flow from investing activities, and cash flow from financing
activities.
Net income, sales, cash flow from operating activities, cash flow from investing
activities, and cash flow from financing activities.
Cash balance at the beginning of the year, cash flow from operating activities, cash flow
-✓✓Cash balance at the beginning of the year, cash flow from operating activities, cash
flow from investing activities, and cash flow from financing activities.
• How is revenue typically recorded with debits and credits?
As a credit, representing a reduction in assets.
, As a credit, representing an increase in equity.
As a debit, representing an increase in assets.
As a debit, representing a reduction in equity. -✓✓As a credit, representing an increase
in equity.
• What is the proper way to record an increase in an asset account and an increase in
an equity account?
Asset, credit; equity, debit
Asset, credit; equity, credit
Asset, debit; equity, debit
Asset, debit; equity, credit -✓✓Asset, debit; equity, credit
• A company was started last year when the shareholders invested $70,000 cash into it.
At that time, the company also borrowed $100,000 cash from a local bank. The
company used $140,000 cash to purchase inventory for $140,000. This year the
company sold all of the inventory for $95,000 cash (and that is not a typographical error;
the amount received for all of the inventory was only $95,000 cash).
Which account balance is correct with respect to this company's balance sheet after the
sale of the inventory?
Total owners' equity is $115,000.
Total owners' equity is $25,000.
Cash is $45,000.
Total owners' equity is $70,000. -✓✓Total owners' equity is $25,000.
• On January 1, a company had these assets, liabilities, and equities:
Cash$100
Inventory$140
Accounts payable$70
Paid-in capital$150
Retained earnings$20
During the year, the company entered into these transactions:
Selling inventory costing $140 for a total of $200; cash of $30 was received, and the
remaining $170 was put on account.
Paying cash for rent of $45.
Paying cash dividends of $30.
What is this company's total equity at the end of the year?
$130
$150
$155
$210 -✓✓$155
Answers | Complete Exam Prep Resource |
A+ Pass Guaranteed
• What is reported in a multiple-step income statement that is not reported in a single-
step income statement?
Gross profit
Dividends
Retained earnings
Cash collected from customers -✓✓Gross profit
• How is gross profit computed?
Sales minus cost of goods sold.
Sales minus operating expenses.
Cash minus dividends.
Total revenues minus total expenses. -✓✓Sales minus cost of goods sold.
• The following are some accounts from a company's financial statements:
-accounts receivable
-cost of goods sold
-cash
-retained earnings
-sales
-inventory
-income tax expense
-accounts payable
Which set is a list of all of the items that are used in computing this company's net
income?
Cash, accounts receivable, and accounts payable.
Cash, retained earnings, and accounts payable.
Sales, cost of goods sold, and income tax expense.
Inventory, accounts payable, and retained earnings. -✓✓Sales, cost of goods sold, and
income tax expense.
• What cash flow category contains activities whereby cash is obtained from or repaid to
owners or creditors?
Financing
Investing
,Equity
Revenue -✓✓Financing
• Here are some financial statement items for the year for a company.
-Cash received from customers
-Cash received from the sale of land
-Cash paid for dividends
-Cash paid to employees for wages
-Cash paid to purchase a new building
-Cash paid for rent
-Cash received as new investment from owners
Which set of items is a list of items that are used in computing the company's financing
cash flow for the year?
Cash received from customers and cash paid for rent.
Cash paid to purchase a new building and cash received from the sale of land.
Cash paid for dividends and cash received as new investment from owners.
Cash received from customers, and cash paid to employees for wages. -✓✓Cash paid
for dividends and cash received as new investment from owners.
• Here are some financial statement items for a company.
-Net income
-Cash flow from financing activities
-Cash balance at the beginning of the year
-Sales Cash flow from investing activities
-Accounts receivable
-Retained earnings at the beginning of the year
-Cash flow from operating activities
What items are used in computing the company's ending cash balance for the year?
Cash balance at the beginning of the year, net income, cash flow from investing
activities, and retained earnings at the beginning of the year.
Retained earnings at the beginning of the year, cash flow from operating activities,
accounts receivable, cash flow from investing activities, and cash flow from financing
activities.
Net income, sales, cash flow from operating activities, cash flow from investing
activities, and cash flow from financing activities.
Cash balance at the beginning of the year, cash flow from operating activities, cash flow
-✓✓Cash balance at the beginning of the year, cash flow from operating activities, cash
flow from investing activities, and cash flow from financing activities.
• How is revenue typically recorded with debits and credits?
As a credit, representing a reduction in assets.
, As a credit, representing an increase in equity.
As a debit, representing an increase in assets.
As a debit, representing a reduction in equity. -✓✓As a credit, representing an increase
in equity.
• What is the proper way to record an increase in an asset account and an increase in
an equity account?
Asset, credit; equity, debit
Asset, credit; equity, credit
Asset, debit; equity, debit
Asset, debit; equity, credit -✓✓Asset, debit; equity, credit
• A company was started last year when the shareholders invested $70,000 cash into it.
At that time, the company also borrowed $100,000 cash from a local bank. The
company used $140,000 cash to purchase inventory for $140,000. This year the
company sold all of the inventory for $95,000 cash (and that is not a typographical error;
the amount received for all of the inventory was only $95,000 cash).
Which account balance is correct with respect to this company's balance sheet after the
sale of the inventory?
Total owners' equity is $115,000.
Total owners' equity is $25,000.
Cash is $45,000.
Total owners' equity is $70,000. -✓✓Total owners' equity is $25,000.
• On January 1, a company had these assets, liabilities, and equities:
Cash$100
Inventory$140
Accounts payable$70
Paid-in capital$150
Retained earnings$20
During the year, the company entered into these transactions:
Selling inventory costing $140 for a total of $200; cash of $30 was received, and the
remaining $170 was put on account.
Paying cash for rent of $45.
Paying cash dividends of $30.
What is this company's total equity at the end of the year?
$130
$150
$155
$210 -✓✓$155
