WGU D774 OA FINAL EXAM /ACTUAL INTRODUCTION TO
BUSINESS ACCOUNTING WGU D774 OBJECTIVE
ASSESSMENT (OA) FINAL EXAM 2026/2027 ACCURATE TEST
APPROVED QUESTIONS AND CORRECT VERIFIED
ANSWERS WITH DETAILED RATIONALES (100% CORRECT
VERIFIED SOLUTIONS) LATEST UPDATED VERSION 2026
EDITION |GUARANTEED SUCCESS A+
1. A company purchases office supplies
for 500onaccount.Whatistheeffectontheaccountingequation?A)Assetsinc
rease500onaccount.Whatistheeffectontheaccountingequation?A)Assetsin
crease500; liabilities
decrease 500B)Assetsdecrease500B)Assetsdecrease500; equity
decreases 500C)∗∗Assetsincrease500C)∗∗Assetsincrease500; liabilities
increase $500**
D) No change to the accounting equation
CORRECT ANSWER: C – Purchasing supplies on account increases
assets (supplies) and increases liabilities (accounts payable). The
accounting equation (Assets = Liabilities + Equity) remains balanced.
2. Which financial statement reports a company’s financial position at a
specific point in time?
A) Income statement
B) Statement of cash flows
C) Balance sheet
D) Statement of retained earnings
,CORRECT ANSWER: C – The balance sheet shows assets, liabilities,
and equity as of a specific date. The income statement and cash flow
statement cover a period of time.
3. Revenue is recognized when:
A) Cash is received from the customer
B) It is earned, regardless of when cash is received
C) The customer places an order
D) The invoice is printed
CORRECT ANSWER: B – According to the revenue recognition
principle (GAAP), revenue is recorded when earned, typically when
goods or services are delivered, not necessarily when cash changes
hands.
4. A company has 50,000inassetsand50,000inassetsand30,000 in
liabilities. What is the owner’s equity?
A) 80,000B)80,000B)50,000
C) **20,000∗∗D)20,000∗∗D)30,000
CORRECT ANSWER: C – Owner’s equity = Assets – Liabilities
= 50,000–50,000–30,000 = $20,000.
5. Which account is increased by a debit?
A) Accounts payable
B) Equipment
C) Common stock
D) Service revenue
,CORRECT ANSWER: B – Assets (like Equipment) and expenses
increase with debits. Liabilities, equity, and revenues increase with
credits.
6. A company
pays 1,200foraone−yearinsurancepolicy.Thepaymentisrecordedasprepaid
insurance.Afterthreemonths,whatadjustingentryisneeded?A)DebitInsura
nceExpense1,200foraone−yearinsurancepolicy.Thepaymentisrecordedas
prepaidinsurance.Afterthreemonths,whatadjustingentryisneeded?A)Debi
tInsuranceExpense300; Credit Prepaid
Insurance 300B)DebitPrepaidInsurance300B)DebitPrepaidInsurance300
; Credit Insurance
Expense 300C)DebitInsuranceExpense300C)DebitInsuranceExpense1,2
00; Credit Cash $1,200
D) No adjusting entry is needed
CORRECT ANSWER: A – Each month 100(100(1,200/12) expires.
After 3 months, $300 has been used. Adjusting entry recognizes expense
and reduces prepaid asset.
7. Which of the following is an example of a financing activity on the
statement of cash flows?
A) Purchasing equipment
B) Issuing common stock
C) Selling inventory
D) Paying rent
CORRECT ANSWER: B – Financing activities include transactions
with owners and creditors, such as issuing stock or borrowing money.
, Purchasing equipment is investing; selling inventory and paying rent are
operating.
8. Gross profit is calculated as:
A) Net sales – operating expenses
B) Net sales – cost of goods sold
C) Net sales – total liabilities
D) Net income + cost of goods sold
CORRECT ANSWER: B – Gross profit = Revenue (net sales) – Cost
of Goods Sold. Operating expenses are deducted later to get operating
income.
9. A company’s accounts receivable balance
is 20,000.Itestimatesthat5A)∗∗20,000.Itestimatesthat5A)∗∗1,000**
B) 20,000C)20,000C)5,000
D) $0
CORRECT ANSWER: A – 5% of 20,000=20,000=1,000. This is the
required balance in the allowance account after adjustment.
10. Which principle requires that expenses be recorded in the same
period as the revenues they help generate?
A) Revenue recognition principle
B) Matching principle
C) Cost principle
D) Full disclosure principle
BUSINESS ACCOUNTING WGU D774 OBJECTIVE
ASSESSMENT (OA) FINAL EXAM 2026/2027 ACCURATE TEST
APPROVED QUESTIONS AND CORRECT VERIFIED
ANSWERS WITH DETAILED RATIONALES (100% CORRECT
VERIFIED SOLUTIONS) LATEST UPDATED VERSION 2026
EDITION |GUARANTEED SUCCESS A+
1. A company purchases office supplies
for 500onaccount.Whatistheeffectontheaccountingequation?A)Assetsinc
rease500onaccount.Whatistheeffectontheaccountingequation?A)Assetsin
crease500; liabilities
decrease 500B)Assetsdecrease500B)Assetsdecrease500; equity
decreases 500C)∗∗Assetsincrease500C)∗∗Assetsincrease500; liabilities
increase $500**
D) No change to the accounting equation
CORRECT ANSWER: C – Purchasing supplies on account increases
assets (supplies) and increases liabilities (accounts payable). The
accounting equation (Assets = Liabilities + Equity) remains balanced.
2. Which financial statement reports a company’s financial position at a
specific point in time?
A) Income statement
B) Statement of cash flows
C) Balance sheet
D) Statement of retained earnings
,CORRECT ANSWER: C – The balance sheet shows assets, liabilities,
and equity as of a specific date. The income statement and cash flow
statement cover a period of time.
3. Revenue is recognized when:
A) Cash is received from the customer
B) It is earned, regardless of when cash is received
C) The customer places an order
D) The invoice is printed
CORRECT ANSWER: B – According to the revenue recognition
principle (GAAP), revenue is recorded when earned, typically when
goods or services are delivered, not necessarily when cash changes
hands.
4. A company has 50,000inassetsand50,000inassetsand30,000 in
liabilities. What is the owner’s equity?
A) 80,000B)80,000B)50,000
C) **20,000∗∗D)20,000∗∗D)30,000
CORRECT ANSWER: C – Owner’s equity = Assets – Liabilities
= 50,000–50,000–30,000 = $20,000.
5. Which account is increased by a debit?
A) Accounts payable
B) Equipment
C) Common stock
D) Service revenue
,CORRECT ANSWER: B – Assets (like Equipment) and expenses
increase with debits. Liabilities, equity, and revenues increase with
credits.
6. A company
pays 1,200foraone−yearinsurancepolicy.Thepaymentisrecordedasprepaid
insurance.Afterthreemonths,whatadjustingentryisneeded?A)DebitInsura
nceExpense1,200foraone−yearinsurancepolicy.Thepaymentisrecordedas
prepaidinsurance.Afterthreemonths,whatadjustingentryisneeded?A)Debi
tInsuranceExpense300; Credit Prepaid
Insurance 300B)DebitPrepaidInsurance300B)DebitPrepaidInsurance300
; Credit Insurance
Expense 300C)DebitInsuranceExpense300C)DebitInsuranceExpense1,2
00; Credit Cash $1,200
D) No adjusting entry is needed
CORRECT ANSWER: A – Each month 100(100(1,200/12) expires.
After 3 months, $300 has been used. Adjusting entry recognizes expense
and reduces prepaid asset.
7. Which of the following is an example of a financing activity on the
statement of cash flows?
A) Purchasing equipment
B) Issuing common stock
C) Selling inventory
D) Paying rent
CORRECT ANSWER: B – Financing activities include transactions
with owners and creditors, such as issuing stock or borrowing money.
, Purchasing equipment is investing; selling inventory and paying rent are
operating.
8. Gross profit is calculated as:
A) Net sales – operating expenses
B) Net sales – cost of goods sold
C) Net sales – total liabilities
D) Net income + cost of goods sold
CORRECT ANSWER: B – Gross profit = Revenue (net sales) – Cost
of Goods Sold. Operating expenses are deducted later to get operating
income.
9. A company’s accounts receivable balance
is 20,000.Itestimatesthat5A)∗∗20,000.Itestimatesthat5A)∗∗1,000**
B) 20,000C)20,000C)5,000
D) $0
CORRECT ANSWER: A – 5% of 20,000=20,000=1,000. This is the
required balance in the allowance account after adjustment.
10. Which principle requires that expenses be recorded in the same
period as the revenues they help generate?
A) Revenue recognition principle
B) Matching principle
C) Cost principle
D) Full disclosure principle
