WGU D774 OA EXAM (2026 EDITION) –
BUSINESS ACCOUNTING 200 Questions |
Answers & Rationales
Exam Blueprint:
Accounting Principles & Concepts (15%) – 30 Qs
The Accounting Cycle (15%) – 30 Qs
Financial Statements (25%) – 50 Qs
Financial Ratio Analysis (15%) – 30 Qs
Managerial & Cost Accounting (20%) – 40 Qs
Budgeting & Decision Making (10%) – 20 Qs
Time limit (simulated): 2.5 hours (0.75 min/question)
Passing threshold: 70% (140/200)
SECTION 1: ACCOUNTING PRINCIPLES & CONCEPTS (Questions 1–30)
1. The accounting equation is:
A) Assets = Liabilities + Owner's Equity
B) Assets + Liabilities = Owner's Equity
C) Assets + Owner's Equity = Liabilities
D) Revenues – Expenses = Net Income
Answer: A
Rationale: The fundamental accounting equation states that assets must
equal the sum of liabilities and owner's equity.
,2. Which accounting concept requires that revenue be recorded when
earned, regardless of when cash is received?
A) Matching principle
B) Revenue recognition principle
C) Cost principle
D) Full disclosure principle
Answer: B
Rationale: The revenue recognition principle dictates that revenue is
recognized in the period in which it is earned, not necessarily when cash is
received.
3. The matching principle requires that:
A) Assets equal liabilities
B) Expenses be recorded in the same period as the revenues they help
generate
C) Revenue be recorded when cash is received
D) All transactions be recorded at historical cost
Answer: B
Rationale: The matching principle pairs expenses with the revenues they
produce in the same accounting period.
4. Under the cost principle, assets should be recorded at:
A) Current market value
B) Their original purchase price (historical cost)
C) Fair value at year-end
D) Replacement cost
Answer: B
Rationale: The cost principle requires assets to be recorded at their original
acquisition cost, not current market value.
,5. What is the accounting period concept?
A) Financial statements are prepared for a specific period of time (e.g.,
month, quarter, year)
B) The business will continue operating indefinitely
C) Transactions are recorded at historical cost
D) All transactions are recorded in dollars
Answer: A
Rationale: The accounting period concept divides the life of a business into
artificial time periods for reporting purposes.
6. The going concern assumption means that:
A) The business will go bankrupt soon
B) The business is expected to continue operating indefinitely
C) Assets must be recorded at liquidation value
D) Liabilities will be paid immediately
Answer: B
Rationale: The going concern assumption assumes the business will remain
in operation for the foreseeable future.
7. Which principle requires that all significant information be disclosed in
financial statements?
A) Materiality principle
B) Full disclosure principle
C) Consistency principle
D) Conservatism principle
Answer: B
Rationale: The full disclosure principle requires that any information that
could affect users' decisions be included in financial statements.
, 8. The materiality concept states that:
A) All transactions must be recorded exactly
B) Small amounts that would not influence decisions can be handled in the
most convenient way
C) Only large transactions are recorded
D) All assets must be depreciated
Answer: B
Rationale: Materiality allows accountants to ignore immaterial items that
would not affect users' decisions.
9. Which accounting concept guides accountants to choose the method that
least likely overstates assets or income?
A) Consistency
B) Conservatism
C) Materiality
D) Revenue recognition
Answer: B
Rationale: Conservatism dictates that when uncertainty exists, accountants
should choose the option that is less likely to overstate assets or income.
10. A business that uses the same accounting methods year after year is
following the:
A) Consistency principle
B) Matching principle
C) Cost principle
D) Revenue recognition principle
Answer: A
Rationale: Consistency requires that once a method is adopted, it should be
used consistently from period to period to allow comparability.
BUSINESS ACCOUNTING 200 Questions |
Answers & Rationales
Exam Blueprint:
Accounting Principles & Concepts (15%) – 30 Qs
The Accounting Cycle (15%) – 30 Qs
Financial Statements (25%) – 50 Qs
Financial Ratio Analysis (15%) – 30 Qs
Managerial & Cost Accounting (20%) – 40 Qs
Budgeting & Decision Making (10%) – 20 Qs
Time limit (simulated): 2.5 hours (0.75 min/question)
Passing threshold: 70% (140/200)
SECTION 1: ACCOUNTING PRINCIPLES & CONCEPTS (Questions 1–30)
1. The accounting equation is:
A) Assets = Liabilities + Owner's Equity
B) Assets + Liabilities = Owner's Equity
C) Assets + Owner's Equity = Liabilities
D) Revenues – Expenses = Net Income
Answer: A
Rationale: The fundamental accounting equation states that assets must
equal the sum of liabilities and owner's equity.
,2. Which accounting concept requires that revenue be recorded when
earned, regardless of when cash is received?
A) Matching principle
B) Revenue recognition principle
C) Cost principle
D) Full disclosure principle
Answer: B
Rationale: The revenue recognition principle dictates that revenue is
recognized in the period in which it is earned, not necessarily when cash is
received.
3. The matching principle requires that:
A) Assets equal liabilities
B) Expenses be recorded in the same period as the revenues they help
generate
C) Revenue be recorded when cash is received
D) All transactions be recorded at historical cost
Answer: B
Rationale: The matching principle pairs expenses with the revenues they
produce in the same accounting period.
4. Under the cost principle, assets should be recorded at:
A) Current market value
B) Their original purchase price (historical cost)
C) Fair value at year-end
D) Replacement cost
Answer: B
Rationale: The cost principle requires assets to be recorded at their original
acquisition cost, not current market value.
,5. What is the accounting period concept?
A) Financial statements are prepared for a specific period of time (e.g.,
month, quarter, year)
B) The business will continue operating indefinitely
C) Transactions are recorded at historical cost
D) All transactions are recorded in dollars
Answer: A
Rationale: The accounting period concept divides the life of a business into
artificial time periods for reporting purposes.
6. The going concern assumption means that:
A) The business will go bankrupt soon
B) The business is expected to continue operating indefinitely
C) Assets must be recorded at liquidation value
D) Liabilities will be paid immediately
Answer: B
Rationale: The going concern assumption assumes the business will remain
in operation for the foreseeable future.
7. Which principle requires that all significant information be disclosed in
financial statements?
A) Materiality principle
B) Full disclosure principle
C) Consistency principle
D) Conservatism principle
Answer: B
Rationale: The full disclosure principle requires that any information that
could affect users' decisions be included in financial statements.
, 8. The materiality concept states that:
A) All transactions must be recorded exactly
B) Small amounts that would not influence decisions can be handled in the
most convenient way
C) Only large transactions are recorded
D) All assets must be depreciated
Answer: B
Rationale: Materiality allows accountants to ignore immaterial items that
would not affect users' decisions.
9. Which accounting concept guides accountants to choose the method that
least likely overstates assets or income?
A) Consistency
B) Conservatism
C) Materiality
D) Revenue recognition
Answer: B
Rationale: Conservatism dictates that when uncertainty exists, accountants
should choose the option that is less likely to overstate assets or income.
10. A business that uses the same accounting methods year after year is
following the:
A) Consistency principle
B) Matching principle
C) Cost principle
D) Revenue recognition principle
Answer: A
Rationale: Consistency requires that once a method is adopted, it should be
used consistently from period to period to allow comparability.
