WGU C213 ACCOUNTING FOR DECISION MAKERS EXAM
VERSION 2026/2027 | Questions & Verified Answers | A
Grade | Pass Guaranteed - A+ Graded
Section 1: The Accounting Cycle & Financial Statements (Q1-15)
Q1. On January 1, a company purchases equipment for $50,000 cash. Which accounts
are affected and how?
A. Debit Equipment $50,000; Credit Accounts Payable $50,000
B. Debit Equipment $50,000; Credit Cash $50,000
C. Debit Cash $50,000; Credit Equipment $50,000
D. Debit Equipment Expense $50,000; Credit Cash $50,000
Correct Answer: B [CORRECT]
Rationale: The purchase of equipment with cash increases the Equipment asset
account (debit) and decreases the Cash asset account (credit) by $50,000. Equipment
is a long-term asset, not an expense, because it provides future economic benefit.
Option A incorrectly uses Accounts Payable since cash was paid. Option C reverses
the debit and credit. Option D incorrectly expenses the entire amount instead of
capitalizing the asset.
Q2. A company provides services to a customer on account for $8,000. The correct
journal entry is:
A. Debit Cash $8,000; Credit Service Revenue $8,000
B. Debit Accounts Receivable $8,000; Credit Service Revenue $8,000
C. Debit Service Revenue $8,000; Credit Accounts Receivable $8,000
D. Debit Accounts Payable $8,000; Credit Service Revenue $8,000
Correct Answer: B [CORRECT]
,Rationale: When services are provided on account (credit sale), Accounts Receivable
(asset) increases (debit) and Service Revenue increases (credit) per the revenue
recognition principle. Cash was not received (A is incorrect). Option C reverses the
entry. Option D incorrectly uses Accounts Payable, a liability account.
Q3. At year-end, a company has incurred $3,200 of wages expense that will be paid
in the next accounting period. The adjusting entry is:
A. Debit Wages Expense $3,200; Credit Cash $3,200
B. Debit Wages Payable $3,200; Credit Wages Expense $3,200
C. Debit Wages Expense $3,200; Credit Wages Payable $3,200
D. No entry needed until wages are paid
Correct Answer: C [CORRECT]
Rationale: Under accrual accounting and the matching principle, expenses must be
recorded in the period incurred. The adjusting entry debits Wages Expense
(increasing expense) and credits Wages Payable (increasing liability) to recognize the
obligation. Option A incorrectly assumes cash was paid. Option B reverses the entry.
Option D violates the matching principle.
Q4. A company prepaid $12,000 for 12 months of rent on October 1. By December
31, three months have expired. The adjusting entry is:
A. Debit Prepaid Rent $3,000; Credit Rent Expense $3,000
B. Debit Rent Expense $3,000; Credit Prepaid Rent $3,000
C. Debit Rent Expense $12,000; Credit Prepaid Rent $12,000
D. Debit Prepaid Rent $9,000; Credit Rent Expense $9,000
Correct Answer: B [CORRECT]
Rationale: Three months of rent have expired ($12,000 ÷ 12 = $1,000/month × 3
months = $3,000). The adjusting entry recognizes the expired portion as expense:
debit Rent Expense $3,000, credit Prepaid Rent $3,000. Prepaid Rent (asset) decreases
,and Rent Expense increases. Option A reverses the entry. Option C recognizes the full
amount prematurely. Option D adjusts the remaining balance rather than the expired
portion.
Q5. A company has unearned revenue of $5,000 at the beginning of the period.
During the period, $2,000 of services were performed. The adjusting entry is:
A. Debit Cash $2,000; Credit Service Revenue $2,000
B. Debit Unearned Revenue $2,000; Credit Service Revenue $2,000
C. Debit Service Revenue $2,000; Credit Unearned Revenue $2,000
D. Debit Unearned Revenue $5,000; Credit Service Revenue $5,000
Correct Answer: B [CORRECT]
Rationale: As services are performed, the liability (Unearned Revenue) decreases
(debit) and revenue is recognized (credit). Only the $2,000 earned portion is
recognized, not the full $5,000. Option A incorrectly assumes cash was received (it
was received previously). Option C reverses the entry. Option D recognizes the full
unearned balance rather than only the earned portion.
Q6. A company purchased equipment for $30,000 with a 5-year useful life and $5,000
salvage value. Annual straight-line depreciation is:
A. $6,000
B. $5,000
C. $7,000
D. $5,500
Correct Answer: B [CORRECT]
Rationale: Straight-line depreciation = (Cost – Salvage Value) ÷ Useful Life = ($30,000
– $5,000) ÷ 5 = $25,000 ÷ 5 = $5,000 per year. Option A incorrectly excludes salvage
value ($30,000 ÷ 5). Option C incorrectly adds salvage value. Option D uses incorrect
calculation.
, Q7. The adjusting entry for depreciation on the equipment in Q6 is:
A. Debit Accumulated Depreciation $5,000; Credit Depreciation Expense $5,000
B. Debit Depreciation Expense $5,000; Credit Equipment $5,000
C. Debit Depreciation Expense $5,000; Credit Accumulated Depreciation $5,000
D. Debit Equipment $5,000; Credit Depreciation Expense $5,000
Correct Answer: C [CORRECT]
Rationale: Depreciation is recorded by debiting Depreciation Expense (increasing
expense) and crediting Accumulated Depreciation (a contra-asset account that
reduces the book value of the asset). The Equipment account itself is not directly
credited (B and D are incorrect). Option A reverses the debit and credit.
Q8. Which of the following accounts would NOT appear on the post-closing trial
balance?
A. Cash
B. Accounts Receivable
C. Service Revenue
D. Retained Earnings
Correct Answer: C [CORRECT]
Rationale: The post-closing trial balance contains only permanent (real) accounts:
assets, liabilities, and equity. Service Revenue is a temporary (nominal) account that is
closed to Income Summary and then to Retained Earnings at period end. Cash (A),
Accounts Receivable (B), and Retained Earnings (D) are all permanent accounts that
carry forward to the next period.
Q9. The closing entry for Service Revenue of $120,000 (credit balance) is:
VERSION 2026/2027 | Questions & Verified Answers | A
Grade | Pass Guaranteed - A+ Graded
Section 1: The Accounting Cycle & Financial Statements (Q1-15)
Q1. On January 1, a company purchases equipment for $50,000 cash. Which accounts
are affected and how?
A. Debit Equipment $50,000; Credit Accounts Payable $50,000
B. Debit Equipment $50,000; Credit Cash $50,000
C. Debit Cash $50,000; Credit Equipment $50,000
D. Debit Equipment Expense $50,000; Credit Cash $50,000
Correct Answer: B [CORRECT]
Rationale: The purchase of equipment with cash increases the Equipment asset
account (debit) and decreases the Cash asset account (credit) by $50,000. Equipment
is a long-term asset, not an expense, because it provides future economic benefit.
Option A incorrectly uses Accounts Payable since cash was paid. Option C reverses
the debit and credit. Option D incorrectly expenses the entire amount instead of
capitalizing the asset.
Q2. A company provides services to a customer on account for $8,000. The correct
journal entry is:
A. Debit Cash $8,000; Credit Service Revenue $8,000
B. Debit Accounts Receivable $8,000; Credit Service Revenue $8,000
C. Debit Service Revenue $8,000; Credit Accounts Receivable $8,000
D. Debit Accounts Payable $8,000; Credit Service Revenue $8,000
Correct Answer: B [CORRECT]
,Rationale: When services are provided on account (credit sale), Accounts Receivable
(asset) increases (debit) and Service Revenue increases (credit) per the revenue
recognition principle. Cash was not received (A is incorrect). Option C reverses the
entry. Option D incorrectly uses Accounts Payable, a liability account.
Q3. At year-end, a company has incurred $3,200 of wages expense that will be paid
in the next accounting period. The adjusting entry is:
A. Debit Wages Expense $3,200; Credit Cash $3,200
B. Debit Wages Payable $3,200; Credit Wages Expense $3,200
C. Debit Wages Expense $3,200; Credit Wages Payable $3,200
D. No entry needed until wages are paid
Correct Answer: C [CORRECT]
Rationale: Under accrual accounting and the matching principle, expenses must be
recorded in the period incurred. The adjusting entry debits Wages Expense
(increasing expense) and credits Wages Payable (increasing liability) to recognize the
obligation. Option A incorrectly assumes cash was paid. Option B reverses the entry.
Option D violates the matching principle.
Q4. A company prepaid $12,000 for 12 months of rent on October 1. By December
31, three months have expired. The adjusting entry is:
A. Debit Prepaid Rent $3,000; Credit Rent Expense $3,000
B. Debit Rent Expense $3,000; Credit Prepaid Rent $3,000
C. Debit Rent Expense $12,000; Credit Prepaid Rent $12,000
D. Debit Prepaid Rent $9,000; Credit Rent Expense $9,000
Correct Answer: B [CORRECT]
Rationale: Three months of rent have expired ($12,000 ÷ 12 = $1,000/month × 3
months = $3,000). The adjusting entry recognizes the expired portion as expense:
debit Rent Expense $3,000, credit Prepaid Rent $3,000. Prepaid Rent (asset) decreases
,and Rent Expense increases. Option A reverses the entry. Option C recognizes the full
amount prematurely. Option D adjusts the remaining balance rather than the expired
portion.
Q5. A company has unearned revenue of $5,000 at the beginning of the period.
During the period, $2,000 of services were performed. The adjusting entry is:
A. Debit Cash $2,000; Credit Service Revenue $2,000
B. Debit Unearned Revenue $2,000; Credit Service Revenue $2,000
C. Debit Service Revenue $2,000; Credit Unearned Revenue $2,000
D. Debit Unearned Revenue $5,000; Credit Service Revenue $5,000
Correct Answer: B [CORRECT]
Rationale: As services are performed, the liability (Unearned Revenue) decreases
(debit) and revenue is recognized (credit). Only the $2,000 earned portion is
recognized, not the full $5,000. Option A incorrectly assumes cash was received (it
was received previously). Option C reverses the entry. Option D recognizes the full
unearned balance rather than only the earned portion.
Q6. A company purchased equipment for $30,000 with a 5-year useful life and $5,000
salvage value. Annual straight-line depreciation is:
A. $6,000
B. $5,000
C. $7,000
D. $5,500
Correct Answer: B [CORRECT]
Rationale: Straight-line depreciation = (Cost – Salvage Value) ÷ Useful Life = ($30,000
– $5,000) ÷ 5 = $25,000 ÷ 5 = $5,000 per year. Option A incorrectly excludes salvage
value ($30,000 ÷ 5). Option C incorrectly adds salvage value. Option D uses incorrect
calculation.
, Q7. The adjusting entry for depreciation on the equipment in Q6 is:
A. Debit Accumulated Depreciation $5,000; Credit Depreciation Expense $5,000
B. Debit Depreciation Expense $5,000; Credit Equipment $5,000
C. Debit Depreciation Expense $5,000; Credit Accumulated Depreciation $5,000
D. Debit Equipment $5,000; Credit Depreciation Expense $5,000
Correct Answer: C [CORRECT]
Rationale: Depreciation is recorded by debiting Depreciation Expense (increasing
expense) and crediting Accumulated Depreciation (a contra-asset account that
reduces the book value of the asset). The Equipment account itself is not directly
credited (B and D are incorrect). Option A reverses the debit and credit.
Q8. Which of the following accounts would NOT appear on the post-closing trial
balance?
A. Cash
B. Accounts Receivable
C. Service Revenue
D. Retained Earnings
Correct Answer: C [CORRECT]
Rationale: The post-closing trial balance contains only permanent (real) accounts:
assets, liabilities, and equity. Service Revenue is a temporary (nominal) account that is
closed to Income Summary and then to Retained Earnings at period end. Cash (A),
Accounts Receivable (B), and Retained Earnings (D) are all permanent accounts that
carry forward to the next period.
Q9. The closing entry for Service Revenue of $120,000 (credit balance) is:
