WGU D196 Exam Prep – 172 Real Questions & Verified
Answers | Financial & Managerial Accounting | Latest
2026 Update
1. Which ONE of the following organizations sets the accounting rules (GAAP)
for the United States?
AICPA
IASB
FASB
IRS
2. A manager is evaluated based on both controllable and noncontrollable
costs. What potential issue could arise from this evaluation method?
The evaluation will provide a comprehensive view of the manager's
performance.
The manager will be incentivized to reduce all costs, including those
they cannot influence.
The manager may be unfairly penalized for costs they cannot
control.
The evaluation will focus solely on the manager's ability to manage
controllable costs.
3. What effect do expenses have on owners' equity in the accounting equation?
Expenses have no effect on owners' equity.
Expenses increase liabilities.
Expenses increase owners' equity.
Expenses decrease owners' equity.
,4. How is cost of goods sold classified in the financial statements?
As an expense
As an asset
As a liability
As a revenue
5. If a company has a significant amount of work-in-process inventory at the
end of the accounting period, how might this affect its financial statements?
It may reduce the company's equity.
It will have no effect on the financial statements.
It may increase the total assets reported on the balance sheet.
It will decrease the cost of goods sold reported on the income
statement.
6. Describe the key components that a manufacturing business focuses on in its
accounting practices.
Customer service and marketing strategies.
Sales revenue and expenses.
Direct materials, direct labor, and overhead.
Inventory management and cash flow.
7. If a company decides to lower its ethical standards in accounting, what
potential consequence might it face regarding its financial reporting?
The company will be able to report fewer financial statements.
The company will save costs on accounting staff.
, The company's accounting information may lose credibility and
value.
The company will have more favorable financial results.
8. Describe how financial statement data can influence employee
compensation.
Financial statement data provide insights into product costs, which do
not relate to employee bonuses.
Financial statement data can influence employee compensation by
being used to determine bonuses based on company performance.
Financial statement data are primarily used for external reporting and
do not affect employee compensation.
Financial statement data are only relevant for managerial decisions
and not for employee compensation.
9. Which of the following is the correct basic accounting equation?
Assets = Stockholders' Equity - Liabilities
Revenue - Expenses - Dividends
Assets = Liabilities + Stockholders' Equity
Liabilities = Assets + Stockholders' Equity
10. In a job-order costing system, when units are sold
Product costs are reported on the income statement as cost of
goods sold.
Product costs are reported on the balance sheet.
Product costs become selling costs
, Indirect product costs are reported on the balance sheet but direct
product costs are reported on the income statement as a period
cost.
11. What is the acronym for the board responsible for establishing financial
accounting standards in the U.S.?
IASB
AICPA
FASB
IRS
12. What is the formula used to calculate gross profit?
Total revenues minus total expenses
Accounts receivable minus accounts payable
Sales minus cost of goods sold
Total assets minus total liabilities
13. What type of costs should be excluded from the performance evaluation
measure of a profit center manager?
Variable costs
Direct costs
Uncontrollable costs
Fixed costs
14. A major difference between process costing and job-order costing is:
job-order costing is focused on each specific job while process
costing focuses on departmental activity.
Answers | Financial & Managerial Accounting | Latest
2026 Update
1. Which ONE of the following organizations sets the accounting rules (GAAP)
for the United States?
AICPA
IASB
FASB
IRS
2. A manager is evaluated based on both controllable and noncontrollable
costs. What potential issue could arise from this evaluation method?
The evaluation will provide a comprehensive view of the manager's
performance.
The manager will be incentivized to reduce all costs, including those
they cannot influence.
The manager may be unfairly penalized for costs they cannot
control.
The evaluation will focus solely on the manager's ability to manage
controllable costs.
3. What effect do expenses have on owners' equity in the accounting equation?
Expenses have no effect on owners' equity.
Expenses increase liabilities.
Expenses increase owners' equity.
Expenses decrease owners' equity.
,4. How is cost of goods sold classified in the financial statements?
As an expense
As an asset
As a liability
As a revenue
5. If a company has a significant amount of work-in-process inventory at the
end of the accounting period, how might this affect its financial statements?
It may reduce the company's equity.
It will have no effect on the financial statements.
It may increase the total assets reported on the balance sheet.
It will decrease the cost of goods sold reported on the income
statement.
6. Describe the key components that a manufacturing business focuses on in its
accounting practices.
Customer service and marketing strategies.
Sales revenue and expenses.
Direct materials, direct labor, and overhead.
Inventory management and cash flow.
7. If a company decides to lower its ethical standards in accounting, what
potential consequence might it face regarding its financial reporting?
The company will be able to report fewer financial statements.
The company will save costs on accounting staff.
, The company's accounting information may lose credibility and
value.
The company will have more favorable financial results.
8. Describe how financial statement data can influence employee
compensation.
Financial statement data provide insights into product costs, which do
not relate to employee bonuses.
Financial statement data can influence employee compensation by
being used to determine bonuses based on company performance.
Financial statement data are primarily used for external reporting and
do not affect employee compensation.
Financial statement data are only relevant for managerial decisions
and not for employee compensation.
9. Which of the following is the correct basic accounting equation?
Assets = Stockholders' Equity - Liabilities
Revenue - Expenses - Dividends
Assets = Liabilities + Stockholders' Equity
Liabilities = Assets + Stockholders' Equity
10. In a job-order costing system, when units are sold
Product costs are reported on the income statement as cost of
goods sold.
Product costs are reported on the balance sheet.
Product costs become selling costs
, Indirect product costs are reported on the balance sheet but direct
product costs are reported on the income statement as a period
cost.
11. What is the acronym for the board responsible for establishing financial
accounting standards in the U.S.?
IASB
AICPA
FASB
IRS
12. What is the formula used to calculate gross profit?
Total revenues minus total expenses
Accounts receivable minus accounts payable
Sales minus cost of goods sold
Total assets minus total liabilities
13. What type of costs should be excluded from the performance evaluation
measure of a profit center manager?
Variable costs
Direct costs
Uncontrollable costs
Fixed costs
14. A major difference between process costing and job-order costing is:
job-order costing is focused on each specific job while process
costing focuses on departmental activity.
