D216 WGU(Accounting fundamentals) Exam – Questions and Answers

1. A company wants to analyze how its revenue and expenses have changed over the past three years.

Single-step income statement

Contribution margin income statement

Common-size income statement

✔ Comparative income statement

2. Why is cost of goods sold reported separately from operating expenses?

It combines revenue and expenses for a quick overview.

It ensures all expenses are categorized together.

It reduces total net income.

✔ It helps determine gross profit before deducting other expenses.

3. Which limitation of the income statement does inflation illustrate?

✔ It does not adjust for external economic factors.

It fails to show changes in cash flow.

It provides too much long-term data.

It excludes non-operating income.

4. Which method should be used to analyze a common-size income statement?

Review dollar values without adjusting for scale.

Eliminate fixed costs.

Focus only on total revenue growth.

✔ Compare percentage changes in expenses over time.

5. Which balance sheet element is a resource used to generate revenue?

✔ Asset

Owner’s equity

Liabilities

Expenses

6. Quality Apple Farms has assets of $1,000,000 and liabilities of $300,000. What is owner’s equity?

$1,300,000

$1,000,000

✔ $700,000

-$700,000

7. Paradigm Toys has $800,000 in assets and $460,000 in equity. What are liabilities?

✔ $340,000

$460,000

$800,000

$1,260,000

8. Accounts receivable should be reported as:

Short-term liabilities

Long-term liabilities

✔ Short-term assets

Long-term assets

9. Notes payable due in four years should be classified as:

✔ Non-current liability

Current asset

Non-current asset

Current liability

10. A 3-year bank loan should be reported as:

Current liability

✔ Long-term liability

Expense

Equity

11. Borrowing from a bank appears in which cash flow section?

✔ Financing activities

Issuance of stock

Investing activities

Operating activities

12. Which accounting basis records revenue when earned, not when cash is received?

✔ Accrual basis

Fair value basis

Cost basis

Cash basis

13. Which product uses a process cost system?

Custom furniture

✔ Craft soft drinks

Handmade jewelry

Tailored clothing

14. Which is a direct material in furniture manufacturing?

Gold

✔ Leather

Glue

Nails

15. Which costs are included in conversion costs?

✔ Direct labor and manufacturing overhead

Direct materials and manufacturing overhead

Raw materials and indirect materials

Indirect labor and direct materials

Students trust exam experts because they provide a safe, reliable, and effective way to achieve academic success. With guaranteed results and 24/7 support, services like ProctoredExamsExperts.com offer peace of mind and consistent high score