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WGU D104 Intermediate Accounting II Units 4-
Exam | Questions with 100% Correct Answers |
Verified | Latest Update 2026
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Asset Turnover Ratio net sales/average total assets
Profit Margin Ratio net income/total sales
Rate of return on assets net income/average total assets
Current ratio current assets/current liabilities
acid-test ratio (cash + short-term investments + net receivables) / current liabilities
rate of return on common stock equity
(net income - preferred dividends) / average common stockholders' equity
payout ratio cash dividends / (net income - preferred dividends)
book value per share common stockholders' equity / outstanding shares
WGU D104 Intermediate Accounting II Units 4-6 Exam |
Questions with 100% Correct Answers | Verified | Latest
Update 2026/
sum-of-the-years'-digits method Accelerated depreciation with higher depreciation cost in beginning and lower charges in the end. Numerator is the # of years of est. life remaining at the 1st of the year, denominator is sum of the years individually. (e.g. 5/15, 4/15, 3/15, 2/15, 1/15)
Variable charge depreciation method (activity method or units-of- activity/ production approach)
((cost - salvage value) X current units) / total estimated units
activity method (actual activity in period / total estimate activity) X (cost - salvage value)
double declining balance method An accelerated depreciation method that computes annual depreciation by multiplying the depreciable asset's decreasing book value by a constant percent that is two times the straight-line depreciation rate.
Multiple assets group depreciation method
Assets similar in nature and have approx. same useful lives. Total of the annual depreciation expense for all assets in the group / total cost of the assets.
Multiple assets composite depreciation method
Assets are dissimilar and have different lives. Total annual depreciation expense of all assets / total cost of all assets.
Composite life (Original cost - salvage value) / total annual depreciation
Composite depreciation rate Total annual depreciation of all assets / total cost of all assets.
Types of current liabilities Accounts payable, notes payable, dividends payable, customer advances/deposits, unearned (deferred) revenues, sales tax payable, current maturities of long-term debt
Journal entry to record issuance of a note
Debit cash, credit notes payable
Journal entry to record payment of the note at maturity
Debit notes payable, debit interest expense, credit cash
Journal entry to record issuance of a zero interest bearing note
Debit cash, debit discount on notes payable, credit notes payable
Journal entry to record payment of a zero interest bearing note at maturity
Debit notes payable, credit cash
Journal entry to record sale of gift certificate booklet
Debit cash, credit unearned gift card revenue
Journal entry to record redemption of gift cards
debit unearned gift card revenue, credit sales revenue
Journal entry to record a sale with sales tax and a loss on sales tax
Debit cash, debit loss on sales tax collection, credit sales revenue, credit sales tax payable
Journal entry to record payment to the sales tax agency
Debit sales tax payable, credit cash
Journal entry to record a sale when sales tax is not segregated
Debit cash, credit sales revenue
Journal entry to record payment to sales tax agency when sales tax is not segregated with a loss on sales tax
Debit sales revenue, debit loss on sales tax collection, credit cash
Journal entry to record sale with segregated sales tax and a gain on sales tax
Debit cash, credit gain on sales tax collection, credit sales revenue, credit sales tax payable
Journal entry to record payment to sale tax agency with sales tax segregated
Debit sales tax payable, credit cash
Journal entry to record payment to sales tax agency if sales tax is not segregated and there is a gain on sales tax
Debit sales revenue, credit gain on sales tax collection, credit cash
Journal entry to record accrued interest expense
Debit interest expense, credit interest payable
Journal entry to record a long term loan with payment due during the current fiscal year
Debit cash, credit current maturities of long term debt, credit note payable
Long term debt due on demand Considered a current liability or will be due on demand within a year.
Long term debt that matures within one year and is to be converted into stock should be reported as?
Noncurrent and accompanied with a note explaining the method to be used in its liquidation.
Journal entry to record the revenue recognized on the service type warranty
Debit unearned warranty revenue, credit warranty revenue
Service type warranty Sold separately from the product. It's recorded as a separate performance obligation in an unearned warranty revenue account. It's recognized on a straight line basis over the warranty period.
Journal entry to record bond issuance at par/face/ maturity value
Debit cash, credit bonds payable.
Journal entry to record issuance of bond at discount
Debit cash, debit discount, credit bonds payable
Journal entry to record issuance of bond at premium
Debit cash, credit premium, credit bonds payable
Journal entry to record bond interest payment mid-year
Debit interest expense, credit cash
Journal entry to record bond interest payment end of the year
Debit interest expense, credit interest payable
Journal entry to record bond interest payment end of the year with a discount
Debit Interest expense, credit discount on bonds payable, credit interest payable
How is a discount on a bond amortized?
Calculate discount rate by multiplying the percent discount by face value of bond. Divide by term and calculate the current portion during bond interest payment.
Journal entry to record bond interest payment mid year with a discount
Debit interest expense, credit discount on bonds payable, credit cash.
Journal entry to record interest expense on a bond at premium mid year
Debit interest expense, debit premium on bonds payable, credit cash.
Journal entry to record interest expense on a bond at a premium at the end of the year
Debit interest expense, debit premium on bonds payable, credit interest payable
Journal entry to record the issuance of a bond with a discount dated 1/1/20 on 3/1/
Debit cash, debit discount on bonds payable, credit bonds payable, credit accrued interest payable.
When interest payment dates of a bond are May 1 and Nov. 1, and a bond issue is sold on June 1, the amount of cash received by the issuer will be
Increased by accrued interest from May 1 to June 1.
Bond issuance costs should Be accumulated in a deferred charge account and amortized over the life of the bonds.
Is there a gain on a bond held to maturity?
There is no gain or loss on bonds held to maturity because the maturity value is exactly equal to the carrying amount of the bond.
Journal entry to record a reacquisition price on a bond when it is less than the current net carrying value and purchased at a premium
Debit bonds payable, debit unamortized premium on bonds payable, credit cash, gain on early extinguishment of bonds.
Premium on bonds payable is what kind of liability
Long term liability
Times interest earned ratio (Net Income + Interest Expense + Income Tax Expense) / Interest Expense
Times interest earned ratio measures what
The ability of a company to pay its debt obligations. It indicates the margin of safety provided to creditors.
Debt to assets ratio total liabilities / total assets
Debt equity ratio total liabilities/total equity
The preemptive right enables a stockholder to
receive the same amount of dividends on a percentage basis as the preferred stockholders.
Stockholders' equity is comprised of Capital stock (common and preferred), additional paid in capital, retained earnings, treasury stock as a contra account.
Stockholders' equity is generally classified into two major categories
earned capital and contributed capital.
Stock may be issued in exchange for cash, property or services. How is it recorded?
Property or service is recorded at the fair or market value of the stock. If the fair or market value is not available, the fair or market value of the property or services received is used.
Journal entry to record the exchange of stock for land if the fair value of the land is unknown
Debit land, credit common stock, credit additional paid-in capital (fair value of stock vs par value).
Journal entry to record the exchange of stock for land if the fair value of the stock is unknown.
Debit land, credit common stock, credit additional paid-in capital (fair value of land vs par value of stock).
Journal entry to record the exchange of stock for land if the fair value of stock and land are unknown, but an appraiser values the land.
Debit land, credit common stock, credit additional paid in capital.
Direct costs incurred to sell stock such as underwriting costs, accounting, and legal fees, and printing cost should be shown as
a debit to additional paid in capital.
Purchase of treasury stock Debit treasury stock (cost), credit cash.
Sale of treasury stock above cost Debit cash, credit treasury stock (cost), credit paid in capital from treasury stock.
Sale of treasury stock below cost Debit cash, debit paid in capital from treasury stock (remove any previous credit balance in this account), debit retained earnings (plug figure to balance debit and credit columns), credit treasury stock (cost).
Journal entry for dividends at the declaration
Debit retained earnings, credit dividends payable.
Journal entry for payment of dividends
Debit dividends payable, credit cash.
