WGU C214 Financial Management Exam
Questions and Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A | Instant
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Question 1
The primary goal of financial management in a corporation is to:
A. Maximize accounting profits
B. Minimize operating expenses
C. Maximize shareholder wealth
D. Increase employee compensation
Rationale: The primary objective of financial management is to
maximize shareholder wealth by increasing the value of the firm.
While profits, cost control, and employee benefits are important, they
are secondary considerations compared with creating long-term value
for shareholders.
Question 2
,Which financial statement reports a company’s revenues and expenses
over a specific period?
A. Balance sheet
B. Statement of cash flows
C. Income statement
D. Statement of retained earnings
Rationale: The income statement summarizes revenues, expenses,
gains, and losses over a specific accounting period to determine net
income or loss. The balance sheet reports financial position at a point
in time, while the statement of cash flows reports cash inflows and
outflows.
Question 3
The balance sheet equation is:
A. Assets = Revenue − Expenses
B. Assets = Liabilities − Equity
C. Assets = Liabilities + Stockholders’ Equity
D. Assets = Cash + Inventory
,Rationale: The accounting equation states that total assets must equal
total liabilities plus shareholders’ equity. This relationship reflects how
assets are financed through either debt or ownership investment.
Question 4
Which of the following represents a current asset?
A. Long-term debt
B. Buildings
C. Common stock
D. Accounts receivable
Rationale: Current assets are resources expected to be converted into
cash within one year. Accounts receivable represent amounts owed by
customers and are classified as current assets.
Question 5
The time value of money concept states that:
A. Money loses value only during inflation
B. Future cash flows are always worth more than current cash flows
, C. A dollar today is worth more than a dollar received in the future
D. Interest rates do not affect investment decisions
Rationale: Money available today can be invested to earn returns,
making it more valuable than the same amount received later. This
concept is fundamental to capital budgeting and investment analysis.
Question 6
Which formula calculates the future value of a single amount?
A. FV = PV − Interest
B. FV = PV × (1 − r)^n
C. FV = PV × (1 + r)^n
D. FV = PV ÷ (1 + r)^n
Rationale: Future value is calculated by multiplying the present value
by one plus the interest rate raised to the number of compounding
periods. This determines how much an investment will grow over
time.
Question 7
The discount rate used in capital budgeting represents:
Questions and Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A | Instant
Download Pdf
Question 1
The primary goal of financial management in a corporation is to:
A. Maximize accounting profits
B. Minimize operating expenses
C. Maximize shareholder wealth
D. Increase employee compensation
Rationale: The primary objective of financial management is to
maximize shareholder wealth by increasing the value of the firm.
While profits, cost control, and employee benefits are important, they
are secondary considerations compared with creating long-term value
for shareholders.
Question 2
,Which financial statement reports a company’s revenues and expenses
over a specific period?
A. Balance sheet
B. Statement of cash flows
C. Income statement
D. Statement of retained earnings
Rationale: The income statement summarizes revenues, expenses,
gains, and losses over a specific accounting period to determine net
income or loss. The balance sheet reports financial position at a point
in time, while the statement of cash flows reports cash inflows and
outflows.
Question 3
The balance sheet equation is:
A. Assets = Revenue − Expenses
B. Assets = Liabilities − Equity
C. Assets = Liabilities + Stockholders’ Equity
D. Assets = Cash + Inventory
,Rationale: The accounting equation states that total assets must equal
total liabilities plus shareholders’ equity. This relationship reflects how
assets are financed through either debt or ownership investment.
Question 4
Which of the following represents a current asset?
A. Long-term debt
B. Buildings
C. Common stock
D. Accounts receivable
Rationale: Current assets are resources expected to be converted into
cash within one year. Accounts receivable represent amounts owed by
customers and are classified as current assets.
Question 5
The time value of money concept states that:
A. Money loses value only during inflation
B. Future cash flows are always worth more than current cash flows
, C. A dollar today is worth more than a dollar received in the future
D. Interest rates do not affect investment decisions
Rationale: Money available today can be invested to earn returns,
making it more valuable than the same amount received later. This
concept is fundamental to capital budgeting and investment analysis.
Question 6
Which formula calculates the future value of a single amount?
A. FV = PV − Interest
B. FV = PV × (1 − r)^n
C. FV = PV × (1 + r)^n
D. FV = PV ÷ (1 + r)^n
Rationale: Future value is calculated by multiplying the present value
by one plus the interest rate raised to the number of compounding
periods. This determines how much an investment will grow over
time.
Question 7
The discount rate used in capital budgeting represents:
