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WGU C214 FINANCIAL MANAGEMENT EXAM (TRUE/FALSE)
- ACTUAL EXAM 2026/2027 | EXPERT VERIFIED | 50
VERIFIED Q&A | COMPLETE RATIONALES | PASS
GUARANTEED - A+ GRADED
TRUE/FALSE QUESTION 1
Statement: The primary goal of financial management is to maximize shareholder wealth.
A. False
B. True
Rationale: The primary goal of financial management is to maximize shareholder wealth, which is measured
by the market value of the firm's common stock. This goal focuses on long-term value creation rather than
short-term profits.
TRUE/FALSE QUESTION 2
Statement: A sole proprietorship has limited liability.
A. False
B. True
Rationale: A sole proprietorship has unlimited liability, meaning the owner is personally responsible for all
business debts. A corporation has limited liability, meaning shareholders are only liable for the amount they
invested.
TRUE/FALSE QUESTION 3
Statement: The Sarbanes-Oxley Act (SOX) was designed to improve corporate governance and financial
reporting accuracy.
A. False
B. True
Rationale: The Sarbanes-Oxley Act (SOX) was enacted to improve corporate governance and financial
reporting accuracy. It requires CEOs and CFOs to certify financial statements and enhances penalties for
fraud.
TRUE/FALSE QUESTION 4
Statement: The balance sheet shows a company's financial position over a period of time.
, 2
A. False
B. True
Rationale: The balance sheet is a snapshot of a company's financial position at a specific point in time. The
income statement shows financial performance over a period of time.
TRUE/FALSE QUESTION 5
Statement: The income statement reports a company's revenues and expenses over a period of time.
A. False
B. True
Rationale: The income statement reports a company's revenues and expenses over a period of time (e.g., a
quarter or year). It shows net income (or loss) for the period.
TRUE/FALSE QUESTION 6
Statement: The statement of cash flows reports a company's cash inflows and outflows.
A. False
B. True
Rationale: The statement of cash flows reports a company's cash inflows and outflows over a period. It is
divided into three sections: operating activities, investing activities, and financing activities (CFO, CFI, CFF).
TRUE/FALSE QUESTION 7
Statement: EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.
A. False
B. True
Rationale: EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA is used as a
proxy for operating cash flow and is often used in valuation.
TRUE/FALSE QUESTION 8
Statement: The current ratio is total liabilities divided by total assets.
A. False
B. True
Rationale: The current ratio is current assets divided by current liabilities. The debt ratio is total liabilities
divided by total assets.
WGU C214 FINANCIAL MANAGEMENT EXAM (TRUE/FALSE)
- ACTUAL EXAM 2026/2027 | EXPERT VERIFIED | 50
VERIFIED Q&A | COMPLETE RATIONALES | PASS
GUARANTEED - A+ GRADED
TRUE/FALSE QUESTION 1
Statement: The primary goal of financial management is to maximize shareholder wealth.
A. False
B. True
Rationale: The primary goal of financial management is to maximize shareholder wealth, which is measured
by the market value of the firm's common stock. This goal focuses on long-term value creation rather than
short-term profits.
TRUE/FALSE QUESTION 2
Statement: A sole proprietorship has limited liability.
A. False
B. True
Rationale: A sole proprietorship has unlimited liability, meaning the owner is personally responsible for all
business debts. A corporation has limited liability, meaning shareholders are only liable for the amount they
invested.
TRUE/FALSE QUESTION 3
Statement: The Sarbanes-Oxley Act (SOX) was designed to improve corporate governance and financial
reporting accuracy.
A. False
B. True
Rationale: The Sarbanes-Oxley Act (SOX) was enacted to improve corporate governance and financial
reporting accuracy. It requires CEOs and CFOs to certify financial statements and enhances penalties for
fraud.
TRUE/FALSE QUESTION 4
Statement: The balance sheet shows a company's financial position over a period of time.
, 2
A. False
B. True
Rationale: The balance sheet is a snapshot of a company's financial position at a specific point in time. The
income statement shows financial performance over a period of time.
TRUE/FALSE QUESTION 5
Statement: The income statement reports a company's revenues and expenses over a period of time.
A. False
B. True
Rationale: The income statement reports a company's revenues and expenses over a period of time (e.g., a
quarter or year). It shows net income (or loss) for the period.
TRUE/FALSE QUESTION 6
Statement: The statement of cash flows reports a company's cash inflows and outflows.
A. False
B. True
Rationale: The statement of cash flows reports a company's cash inflows and outflows over a period. It is
divided into three sections: operating activities, investing activities, and financing activities (CFO, CFI, CFF).
TRUE/FALSE QUESTION 7
Statement: EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.
A. False
B. True
Rationale: EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA is used as a
proxy for operating cash flow and is often used in valuation.
TRUE/FALSE QUESTION 8
Statement: The current ratio is total liabilities divided by total assets.
A. False
B. True
Rationale: The current ratio is current assets divided by current liabilities. The debt ratio is total liabilities
divided by total assets.
