WGU C214 Financial Management
UPDATED | Objective Assessment (OA)
Prep | NPV, IRR, WACC, Capital Budgeting
& Financial Ratios | PASS FIRST ATTEMPT
2026/2027 Frequently Most Tested Questions and
100% Accurate From Past papers | Graded A+ ,
Reviewed and Updated | 100% Guarantee Pass | Latest
Exam and Newest Version!!!
Trading on the NYSE is executed without a specialist (i.e., a market maker).
,a. True
b. False
✔️ Correct Answer: False
Rationale:
The NYSE uses designated market makers (formerly specialists) to facilitate trading and
maintain liquidity in assigned stocks. These market makers are responsible for matching
buy and sell orders and maintaining orderly markets.
Stocks and bonds are two types of financial instruments.
a. True
b. False
✔️ Correct Answer: True
Rationale:
Stocks and bonds are both financial instruments. Stocks represent ownership in a
company, while bonds represent debt obligations. Both are traded in financial markets
and are used by companies to raise capital.
The matching principle in accrual accounting requires that:
a. Revenues be recognized when the earnings process is complete and matches
expenses to revenues recognized
b. Expenses are matched to the year in which they are incurred
c. Revenues are matched to the year in which they are booked
d. Revenues should be large enough to match expenses
✔️ Correct Answer: A
Rationale:
The matching principle is a fundamental accounting concept that requires expenses to
be recognized in the same period as the revenues they helped generate. This ensures
accurate measurement of net income for a given period.
,A basic equation for the balance sheet is:
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities
✔️ Correct Answer: A
Rationale:
The fundamental accounting equation is Assets = Liabilities + Equity. Rearranging this
gives Equity = Assets - Liabilities. This equation must always balance and represents the
relationship between what a company owns, owes, and the owners' claim.
Why is the Balance Sheet known as a permanent statement?
a. Because the statement is sent to the SEC
b. Because the other statements are reset at the end of the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders
✔️ Correct Answer: B
Rationale:
The balance sheet is called a permanent statement because unlike the income statement
and statement of cash flows (which reset to zero at the end of each period), balance
sheet accounts carry forward from one period to the next.
How do you calculate the change in Retained Earnings?
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends
✔️ Correct Answer: D
Rationale:
The change in retained earnings equals Net Income minus Dividends paid. This
, represents the portion of earnings kept in the business rather than distributed to
shareholders.
Which of the following is generally true?
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net Income
c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net Income
✔️ Correct Answer: C
Rationale:
Operating Income and EBIT (Earnings Before Interest and Taxes) are the same measure
of income from core business operations. Gross Profit is before operating expenses, and
Net Income is after all expenses including interest and taxes.
Which components are part of total assets?
a. Cash, Accounts Receivable, Short Term Debt
b. Cash, Accounts Receivable, Inventory, Long Term Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity
✔️ Correct Answer: B
Rationale:
Total assets include current assets (cash, accounts receivable, inventory) and long-term
assets (property, plant, equipment). Short-term debt, accounts payable, and long-term
debt are liabilities. Net income and equity are on the other side of the balance sheet.
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
UPDATED | Objective Assessment (OA)
Prep | NPV, IRR, WACC, Capital Budgeting
& Financial Ratios | PASS FIRST ATTEMPT
2026/2027 Frequently Most Tested Questions and
100% Accurate From Past papers | Graded A+ ,
Reviewed and Updated | 100% Guarantee Pass | Latest
Exam and Newest Version!!!
Trading on the NYSE is executed without a specialist (i.e., a market maker).
,a. True
b. False
✔️ Correct Answer: False
Rationale:
The NYSE uses designated market makers (formerly specialists) to facilitate trading and
maintain liquidity in assigned stocks. These market makers are responsible for matching
buy and sell orders and maintaining orderly markets.
Stocks and bonds are two types of financial instruments.
a. True
b. False
✔️ Correct Answer: True
Rationale:
Stocks and bonds are both financial instruments. Stocks represent ownership in a
company, while bonds represent debt obligations. Both are traded in financial markets
and are used by companies to raise capital.
The matching principle in accrual accounting requires that:
a. Revenues be recognized when the earnings process is complete and matches
expenses to revenues recognized
b. Expenses are matched to the year in which they are incurred
c. Revenues are matched to the year in which they are booked
d. Revenues should be large enough to match expenses
✔️ Correct Answer: A
Rationale:
The matching principle is a fundamental accounting concept that requires expenses to
be recognized in the same period as the revenues they helped generate. This ensures
accurate measurement of net income for a given period.
,A basic equation for the balance sheet is:
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities
✔️ Correct Answer: A
Rationale:
The fundamental accounting equation is Assets = Liabilities + Equity. Rearranging this
gives Equity = Assets - Liabilities. This equation must always balance and represents the
relationship between what a company owns, owes, and the owners' claim.
Why is the Balance Sheet known as a permanent statement?
a. Because the statement is sent to the SEC
b. Because the other statements are reset at the end of the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders
✔️ Correct Answer: B
Rationale:
The balance sheet is called a permanent statement because unlike the income statement
and statement of cash flows (which reset to zero at the end of each period), balance
sheet accounts carry forward from one period to the next.
How do you calculate the change in Retained Earnings?
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends
✔️ Correct Answer: D
Rationale:
The change in retained earnings equals Net Income minus Dividends paid. This
, represents the portion of earnings kept in the business rather than distributed to
shareholders.
Which of the following is generally true?
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net Income
c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net Income
✔️ Correct Answer: C
Rationale:
Operating Income and EBIT (Earnings Before Interest and Taxes) are the same measure
of income from core business operations. Gross Profit is before operating expenses, and
Net Income is after all expenses including interest and taxes.
Which components are part of total assets?
a. Cash, Accounts Receivable, Short Term Debt
b. Cash, Accounts Receivable, Inventory, Long Term Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity
✔️ Correct Answer: B
Rationale:
Total assets include current assets (cash, accounts receivable, inventory) and long-term
assets (property, plant, equipment). Short-term debt, accounts payable, and long-term
debt are liabilities. Net income and equity are on the other side of the balance sheet.
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
