WGU D076 Finance Skills for Managers 100 Original OA Practice
Questions with Answers and Rationales 2026/2027
1. What is the usual financial objective of a publicly traded corporation?
A. Maximize sales alone
B. Maximize long term shareholder wealth
C. Eliminate all debt
D. Maximize employee count
Answer: B. Maximize long term shareholder wealth
Rationale: Value creation considers expected cash flows, timing, and risk.
2. When does an agency conflict occur?
A. Managers act against owners' interests for personal benefit
B. A loan is repaid
C. Customers pay invoices
D. Dividends are declared
Answer: A. Managers act against owners' interests for personal benefit
Rationale: Managers and owners may have different incentives.
3. Which mechanism can help align managers with shareholders?
A. Unrestricted personal spending
B. Well-designed performance based compensation
C. No oversight
D. Concealed financial reports
Answer: B. Well-designed performance based compensation
Rationale: Appropriate incentives can connect rewards with long term value
creation.
4. What does a primary market transaction involve?
A. Existing shares traded between investors
B. Newly issued securities sold to investors
C. Only used equipment
D. Only foreign currency
Answer: B. Newly issued securities sold to investors
Rationale: The issuer receives financing from the original sale.
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,5. What does a secondary market transaction involve?
A. A company issuing new shares
B. Investors trading existing securities
C. A new bank loan
D. Initial bond issuance
Answer: B. Investors trading existing securities
Rationale: Existing securities change hands between investors.
6. Money markets generally trade which instruments?
A. Short term debt instruments
B. Common stock only
C. Buildings
D. Thirty year mortgages only
Answer: A. Short term debt instruments
Rationale: Money market instruments generally mature in one year or less.
7. Capital markets generally provide financing through what?
A. Only overnight loans
B. Longer term debt and equity
C. Petty cash
D. Inventory transfers
Answer: B. Longer term debt and equity
Rationale: Capital markets support longer term financing needs.
8. Which security represents ownership?
A. Corporate bond
B. Treasury bill
C. Common stock
D. Bank note
Answer: C. Common stock
Rationale: Common shareholders hold an ownership interest.
9. Which investor generally has a contractual claim to interest?
A. Common shareholder
B. Bondholder
C. Customer
D. Employee shareholder only
Answer: B. Bondholder
Rationale: Debt contracts specify interest and principal obligations.
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, 10. Which business form generally provides limited liability to shareholders?
A. Sole proprietorship
B. General partnership
C. Corporation
D. Informal joint ownership
Answer: C. Corporation
Rationale: Corporate shareholders generally risk their investment rather than
personal assets.
11. Current assets are $240,000 and current liabilities are $120,000. What is
the current ratio?
A. 0.5
B. 1.0
C. 2.0
D. 4.0
Answer: C. 2.0
Rationale: The ratio equals $240,000 divided by $120,000, or 2.0.
12. Cash is $25,000, net receivables are $55,000, and current liabilities are
$100,000. With no other quick assets, what is the quick ratio?
A. 0.25
B. 0.55
C. 0.80
D. 1.25
Answer: C. 0.80
Rationale: Quick assets of $80,000 divided by $100,000 equal 0.80.
13. Current assets are $300,000 and current liabilities are $190,000. What is
net working capital?
A. $110,000
B. $190,000
C. $300,000
D. $490,000
Answer: A. $110,000
Rationale: Net working capital equals current assets minus current liabilities.
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Questions with Answers and Rationales 2026/2027
1. What is the usual financial objective of a publicly traded corporation?
A. Maximize sales alone
B. Maximize long term shareholder wealth
C. Eliminate all debt
D. Maximize employee count
Answer: B. Maximize long term shareholder wealth
Rationale: Value creation considers expected cash flows, timing, and risk.
2. When does an agency conflict occur?
A. Managers act against owners' interests for personal benefit
B. A loan is repaid
C. Customers pay invoices
D. Dividends are declared
Answer: A. Managers act against owners' interests for personal benefit
Rationale: Managers and owners may have different incentives.
3. Which mechanism can help align managers with shareholders?
A. Unrestricted personal spending
B. Well-designed performance based compensation
C. No oversight
D. Concealed financial reports
Answer: B. Well-designed performance based compensation
Rationale: Appropriate incentives can connect rewards with long term value
creation.
4. What does a primary market transaction involve?
A. Existing shares traded between investors
B. Newly issued securities sold to investors
C. Only used equipment
D. Only foreign currency
Answer: B. Newly issued securities sold to investors
Rationale: The issuer receives financing from the original sale.
Page 1
,5. What does a secondary market transaction involve?
A. A company issuing new shares
B. Investors trading existing securities
C. A new bank loan
D. Initial bond issuance
Answer: B. Investors trading existing securities
Rationale: Existing securities change hands between investors.
6. Money markets generally trade which instruments?
A. Short term debt instruments
B. Common stock only
C. Buildings
D. Thirty year mortgages only
Answer: A. Short term debt instruments
Rationale: Money market instruments generally mature in one year or less.
7. Capital markets generally provide financing through what?
A. Only overnight loans
B. Longer term debt and equity
C. Petty cash
D. Inventory transfers
Answer: B. Longer term debt and equity
Rationale: Capital markets support longer term financing needs.
8. Which security represents ownership?
A. Corporate bond
B. Treasury bill
C. Common stock
D. Bank note
Answer: C. Common stock
Rationale: Common shareholders hold an ownership interest.
9. Which investor generally has a contractual claim to interest?
A. Common shareholder
B. Bondholder
C. Customer
D. Employee shareholder only
Answer: B. Bondholder
Rationale: Debt contracts specify interest and principal obligations.
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, 10. Which business form generally provides limited liability to shareholders?
A. Sole proprietorship
B. General partnership
C. Corporation
D. Informal joint ownership
Answer: C. Corporation
Rationale: Corporate shareholders generally risk their investment rather than
personal assets.
11. Current assets are $240,000 and current liabilities are $120,000. What is
the current ratio?
A. 0.5
B. 1.0
C. 2.0
D. 4.0
Answer: C. 2.0
Rationale: The ratio equals $240,000 divided by $120,000, or 2.0.
12. Cash is $25,000, net receivables are $55,000, and current liabilities are
$100,000. With no other quick assets, what is the quick ratio?
A. 0.25
B. 0.55
C. 0.80
D. 1.25
Answer: C. 0.80
Rationale: Quick assets of $80,000 divided by $100,000 equal 0.80.
13. Current assets are $300,000 and current liabilities are $190,000. What is
net working capital?
A. $110,000
B. $190,000
C. $300,000
D. $490,000
Answer: A. $110,000
Rationale: Net working capital equals current assets minus current liabilities.
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