WGU C214 FINANCIAL MANAGEMENT
PRACTICE QUESTIONS AND DETAILED
SOLUTIONS
◉ Which of the following individuals have unlimited liability for a
firm's debts based on their ownership interest?
Answer: Both general partners and sole proprietors
◉ Corporate dividends are:
Answer: taxable income of the recipient even though that income
was previously taxed.
◉ Financial managers should primarily focus on the interests of:
Answer: shareholders.
◉ Which one of the following best states the primary goal of
financial management?
Answer: Maximize the current value per share
◉ Which one of the following best illustrates that the management
of a firm is adhering to the goal of financial management?
Answer: An increase in the market value per share
,◉ Decisions made by financial managers should primarily focus on
increasing the:
Answer: market value per share of outstanding stock.
◉ Quiz Ch. 2
Which one of the following is a current asset?
Answer: A/R
◉ Which one of the following is included in a firm's market value but
yet is excluded from the firm's accounting value?
Answer: Good reputation of the company
◉ Which one of the following is a current liability?
Answer: Account payable to a supplier that is due next week
◉ Which one of the following will decrease the value of a firm's net
working capital?
Answer: Selling inventory at a loss
◉ Which one of the following statements concerning net working
capital is correct?
Answer: Net working capital may be a negative value.
, ◉ Which one of the following statements related to liquidity is
correct?
Answer: Liquid assets are valuable to a firm.
◉ As the degree of financial leverage increases, the:
Answer: probability a firm will encounter financial distress
increases.
◉ The book value of a firm is:
Answer: based on historical cost.
◉ Which one of the following is the financial statement that shows
the accounting value of a firm's equity as of a particular date?
Answer: Balance sheet
◉ Which one of these sets forth the common set of standards and
procedures by which audited financial statements are prepared?
Answer: Generally Accepted Accounting Principles
◉ Which one of the following is the financial statement that
summarizes a firm's revenue and expenses over a period of time?
Answer: Income statement
PRACTICE QUESTIONS AND DETAILED
SOLUTIONS
◉ Which of the following individuals have unlimited liability for a
firm's debts based on their ownership interest?
Answer: Both general partners and sole proprietors
◉ Corporate dividends are:
Answer: taxable income of the recipient even though that income
was previously taxed.
◉ Financial managers should primarily focus on the interests of:
Answer: shareholders.
◉ Which one of the following best states the primary goal of
financial management?
Answer: Maximize the current value per share
◉ Which one of the following best illustrates that the management
of a firm is adhering to the goal of financial management?
Answer: An increase in the market value per share
,◉ Decisions made by financial managers should primarily focus on
increasing the:
Answer: market value per share of outstanding stock.
◉ Quiz Ch. 2
Which one of the following is a current asset?
Answer: A/R
◉ Which one of the following is included in a firm's market value but
yet is excluded from the firm's accounting value?
Answer: Good reputation of the company
◉ Which one of the following is a current liability?
Answer: Account payable to a supplier that is due next week
◉ Which one of the following will decrease the value of a firm's net
working capital?
Answer: Selling inventory at a loss
◉ Which one of the following statements concerning net working
capital is correct?
Answer: Net working capital may be a negative value.
, ◉ Which one of the following statements related to liquidity is
correct?
Answer: Liquid assets are valuable to a firm.
◉ As the degree of financial leverage increases, the:
Answer: probability a firm will encounter financial distress
increases.
◉ The book value of a firm is:
Answer: based on historical cost.
◉ Which one of the following is the financial statement that shows
the accounting value of a firm's equity as of a particular date?
Answer: Balance sheet
◉ Which one of these sets forth the common set of standards and
procedures by which audited financial statements are prepared?
Answer: Generally Accepted Accounting Principles
◉ Which one of the following is the financial statement that
summarizes a firm's revenue and expenses over a period of time?
Answer: Income statement
