WGU C214 Financial Mgt Practice Questions Answer Key
2024/25
, WGU C214 Financial Mgt Practice Questions Answer Key 2024/25
1. Trading on the NYSE is executed without a specialist (i.e. a market maker).
(T/F): False
2. Stocks and bonds are two types of financial instruments (T/F): True
3. The matching principle in accrual accounting requires that:: Revenues be
recognized when the earnings process is complete and matches expenses to
revenues recognized.
4. A basic equation for the balance sheet is:: Equity = Assets - Liabilities
5. Why is the Balance Sheet known as a permanent statement?: Because the
other statements are reset at the end of the fiscal year
6. How do you calculate the change in Retained Earnings?: Net Income - Divi-
dends
7. Which of the following is generally true?: Operating Income and EBIT are the
same
8. Which components are part of total assets?: Cash Accounts Receivable,
Inventory, Long Term Assets
9. Which components are part of current assets?: Inventory, Cash, Accounts
Receivable, Short Term Investments
10. Which components are part of Total Liabilities?: Bonds, Accounts Payable,
Mortgage
11. When Fixed Assets increase what happens to Cash?: Cash decreases
12. Which is the purpose of the statement of cash flows?: explains the change
in cash balance for one period of time
13. The OIROI (Operating Income Return on Investment) uses what elements
on the income statement?: EBIT, Total Assets
14. Why would a company be interested in the TAT-Total Asset Turnover-ratio?
a: How efficient assets are at producing sales
15. Which of the following gives the largest effective rate (APY): 18.6% com-
pounded daily
16. What does the beta coefficient represent?: It is a statistically-derived mea-
sure of volatility
17. Why is depreciation expense taken out of the net income calculation, yet
added back at the end?: Because depreciation expense is tax deductible
18. Why is the NPV preferred over the IRR? Pick Two: 1-It measures the dollar
value 2- It is harder to calculate
19. What does the Degree of Financial Leverage indicate?: The reliance on debt
20. If a company has a high degree of financial leverage, what does that tell
us about the firm's risk profile?: Higher profits to shareholders
21. What is the cash cycle?: The amount of time to regenerate cash
22. Why is float important to understand?: To time cash expenditures
2024/25
, WGU C214 Financial Mgt Practice Questions Answer Key 2024/25
1. Trading on the NYSE is executed without a specialist (i.e. a market maker).
(T/F): False
2. Stocks and bonds are two types of financial instruments (T/F): True
3. The matching principle in accrual accounting requires that:: Revenues be
recognized when the earnings process is complete and matches expenses to
revenues recognized.
4. A basic equation for the balance sheet is:: Equity = Assets - Liabilities
5. Why is the Balance Sheet known as a permanent statement?: Because the
other statements are reset at the end of the fiscal year
6. How do you calculate the change in Retained Earnings?: Net Income - Divi-
dends
7. Which of the following is generally true?: Operating Income and EBIT are the
same
8. Which components are part of total assets?: Cash Accounts Receivable,
Inventory, Long Term Assets
9. Which components are part of current assets?: Inventory, Cash, Accounts
Receivable, Short Term Investments
10. Which components are part of Total Liabilities?: Bonds, Accounts Payable,
Mortgage
11. When Fixed Assets increase what happens to Cash?: Cash decreases
12. Which is the purpose of the statement of cash flows?: explains the change
in cash balance for one period of time
13. The OIROI (Operating Income Return on Investment) uses what elements
on the income statement?: EBIT, Total Assets
14. Why would a company be interested in the TAT-Total Asset Turnover-ratio?
a: How efficient assets are at producing sales
15. Which of the following gives the largest effective rate (APY): 18.6% com-
pounded daily
16. What does the beta coefficient represent?: It is a statistically-derived mea-
sure of volatility
17. Why is depreciation expense taken out of the net income calculation, yet
added back at the end?: Because depreciation expense is tax deductible
18. Why is the NPV preferred over the IRR? Pick Two: 1-It measures the dollar
value 2- It is harder to calculate
19. What does the Degree of Financial Leverage indicate?: The reliance on debt
20. If a company has a high degree of financial leverage, what does that tell
us about the firm's risk profile?: Higher profits to shareholders
21. What is the cash cycle?: The amount of time to regenerate cash
22. Why is float important to understand?: To time cash expenditures
