WGU C214 Study Guide Multi Choice
Version Questions And Answers With
Verified Solutions Already Passed Latest
Updated 2025
Trading on the NYSE is executed without a specialist (i.e. a market maker).
(T/F)
ANSWER✔✔ F
Stocks and bonds are two types of financial instruments (T/F)
ANSWER✔✔ True
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
ANSWER✔✔ a
A high-quality customer just purchased $500,000 worth of product from your
company. The contract calls for immediate delivery of the product with a cash
payment of $300,000 today and $200,000 to be paid 60 days. The expense
associated with the product is $300,000, of which $100,000 has not been paid
to your supplier. Under accrual based accounting system, you will most likely
report
a. revenues of $300,000 and expenses of $300,000.
b. revenues of $300,000 and expenses of $200,000.
c. revenues of $500,000 and expenses of $300,000.
d. revenues of $500,000 and expenses of $200,000.
ANSWER✔✔ c
,A firm reported retained earnings of $300 in 12/31/20x2. For 12/31/20x3, the
firm reports retained earnings of $400 and pays dividends of $25. What was
net income in 20x3
a. 300
b. 400
c. 125
d. 100
ANSWER✔✔ c
A basic equation for the balance sheet is:
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities
ANSWER✔✔ a
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.
ANSWER✔✔ b
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
ANSWER✔✔ d
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
ANSWER✔✔ c
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
ANSWER✔✔ b
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term Investments
ANSWER✔✔ d
Which components are part of Total Liabilities?
a. Accounts Payable, Accounts Receivable, Short Term Debt
b. Long Term Debt, Common Stock, Retained Earnings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term Investments
ANSWER✔✔ c
Intel reported the following for 2014:
Net Income 100,000
Depreciation 20,000
Change in A/R 10,000
What is the cash flow from operating activities (CF0)?
a. 100,000
b. 110,000
c. 120,000
, d. (130,000)
ANSWER✔✔ b
Intel reported the following for 2014:
Gross Equipment (1/1/14) 50,000
Gross Equipment (12/31/14) 65,000
Net income 100,000
Depreciation 20,000
What is the cash flow from investing activities for 2014?
a. 100,000
b. 80,000
c. (15,000)
d. 15,000
ANSWER✔✔ c
What is the Cash Flow from Operations given the following information?
Net Income 450,000
Change in Accounts Receivable 120,000
Change in Inventory - 90,000
Change in PP&E 60,000
Depreciation Expense 110,000
Change in Accounts Payable 50,000
Change in Accrued Expenses - 75,000
Change in Common Stock 300,000
a. $570,000
b. $410,000
c. $505,000
d. $375,000
ANSWER✔✔ c
When Fixed Assets increase what happens to Cash?
a. Cash stays the same
b. Cash increases
c. Cash decreases
Version Questions And Answers With
Verified Solutions Already Passed Latest
Updated 2025
Trading on the NYSE is executed without a specialist (i.e. a market maker).
(T/F)
ANSWER✔✔ F
Stocks and bonds are two types of financial instruments (T/F)
ANSWER✔✔ True
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
ANSWER✔✔ a
A high-quality customer just purchased $500,000 worth of product from your
company. The contract calls for immediate delivery of the product with a cash
payment of $300,000 today and $200,000 to be paid 60 days. The expense
associated with the product is $300,000, of which $100,000 has not been paid
to your supplier. Under accrual based accounting system, you will most likely
report
a. revenues of $300,000 and expenses of $300,000.
b. revenues of $300,000 and expenses of $200,000.
c. revenues of $500,000 and expenses of $300,000.
d. revenues of $500,000 and expenses of $200,000.
ANSWER✔✔ c
,A firm reported retained earnings of $300 in 12/31/20x2. For 12/31/20x3, the
firm reports retained earnings of $400 and pays dividends of $25. What was
net income in 20x3
a. 300
b. 400
c. 125
d. 100
ANSWER✔✔ c
A basic equation for the balance sheet is:
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities
ANSWER✔✔ a
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.
ANSWER✔✔ b
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
ANSWER✔✔ d
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
ANSWER✔✔ c
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
ANSWER✔✔ b
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term Investments
ANSWER✔✔ d
Which components are part of Total Liabilities?
a. Accounts Payable, Accounts Receivable, Short Term Debt
b. Long Term Debt, Common Stock, Retained Earnings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term Investments
ANSWER✔✔ c
Intel reported the following for 2014:
Net Income 100,000
Depreciation 20,000
Change in A/R 10,000
What is the cash flow from operating activities (CF0)?
a. 100,000
b. 110,000
c. 120,000
, d. (130,000)
ANSWER✔✔ b
Intel reported the following for 2014:
Gross Equipment (1/1/14) 50,000
Gross Equipment (12/31/14) 65,000
Net income 100,000
Depreciation 20,000
What is the cash flow from investing activities for 2014?
a. 100,000
b. 80,000
c. (15,000)
d. 15,000
ANSWER✔✔ c
What is the Cash Flow from Operations given the following information?
Net Income 450,000
Change in Accounts Receivable 120,000
Change in Inventory - 90,000
Change in PP&E 60,000
Depreciation Expense 110,000
Change in Accounts Payable 50,000
Change in Accrued Expenses - 75,000
Change in Common Stock 300,000
a. $570,000
b. $410,000
c. $505,000
d. $375,000
ANSWER✔✔ c
When Fixed Assets increase what happens to Cash?
a. Cash stays the same
b. Cash increases
c. Cash decreases
