WGU C214 Financial
Management OA Study Set
UPDATED 2023/2024
Trading on the NYSE is executed without a specialist (i.e. a market maker). True or False? - Answer--False
Stocks and Bonds are two types of financial instruments. True or False? - Answer--True
When revenue is matched with cost of sales in an Income statement it is called? - Answer--Matching
principle
Basic balance sheet equation is what? - Answer--Equity = Assets - Liabilities
Why is the balance sheet known as the permanent statement? - Answer--Because the other statements
are reset at the end of the fiscal year.
How do you calculate the change in retained earnings? - Answer--Net income-dividends
Sales - Cost of Sales - other expenses = - Answer--Operating Income or EBiT
, Name four accounts that are part of total assets? - Answer--Cash, Accounts receivable, inventory, long
term assets
Name three accounts that are part of total liabilities? - Answer--Bonds, accounts payable and mortgage
Name four accounts that are part of current assets? - Answer--Inventory, cash, accounts receivable and
short term investments.
Name three accounts that are only included in cash flow from financing? - Answer--Common stock,
dividends paid and bonds payable
What does the degree of financial leverage indicate? - Answer--The reliance on debt
If a company has a high degree of financial leverage, what does that tell us about the firms risk profile? -
Answer--Financial leverage also means that more financing is done through debt, not equity. Higher
profits to shareholders.
What is the cash cycle? - Answer--The amount of time to regenerate cash.
Why is float important to understand? - Answer--To time cash expenditures
What should a company do to manage its working capital? - Answer--Collect quickly and pay slowly
Name what characterizes increased collection float? - Answer--Increased float indicates slower
processing time.
In regards to Accounts Payable Balances, what is a good policy? - Answer--Paying off A/P on the last day
due is a good policy.
Management OA Study Set
UPDATED 2023/2024
Trading on the NYSE is executed without a specialist (i.e. a market maker). True or False? - Answer--False
Stocks and Bonds are two types of financial instruments. True or False? - Answer--True
When revenue is matched with cost of sales in an Income statement it is called? - Answer--Matching
principle
Basic balance sheet equation is what? - Answer--Equity = Assets - Liabilities
Why is the balance sheet known as the permanent statement? - Answer--Because the other statements
are reset at the end of the fiscal year.
How do you calculate the change in retained earnings? - Answer--Net income-dividends
Sales - Cost of Sales - other expenses = - Answer--Operating Income or EBiT
, Name four accounts that are part of total assets? - Answer--Cash, Accounts receivable, inventory, long
term assets
Name three accounts that are part of total liabilities? - Answer--Bonds, accounts payable and mortgage
Name four accounts that are part of current assets? - Answer--Inventory, cash, accounts receivable and
short term investments.
Name three accounts that are only included in cash flow from financing? - Answer--Common stock,
dividends paid and bonds payable
What does the degree of financial leverage indicate? - Answer--The reliance on debt
If a company has a high degree of financial leverage, what does that tell us about the firms risk profile? -
Answer--Financial leverage also means that more financing is done through debt, not equity. Higher
profits to shareholders.
What is the cash cycle? - Answer--The amount of time to regenerate cash.
Why is float important to understand? - Answer--To time cash expenditures
What should a company do to manage its working capital? - Answer--Collect quickly and pay slowly
Name what characterizes increased collection float? - Answer--Increased float indicates slower
processing time.
In regards to Accounts Payable Balances, what is a good policy? - Answer--Paying off A/P on the last day
due is a good policy.
