2026/2027 WGU C214 Financial Management Exam Bank

2026/2027 WGU C214 Financial
Management Exam Bank |
Comprehensive C214 Practice
Questions & Finance Study Guide
Question 1
The matching principle in accrual accounting requires that:
a. Expenses are matched to revenue recognition.
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
Correct Answer
a


Question 2
The addition to retained earnings each year is:
a. Net Income
b. Net Income minus dividends
c. Net Income plus dividends
d. Net Income times the Payout Ratio
Correct Answer
b


Question 3
Net working capital equals:
a. Current assets
b. Current liabilities
c. Current assets minus current liabilities
d. None of the above
Correct Answer
c


Question 4
What does the Sarbanes-Oxley Act require companies to do?
a. Have a board of directors
b. Register all foreign sales
c. Make estimated tax payments
d. Have transparent, accurate financial statements
Correct Answer
d


Question 5

,If a company produces and sells a product only in the U.S., what international developments
may affect its sales?
a. Fluctuating exchange rates
b. Imports of competing products
c. Immigration policy
d. Inflation in Europe
Correct Answer
b


Question 6
Which is not a reason to calculate WACC?
a. To measure the overall cost of financing
b. Needed to calculate Cash Flow Financing
c. It is the minimum required return for investment projects
d. Measures investors' required return on firm securities
Correct Answer
b


Question 7
If a firm's goal is to maximize stockholder wealth, which would the firm avoid?
a. Stock buybacks
b. Risky long-term investments
c. Investments with negative NPV
d. Transparency in financial statements
Correct Answer
c


Question 8
In which market transaction is the corporation not involved?
a. Primary Markets
b. Secondary Markets
c. IPO
d. Buy Backs
Correct Answer
b


Question 9
What does Beta measure?
a. The yield on the S&P 500
b. The relative riskiness of an individual stock
c. Indicates the market value of the stock
d. Stocks to avoid purchasing
Correct Answer
b

,Question 10
Which accounting decision uses estimates?
a. Life of a new asset
b. Accounts payable
c. Amortization schedule for a loan
d. Cost of a new machine
Correct Answer
a


Question 11
An investment with a term of less than one year is:
a. A current liability
b. A current asset
c. Is in retained earnings
d. Is a long-term liability
Correct Answer
b


Question 12
Which does not affect the required yield on a bond?
a. Riskiness of the issuer
b. Collateralization
c. Treasury yields
d. Face Value
Correct Answer
d


Question 13
If the yield of a bond is higher than the coupon rate, what is the price?
a. Premium price
b. Par price
c. Discount price
d. Secondary market price
Correct Answer
c


Question 14
Why would a company buy back outstanding stock?
a. To boost the price of the stock
b. To increase financial leverage
c. Lack of investment opportunities
d. All of the above
Correct Answer
d

, Question 15
Which cash flow statement contains income statement items?
a. CFO
b. CFI
c. CFF
d. None of above
Correct Answer
a


Question 16
Why are accurate sales forecasts important?
a. To determine the appropriate debt/equity ratio
b. To have right amount of production resources
c. To determine WACC
d. The time value of money
Correct Answer
b


Question 17
If a firm cannot access markets sufficiently to meet their DFN, what strategies might they
use?
a. Slow sales growth
b. Lower dividend payout
c. Increase the net margin
d. All of the above.
Correct Answer
d


Question 18
To induce an investor to purchase a risky security, the investor must receive
a. A Prospectus
b. Collateral
c. Risk Premium
d. Favorable tax treatment
Correct Answer
c


Question 19
If two companies use different inventory valuation methods, it is called
a. A valuation difference
b. An accounting difference
c. A trend difference
d. None of above
Correct Answer
b