WGU C214 Financial Management
Objective Assessment OA (Latest Update
) Questions & Answers 100%
Correct - (Grade A)
Duration measures - correct answer the market risk of a bond and is the percentage
drop in price caused by a 1% increase in yield (rate)
NOTE: measurement of the drop in price after a rate increase
Maturity of bonds is calculated in - correct answer years
A bond premium occurs when - correct answer bonds are issued for an amount
greater than their face or maturity amount; caused by the bonds having a stated
interest rate that is higher than the market interest rate for similar bonds
Junk Bonds are - correct answer high yield bonds without any stability
"Leveraged" results in - correct answer having more debt (bonds) than equity (stock)
and lower stock prices
NOTE: recall that debt is safer and levels out risk in a portfolio
In current assets, inventory is the - correct answer LEAST liquid of current assets
NOTE: current assets take less than 12 months to make liquid
Net fixed assets are - correct answer long term assets such as buildings, land,
equipment, machinery
,NOTE: assets that are not current
A/P represents money paid to - correct answer suppliers for what is bought on credit
and amount owed by a business to suppliers by agreement
NOTE: A/P is supplies, inventory, or PP&E
Notes payable involves - correct answer an explicit interest bearing arrangement with
the lender at interest cost
NOTE: notes payable is a long-term liability
Current liabilities are listed in order of - correct answer maturity
NOTE: current liabilities are to be paid within 12 months
Two things you can do with net income - correct answer pay out as dividends or
retain (plow back into the firm)
On the Statement of Cash Flows, CFO's include - correct answer -cash receipts from
customers (inflow)
-cash paid for inventory (outflow)
-cash paid for wages (outflow)
NOTE: receipts of cash is inflow & what is paid out is outflow
Which is NOT considered an operating expense - correct answer interest expense is
NOT considered an operating expense
On the Statement of Cash Flows, CFI includes - correct answer cash receipts from sale
of property and equipment (inflow), cash paid for purchase of equipment (outflow)
, NOTE: receipts of cash is inflow & what is paid out is outflow
Which of the following is true with respect to CFO - correct answer an increase in
inventory indicates a reduction in CFO
NOTE: there is a cost (reduction) to purchasing (increasing) inventory
The Statement of Cash Flows is not useful when addressing the financial health of a
firm due to the impact of accrual accounting - correct answer FALSE - the impact of
accrual accounting is seen as MOST useful in relation to net income
Which is true with respect to CFF - correct answer an increase in notes payable
indicates an increase in CFF
Which is not a part of the Statement of Cash Flows - correct answer cash flows from
liquidating activities
NOTE: cash flows are operating, investing, and financing
The sum of CFO + CFI + CFF is equal to - correct answer the change in cash during
the period
Depreciation expense is a significant source of difference between net income and
CFO because - correct answer depreciation is a non-cash expense on the Income
Statement associated with the acquisition of long-term assets
Subordinated bonds - correct answer are bonds not backed by collateral
Objective Assessment OA (Latest Update
) Questions & Answers 100%
Correct - (Grade A)
Duration measures - correct answer the market risk of a bond and is the percentage
drop in price caused by a 1% increase in yield (rate)
NOTE: measurement of the drop in price after a rate increase
Maturity of bonds is calculated in - correct answer years
A bond premium occurs when - correct answer bonds are issued for an amount
greater than their face or maturity amount; caused by the bonds having a stated
interest rate that is higher than the market interest rate for similar bonds
Junk Bonds are - correct answer high yield bonds without any stability
"Leveraged" results in - correct answer having more debt (bonds) than equity (stock)
and lower stock prices
NOTE: recall that debt is safer and levels out risk in a portfolio
In current assets, inventory is the - correct answer LEAST liquid of current assets
NOTE: current assets take less than 12 months to make liquid
Net fixed assets are - correct answer long term assets such as buildings, land,
equipment, machinery
,NOTE: assets that are not current
A/P represents money paid to - correct answer suppliers for what is bought on credit
and amount owed by a business to suppliers by agreement
NOTE: A/P is supplies, inventory, or PP&E
Notes payable involves - correct answer an explicit interest bearing arrangement with
the lender at interest cost
NOTE: notes payable is a long-term liability
Current liabilities are listed in order of - correct answer maturity
NOTE: current liabilities are to be paid within 12 months
Two things you can do with net income - correct answer pay out as dividends or
retain (plow back into the firm)
On the Statement of Cash Flows, CFO's include - correct answer -cash receipts from
customers (inflow)
-cash paid for inventory (outflow)
-cash paid for wages (outflow)
NOTE: receipts of cash is inflow & what is paid out is outflow
Which is NOT considered an operating expense - correct answer interest expense is
NOT considered an operating expense
On the Statement of Cash Flows, CFI includes - correct answer cash receipts from sale
of property and equipment (inflow), cash paid for purchase of equipment (outflow)
, NOTE: receipts of cash is inflow & what is paid out is outflow
Which of the following is true with respect to CFO - correct answer an increase in
inventory indicates a reduction in CFO
NOTE: there is a cost (reduction) to purchasing (increasing) inventory
The Statement of Cash Flows is not useful when addressing the financial health of a
firm due to the impact of accrual accounting - correct answer FALSE - the impact of
accrual accounting is seen as MOST useful in relation to net income
Which is true with respect to CFF - correct answer an increase in notes payable
indicates an increase in CFF
Which is not a part of the Statement of Cash Flows - correct answer cash flows from
liquidating activities
NOTE: cash flows are operating, investing, and financing
The sum of CFO + CFI + CFF is equal to - correct answer the change in cash during
the period
Depreciation expense is a significant source of difference between net income and
CFO because - correct answer depreciation is a non-cash expense on the Income
Statement associated with the acquisition of long-term assets
Subordinated bonds - correct answer are bonds not backed by collateral
