1
WGU D076 OBJECTIVE ASSESSMENT FINAL EXAM 2 S
(VERSION A AND B) EXAM 2026-2027 LATEST VERSION
QUESTI
`
Q1. A firm has current assets of 500,000,inventoryof500,000,inventoryof200,000,
and current liabilities of $250,000. What is its quick ratio?
A. 0.8
B. 1.2
C. 2.0
D. 2.8
Answer: B
Solution: Quick ratio = (Current Assets – Inventory) / Current Liabilities =
(500,000–500,000–200,000) / 250,000=250,000=300,000 / $250,000 = 1.2.
Q2. Which financial statement reports the company's financial position at a
specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Answer: C
Q3. A company's debt-to-equity ratio increased from 1.5 to 2.0. What does this
indicate?
A. The company is using less financial leverage
B. The company has reduced its reliance on debt financing
C. The company has increased its reliance on debt relative to equity
D. The company's profitability has improved
Answer: C
Rationale: A higher debt-to-equity ratio indicates greater financial leverage and
increased reliance on debt financing, which can increase financial risk.
pg. 1
,2
Q4. What is the primary purpose of the statement of cash flows?
A. To show a company's profitability over a period
B. To provide information about a company's cash receipts and cash payments
during a period
C. To show the company's financial position at a point in time
D. To reconcile net income to retained earnings
Answer: B
Q5. Which of the following is an example of a financing activity on the statement
of cash flows?
A. Paying salaries to employees
B. Selling inventory to customers
C. Issuing bonds payable
D. Purchasing a new factory
Answer: C
Rationale: Financing activities include transactions with owners (issuing stock,
paying dividends) and creditors (borrowing and repaying debt).
Q6. A company's gross profit margin is 40%. If sales
are 1,000,000,whatisthecostofgoodssold?A.1,000,000,whatisthecostofgoodssold?
A.400,000
B. 600,000C.600,000C.1,000,000
D. $1,400,000
Answer: B
Solution: Gross profit = 0.40 × 1,000,000=1,000,000=400,000. COGS = Sales –
Gross Profit = 1,000,000–1,000,000–400,000 = $600,000.
Q7. Which of the following ratios measures a company's ability to meet short-
term obligations with its most liquid assets?
A. Current ratio
B. Quick ratio
C. Debt ratio
D. Return on assets
Answer: B
pg. 2
, 3
Q8. A company's net income
is 150,000,anditstotalequityis150,000,anditstotalequityis750,000. What is its
return on equity (ROE)?
A. 15%
B. 20%
C. 25%
D. 50%
Answer: B
Solution: ROE = Net Income / Total Equity = 150,000/150,000/750,000 = 0.20 =
20%.
Q9. Which inventory costing method results in the lowest net income during
periods of rising prices?
A. FIFO
B. LIFO
C. Weighted-average
D. Specific identification
Answer: B
Rationale: LIFO assigns the most recent (higher) costs to cost of goods sold,
reducing gross profit and net income when prices are rising.
Q10. The DuPont formula decomposes return on equity into which three
components?
A. Net profit margin, total asset turnover, and equity multiplier
B. Gross margin, inventory turnover, and debt ratio
C. Quick ratio, current ratio, and cash ratio
D. Operating income, total assets, and long-term debt
Answer: A
Q11. A company reports net sales
of 2,000,000,costofgoodssoldof2,000,000,costofgoodssoldof1,200,000, and
operating expenses of $500,000. What is its operating profit margin?
A. 15%
B. 25%
pg. 3
WGU D076 OBJECTIVE ASSESSMENT FINAL EXAM 2 S
(VERSION A AND B) EXAM 2026-2027 LATEST VERSION
QUESTI
`
Q1. A firm has current assets of 500,000,inventoryof500,000,inventoryof200,000,
and current liabilities of $250,000. What is its quick ratio?
A. 0.8
B. 1.2
C. 2.0
D. 2.8
Answer: B
Solution: Quick ratio = (Current Assets – Inventory) / Current Liabilities =
(500,000–500,000–200,000) / 250,000=250,000=300,000 / $250,000 = 1.2.
Q2. Which financial statement reports the company's financial position at a
specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Answer: C
Q3. A company's debt-to-equity ratio increased from 1.5 to 2.0. What does this
indicate?
A. The company is using less financial leverage
B. The company has reduced its reliance on debt financing
C. The company has increased its reliance on debt relative to equity
D. The company's profitability has improved
Answer: C
Rationale: A higher debt-to-equity ratio indicates greater financial leverage and
increased reliance on debt financing, which can increase financial risk.
pg. 1
,2
Q4. What is the primary purpose of the statement of cash flows?
A. To show a company's profitability over a period
B. To provide information about a company's cash receipts and cash payments
during a period
C. To show the company's financial position at a point in time
D. To reconcile net income to retained earnings
Answer: B
Q5. Which of the following is an example of a financing activity on the statement
of cash flows?
A. Paying salaries to employees
B. Selling inventory to customers
C. Issuing bonds payable
D. Purchasing a new factory
Answer: C
Rationale: Financing activities include transactions with owners (issuing stock,
paying dividends) and creditors (borrowing and repaying debt).
Q6. A company's gross profit margin is 40%. If sales
are 1,000,000,whatisthecostofgoodssold?A.1,000,000,whatisthecostofgoodssold?
A.400,000
B. 600,000C.600,000C.1,000,000
D. $1,400,000
Answer: B
Solution: Gross profit = 0.40 × 1,000,000=1,000,000=400,000. COGS = Sales –
Gross Profit = 1,000,000–1,000,000–400,000 = $600,000.
Q7. Which of the following ratios measures a company's ability to meet short-
term obligations with its most liquid assets?
A. Current ratio
B. Quick ratio
C. Debt ratio
D. Return on assets
Answer: B
pg. 2
, 3
Q8. A company's net income
is 150,000,anditstotalequityis150,000,anditstotalequityis750,000. What is its
return on equity (ROE)?
A. 15%
B. 20%
C. 25%
D. 50%
Answer: B
Solution: ROE = Net Income / Total Equity = 150,000/150,000/750,000 = 0.20 =
20%.
Q9. Which inventory costing method results in the lowest net income during
periods of rising prices?
A. FIFO
B. LIFO
C. Weighted-average
D. Specific identification
Answer: B
Rationale: LIFO assigns the most recent (higher) costs to cost of goods sold,
reducing gross profit and net income when prices are rising.
Q10. The DuPont formula decomposes return on equity into which three
components?
A. Net profit margin, total asset turnover, and equity multiplier
B. Gross margin, inventory turnover, and debt ratio
C. Quick ratio, current ratio, and cash ratio
D. Operating income, total assets, and long-term debt
Answer: A
Q11. A company reports net sales
of 2,000,000,costofgoodssoldof2,000,000,costofgoodssoldof1,200,000, and
operating expenses of $500,000. What is its operating profit margin?
A. 15%
B. 25%
pg. 3
