WGU C214
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1. Trading on the NYSE is executed without a specialist F
(i.e. a market maker). (T/F)
2. Stocks and bonds are two types of financial instru- T
ments (T/F)
3. The matching principle in accrual accounting requires a
that:
a. Revenues be recognized when the earnings process
is complete and matches expenses to revenues recog-
nized.
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 expens-
es
4. A basic equation for the balance sheet is: a
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities
5. Why is the Balance Sheet known as a permanent state- b
ment?
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.
6. d
, WGU C214
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How do you calculate the change in Retained Earn-
ings?
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends
7. Which of the following is generally true? c
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
8. Which components are part of total assets? b
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
9. Which components are part of current assets? d
a. Cash, Accounts Receivable, Property Plant & Equip-
ment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Com-
mon Stock
d. Inventory, Cash, Accounts Receivable, Short Term
Investments
10. Which components are part of Total Liabilities? c
a. Accounts Payable, Accounts Receivable, Short Term
, WGU C214
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Debt
b. Long Term Debt, Common Stock, Retained Earn-
ings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term Invest-
ments
11. When Fixed Assets increase what happens to Cash? c
a. Cash stays the same
b. Cash increases
c. Cash decreases
d. Assets decrease
12. Which is the purpose of the statement of cash flows? c
a. serves as the replacement for the income statement
and balance sheet
b. explains the change in cash balance at one point in
time
c. explains the change in cash balance for one period
of time
d. both (a) and (b) above
13. The OIROI (Operating Income Return on Investment) b
uses what elements on the income statement?
a. Operating Income, EBIT, Total Liabilities
b. EBIT, Total Assets
c. Sales, Total Assets, Equity
d. Net Margin, Total Current Assets
14. Why would a company be interested in the TAT(Total c
Asset Turnover) ratio?
a. How efficient assets are at producing income
b. What the turnover of sales is to liabilities
, WGU C214
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c. How efficient assets are at producing sales
d. How efficient assets are to liabilities and equity
15. Which of the following gives the largest effective rate b
(APY)
a. 18.6% compounded monthly
b. 18.6% compounded daily
c. 18.6% compounded weekly
d. 18.6% compounded yearly
16. What does the beta coefficient represent? a
a. It is a statistically-derived measure of volatility
b. It is the Expected Return minus the Growth Rate
c. It is the volatility of the Risk Free Return
d. It is the expected return for a basket of preferred
stocks
17. Why is depreciation expense taken out of the net in- d
come calculation, yet added back at the end?
a. Because fixed assets should remain on the balance
sheet
b. Because depreciation is not a current asset
c. Because depreciation is a non-cash liability
d. Because depreciation expense is tax deductible
18. Why is the NPV preferred over the IRR? Pick Two b, c
a. It has a higher dollar value
b. It measures the dollar value
c. It is more reliable
d. It is harder to calculate
19. What does the Degree of Financial Leverage indicate? c
a. The firms cash balance
Study online at https://quizlet.com/_ekd4y1
1. Trading on the NYSE is executed without a specialist F
(i.e. a market maker). (T/F)
2. Stocks and bonds are two types of financial instru- T
ments (T/F)
3. The matching principle in accrual accounting requires a
that:
a. Revenues be recognized when the earnings process
is complete and matches expenses to revenues recog-
nized.
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 expens-
es
4. A basic equation for the balance sheet is: a
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities
5. Why is the Balance Sheet known as a permanent state- b
ment?
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.
6. d
, WGU C214
Study online at https://quizlet.com/_ekd4y1
How do you calculate the change in Retained Earn-
ings?
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends
7. Which of the following is generally true? c
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
8. Which components are part of total assets? b
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
9. Which components are part of current assets? d
a. Cash, Accounts Receivable, Property Plant & Equip-
ment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Com-
mon Stock
d. Inventory, Cash, Accounts Receivable, Short Term
Investments
10. Which components are part of Total Liabilities? c
a. Accounts Payable, Accounts Receivable, Short Term
, WGU C214
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Debt
b. Long Term Debt, Common Stock, Retained Earn-
ings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term Invest-
ments
11. When Fixed Assets increase what happens to Cash? c
a. Cash stays the same
b. Cash increases
c. Cash decreases
d. Assets decrease
12. Which is the purpose of the statement of cash flows? c
a. serves as the replacement for the income statement
and balance sheet
b. explains the change in cash balance at one point in
time
c. explains the change in cash balance for one period
of time
d. both (a) and (b) above
13. The OIROI (Operating Income Return on Investment) b
uses what elements on the income statement?
a. Operating Income, EBIT, Total Liabilities
b. EBIT, Total Assets
c. Sales, Total Assets, Equity
d. Net Margin, Total Current Assets
14. Why would a company be interested in the TAT(Total c
Asset Turnover) ratio?
a. How efficient assets are at producing income
b. What the turnover of sales is to liabilities
, WGU C214
Study online at https://quizlet.com/_ekd4y1
c. How efficient assets are at producing sales
d. How efficient assets are to liabilities and equity
15. Which of the following gives the largest effective rate b
(APY)
a. 18.6% compounded monthly
b. 18.6% compounded daily
c. 18.6% compounded weekly
d. 18.6% compounded yearly
16. What does the beta coefficient represent? a
a. It is a statistically-derived measure of volatility
b. It is the Expected Return minus the Growth Rate
c. It is the volatility of the Risk Free Return
d. It is the expected return for a basket of preferred
stocks
17. Why is depreciation expense taken out of the net in- d
come calculation, yet added back at the end?
a. Because fixed assets should remain on the balance
sheet
b. Because depreciation is not a current asset
c. Because depreciation is a non-cash liability
d. Because depreciation expense is tax deductible
18. Why is the NPV preferred over the IRR? Pick Two b, c
a. It has a higher dollar value
b. It measures the dollar value
c. It is more reliable
d. It is harder to calculate
19. What does the Degree of Financial Leverage indicate? c
a. The firms cash balance
