WGU C214 OA Financial Management Retake Exam
Latest Questions and Answers ()
(Verified Answers)
Real photograph used as a visual finance context image.
1. Which financial statement reports a firm's revenues, expenses, and net income over
a period?
Topic: Financial statements
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings
Answer check: Income statement — The income statement summarizes operating performance over a reporting period.
2. Which financial statement presents assets, liabilities, and equity at a specific date?
Topic: Financial statements
Income statement
Statement of cash flows
Balance sheet
Budget report
Answer check: Balance sheet — The balance sheet is a point-in-time snapshot of the accounting equation.
3. What does the statement of cash flows primarily explain?
Topic: Financial statements
Changes in cash during a period
Changes in market share
Changes in gross margin only
Original C214 practice bank — not an official WGU OA or leaked exam. Page 1
, Changes in share price
Answer check: Changes in cash during a period — It reconciles beginning and ending cash through operating,
investing, and financing activities.
4. Which equation links beginning retained earnings to ending retained earnings?
Topic: Financial statements
Ending RE = Beginning RE + dividends − net income
Ending RE = Beginning RE + net income − dividends
Ending RE = Assets − liabilities + dividends
Ending RE = Revenue − assets
Answer check: Ending RE = Beginning RE + net income − dividends — Retained earnings increase with net income and
decrease with dividends.
5. Under accrual accounting, revenue is generally recognized when it is:
Topic: Financial statements
Collected in cash
Earned
Deposited in the bank
Paid to suppliers
Answer check: Earned — Accrual accounting recognizes revenue when earned, not necessarily when cash is collected.
6. Which item is normally a current asset?
Topic: Financial statements
Long-term bond payable
Inventory
Common stock
Long-term note payable
Answer check: Inventory — Inventory is expected to be sold or converted to cash within the operating cycle or one
year.
7. Which item is normally a current liability?
Topic: Financial statements
Accounts payable
Common stock
Land
Retained earnings
Answer check: Accounts payable — Accounts payable represents amounts owed to suppliers and is typically due within
a short period.
Original C214 practice bank — not an official WGU OA or leaked exam. Page 2
, 8. Depreciation expense is best described as:
Topic: Financial statements
A cash payment each period
A noncash allocation of an asset's depreciable cost
A financing cash inflow
A dividend
Answer check: A noncash allocation of an asset's depreciable cost — Depreciation allocates the cost of a long-lived
asset; it is noncash when recorded.
9. If accounts receivable increase while all else is equal, operating cash flow will
generally:
Topic: Financial statements
Increase
Decrease
Remain unchanged
Become equal to net income
Answer check: Decrease — An increase in receivables means revenue exceeded cash collections, reducing cash from
operations.
10. If accounts payable increase while all else is equal, operating cash flow will
generally:
Topic: Financial statements
Increase
Decrease
Become zero
Equal investing cash flow
Answer check: Increase — An increase in payables represents expenses or purchases not yet paid in cash, preserving
cash.
11. A firm's current ratio is calculated as:
Topic: Ratios
Current assets ÷ current liabilities
Current liabilities ÷ current assets
Total debt ÷ equity
Net income ÷ sales
Answer check: Current assets ÷ current liabilities — The current ratio measures short-term liquidity.
12. Quick ratio excludes which major current asset from the numerator?
Topic: Ratios
Original C214 practice bank — not an official WGU OA or leaked exam. Page 3
, Cash
Accounts receivable
Inventory
Marketable securities
Answer check: Inventory — Inventory is excluded because it may be less liquid than other current assets.
13. If current assets are $480,000 and current liabilities are $240,000, the current
ratio is:
Topic: Ratios
0.50
1.00
2.00
4.00
Answer check: 2.00 — 480,000 ÷ 240,000 = 2.00.
14. A debt-to-equity ratio primarily indicates:
Topic: Ratios
Profitability
Use of debt relative to owners' equity
Inventory efficiency
Cash collection speed
Answer check: Use of debt relative to owners' equity — Debt-to-equity is a leverage measure showing debt financing
relative to equity.
15. If net income is $72,000 and sales are $600,000, net profit margin is:
Topic: Ratios
8%
10%
12%
15%
Answer check: 12% — 72,000 ÷ 600,000 = 0.12, or 12%.
16. Asset turnover is generally calculated as:
Topic: Ratios
Sales ÷ average total assets
Net income ÷ equity
Debt ÷ assets
Original C214 practice bank — not an official WGU OA or leaked exam. Page 4
Latest Questions and Answers ()
(Verified Answers)
Real photograph used as a visual finance context image.
1. Which financial statement reports a firm's revenues, expenses, and net income over
a period?
Topic: Financial statements
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings
Answer check: Income statement — The income statement summarizes operating performance over a reporting period.
2. Which financial statement presents assets, liabilities, and equity at a specific date?
Topic: Financial statements
Income statement
Statement of cash flows
Balance sheet
Budget report
Answer check: Balance sheet — The balance sheet is a point-in-time snapshot of the accounting equation.
3. What does the statement of cash flows primarily explain?
Topic: Financial statements
Changes in cash during a period
Changes in market share
Changes in gross margin only
Original C214 practice bank — not an official WGU OA or leaked exam. Page 1
, Changes in share price
Answer check: Changes in cash during a period — It reconciles beginning and ending cash through operating,
investing, and financing activities.
4. Which equation links beginning retained earnings to ending retained earnings?
Topic: Financial statements
Ending RE = Beginning RE + dividends − net income
Ending RE = Beginning RE + net income − dividends
Ending RE = Assets − liabilities + dividends
Ending RE = Revenue − assets
Answer check: Ending RE = Beginning RE + net income − dividends — Retained earnings increase with net income and
decrease with dividends.
5. Under accrual accounting, revenue is generally recognized when it is:
Topic: Financial statements
Collected in cash
Earned
Deposited in the bank
Paid to suppliers
Answer check: Earned — Accrual accounting recognizes revenue when earned, not necessarily when cash is collected.
6. Which item is normally a current asset?
Topic: Financial statements
Long-term bond payable
Inventory
Common stock
Long-term note payable
Answer check: Inventory — Inventory is expected to be sold or converted to cash within the operating cycle or one
year.
7. Which item is normally a current liability?
Topic: Financial statements
Accounts payable
Common stock
Land
Retained earnings
Answer check: Accounts payable — Accounts payable represents amounts owed to suppliers and is typically due within
a short period.
Original C214 practice bank — not an official WGU OA or leaked exam. Page 2
, 8. Depreciation expense is best described as:
Topic: Financial statements
A cash payment each period
A noncash allocation of an asset's depreciable cost
A financing cash inflow
A dividend
Answer check: A noncash allocation of an asset's depreciable cost — Depreciation allocates the cost of a long-lived
asset; it is noncash when recorded.
9. If accounts receivable increase while all else is equal, operating cash flow will
generally:
Topic: Financial statements
Increase
Decrease
Remain unchanged
Become equal to net income
Answer check: Decrease — An increase in receivables means revenue exceeded cash collections, reducing cash from
operations.
10. If accounts payable increase while all else is equal, operating cash flow will
generally:
Topic: Financial statements
Increase
Decrease
Become zero
Equal investing cash flow
Answer check: Increase — An increase in payables represents expenses or purchases not yet paid in cash, preserving
cash.
11. A firm's current ratio is calculated as:
Topic: Ratios
Current assets ÷ current liabilities
Current liabilities ÷ current assets
Total debt ÷ equity
Net income ÷ sales
Answer check: Current assets ÷ current liabilities — The current ratio measures short-term liquidity.
12. Quick ratio excludes which major current asset from the numerator?
Topic: Ratios
Original C214 practice bank — not an official WGU OA or leaked exam. Page 3
, Cash
Accounts receivable
Inventory
Marketable securities
Answer check: Inventory — Inventory is excluded because it may be less liquid than other current assets.
13. If current assets are $480,000 and current liabilities are $240,000, the current
ratio is:
Topic: Ratios
0.50
1.00
2.00
4.00
Answer check: 2.00 — 480,000 ÷ 240,000 = 2.00.
14. A debt-to-equity ratio primarily indicates:
Topic: Ratios
Profitability
Use of debt relative to owners' equity
Inventory efficiency
Cash collection speed
Answer check: Use of debt relative to owners' equity — Debt-to-equity is a leverage measure showing debt financing
relative to equity.
15. If net income is $72,000 and sales are $600,000, net profit margin is:
Topic: Ratios
8%
10%
12%
15%
Answer check: 12% — 72,000 ÷ 600,000 = 0.12, or 12%.
16. Asset turnover is generally calculated as:
Topic: Ratios
Sales ÷ average total assets
Net income ÷ equity
Debt ÷ assets
Original C214 practice bank — not an official WGU OA or leaked exam. Page 4
