WGU D076 PA STUDY GUIDE

In which way is accounting different from finance? -Accounting is backward looking, while finance is focused on the future. -Accounting is about budgeting, saving, and borrowing, while finance is about investing, forecasting, and lending. -Accounting is focused on allocating capital, while finance is focused on bringing in capital. -Accounting forecasts future performance, given the past, while finance records past performance. - Accounting is backward looking, while finance is focused on the future. What is the main question that both individuals and companies must consider when making financial decisions to reach a goal? -Will utility be maximized through this decision? -Will this decision require debt or equity financing? -Will the benefits of the action outweigh the costs? -Will this decrease the amount of cash available? - Will the benefits of the action outweigh the costs? A financial manager at a company is trying to determine whether to issue new stocks or new bonds to cover the costs of a project the company is doing the next year. Which main task in business finance is this situation an example of? -Managing interdepartmental loans -Making investment decisions -Managing working capital -Making financing decisions - Making financing decisions How can investing help a person reach personal financial goals? -It provides access to potential revenue or increases in value to help meet goals faster. -It provides a guaranteed future outcome in order to predictably meet financial goals. -It ensures money is placed in a safe, risk-free, and easily accessible financial asset. -It helps a person understand how money was spent previously in order to reliably predict future expenses. - It provides access to potential revenue or increases in value to help meet goals faster. A sign company is planning to have an initial public offering (IPO). In which type of market will its stock first be sold to the public? -Money market -Secondary market -Primary market -Efficient market - Primary Market Which type of economic indicator changes after the economy changes and helps identify trends in the long term? -Leading indicator -Yield curve indicator -Coincident indicator -Lagging indicator - Lagging indicator How does an investment institution, such as a mutual fund, facilitate the circulation of money in the economy? -By raising capital on a contractual basis, such as an insurance contract -By providing individuals and firms access to financial markets to buy or sell financial securities -By insuring deposits in investment accounts up to $250,000 to promote public confidence -By accepting deposits of money, paying interest on deposits, and providing loans to individuals and organizations - By providing individuals and firms access to financial markets to buy or sell financial securities Which type of economic indicator is used by governments and policymakers to implement or alter policies in an effort to avoid or minimize the effects of an economic downturn? -Lagging indicator -Correlated indicator -Coincident indicator -Leading indicator - Leading indicator Suppose an individual does not eat chocolate because eating chocolate goes against his personal beliefs. Which type of standard is this? -Ethical -Moral -Legal -Financial - Moral Which action is based upon moral standards? -Although there is no company policy regarding it, a financial manager chooses not to accept gifts from the company's clients to ensure that she does not create a conflict of interest. -Since it is generally accepted in the company that no personal information about clients should be released without written permission, a financial manager denies the request for a third party to access its data. -As mandated by government regulations, a financial manager files a registration statement with the U.S. Securities and Exchange Commission (SEC) before offering equity securities for sale. -As outlined in the company's policies, a financial manager hires a third-party entity to review all annual report filings to ensure they are compliant with applicable generally accepted accounting principles (GAAP). - Although there is no company policy regarding it, a financial manager chooses not to accept gifts from the company's clients to ensure that she does not create a conflict of interest.