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WGU C214
WGU C214 - Financial Management
Exam Questions and Answers 2025
Why are American regulators focused on international investing in a global
marketplace? -Correct Answer ✔Because international investing in a global marketplace
is the concern of American investors.
What are the likeliest outcomes if a company outsources the manufacturing of its
products to a foreign country? -Correct Answer ✔Consumer prices will decrease.
Domestic employment will decrease.
How can a private firm appropriately maximize shareholder value? -Correct Answer
✔By making decisions that keep the control of the business with the owners.
What is one of the two basic types of financial instruments? -Correct Answer ✔Bonds
or
Securities/Cheques
A company reported an increase in accounts receivable of $5,000 during the recent
period. Half of this amount is expected to be collected next period.
How will this change in accounts receivable affect the cash flows from the operating
activities section? -Correct Answer ✔The change will decrease cash flows from
operations by $5,000.
Selected Data for 20x2 for ABD Inc.
Net Income $1000
Depreciation Expense $300
Change in Operating Assets $600
Change in Net PPE $5000
Changes in Long-Term Liabilities $1000
Dividends Paid $200
What is this firm's cash flow from investments, using the data above and assuming no
asset disposals? -Correct Answer ✔$5,300 Outflow
What do cash flows from investing activities generally relate to? -Correct Answer ✔A
firm's purchase and sale of long-term assets.
Which transaction is reflected in cash flow from operating activities? -Correct Answer
✔Cash sales to customers.
What does free cash flow represent? -Correct Answer ✔Cash available for distribution
after funding required reinvestment.
WGU C214
, 2
WGU C214
What do the content and structure of a balance sheet report? -Correct Answer ✔The
assets, liabilities, and equity at a point in time.
Which statement accurately explains the recognition of revenues and expenses under
accounting income and income for tax purposes? -Correct Answer ✔Revenues and
expenses may be recognized in one period for accounting income purposes and in a
different period for income tax purposes.
What is the basic equation for a balance sheet? -Correct Answer ✔Assets=Liabilities +
Equity
An analyst is comparing the ratios of two firms and needs to address timing differences.
What is an example of a timing difference between these two firms? -Correct Answer
✔The firms have different fiscal years.
A companys year end balance sheet for 2013:
AR: 900
Inventory: 1200
Fixed assets: 1000
AP: 1300
Sales: 4000
Salaries: 275
What is their fixed asset turnover ratio? -Correct Answer ✔4.0
A firm has a ROE (return on equity) of 0.27, and the industry average ROE is 0.24.
Which conclusion should an analyst draw when comparing this firm to the industry? -
Correct Answer ✔The firm is generating higher returns to owners than the industry.
What must have taken place for a firm to recognize revenue, in order for the firm to
comply with the accrual accounting rules? -Correct Answer ✔The product must have
been delivered.
A teacher won $100,000 and invests this money for five years at an interest rate of 4%
(compounded annually). How much will this teacher have in principal and interest at the
end of the five years? -Correct Answer ✔$121,665
An accountant is 40 years old and has an anticipated retirement age of 70 years old.
The accountant plans to save $6000 per year at the end of the next 30 years to fund
retirement.
How much will this accountant have upon retirement, if the accountant is able to earn
4% annually on this investment? -Correct Answer ✔$336,510
WGU C214
WGU C214
WGU C214 - Financial Management
Exam Questions and Answers 2025
Why are American regulators focused on international investing in a global
marketplace? -Correct Answer ✔Because international investing in a global marketplace
is the concern of American investors.
What are the likeliest outcomes if a company outsources the manufacturing of its
products to a foreign country? -Correct Answer ✔Consumer prices will decrease.
Domestic employment will decrease.
How can a private firm appropriately maximize shareholder value? -Correct Answer
✔By making decisions that keep the control of the business with the owners.
What is one of the two basic types of financial instruments? -Correct Answer ✔Bonds
or
Securities/Cheques
A company reported an increase in accounts receivable of $5,000 during the recent
period. Half of this amount is expected to be collected next period.
How will this change in accounts receivable affect the cash flows from the operating
activities section? -Correct Answer ✔The change will decrease cash flows from
operations by $5,000.
Selected Data for 20x2 for ABD Inc.
Net Income $1000
Depreciation Expense $300
Change in Operating Assets $600
Change in Net PPE $5000
Changes in Long-Term Liabilities $1000
Dividends Paid $200
What is this firm's cash flow from investments, using the data above and assuming no
asset disposals? -Correct Answer ✔$5,300 Outflow
What do cash flows from investing activities generally relate to? -Correct Answer ✔A
firm's purchase and sale of long-term assets.
Which transaction is reflected in cash flow from operating activities? -Correct Answer
✔Cash sales to customers.
What does free cash flow represent? -Correct Answer ✔Cash available for distribution
after funding required reinvestment.
WGU C214
, 2
WGU C214
What do the content and structure of a balance sheet report? -Correct Answer ✔The
assets, liabilities, and equity at a point in time.
Which statement accurately explains the recognition of revenues and expenses under
accounting income and income for tax purposes? -Correct Answer ✔Revenues and
expenses may be recognized in one period for accounting income purposes and in a
different period for income tax purposes.
What is the basic equation for a balance sheet? -Correct Answer ✔Assets=Liabilities +
Equity
An analyst is comparing the ratios of two firms and needs to address timing differences.
What is an example of a timing difference between these two firms? -Correct Answer
✔The firms have different fiscal years.
A companys year end balance sheet for 2013:
AR: 900
Inventory: 1200
Fixed assets: 1000
AP: 1300
Sales: 4000
Salaries: 275
What is their fixed asset turnover ratio? -Correct Answer ✔4.0
A firm has a ROE (return on equity) of 0.27, and the industry average ROE is 0.24.
Which conclusion should an analyst draw when comparing this firm to the industry? -
Correct Answer ✔The firm is generating higher returns to owners than the industry.
What must have taken place for a firm to recognize revenue, in order for the firm to
comply with the accrual accounting rules? -Correct Answer ✔The product must have
been delivered.
A teacher won $100,000 and invests this money for five years at an interest rate of 4%
(compounded annually). How much will this teacher have in principal and interest at the
end of the five years? -Correct Answer ✔$121,665
An accountant is 40 years old and has an anticipated retirement age of 70 years old.
The accountant plans to save $6000 per year at the end of the next 30 years to fund
retirement.
How much will this accountant have upon retirement, if the accountant is able to earn
4% annually on this investment? -Correct Answer ✔$336,510
WGU C214
