Page 1 of 20
WGU C214 FINANCIAL MANAGEMENT OA STUDY SET
QUESTIONS & CORRECT DETAILED ANSWERS [GRADED A+]
LATEST UPDATE
Terms in this set (142) Q & A
Trading on the NYSE is executed without a specialist (i.e. a market maker). True or False?
-answer- False
Stocks and Bonds are two types of financial instruments. True or False?
-answer- True
When revenue is matched with cost of sales in an Income statement it is called?
-answer- Matching principle
Basic balance sheet equation is what?
-answer- Equity = Assets - Liabilities
Why is the balance sheet known as the permanent statement?
-answer- Because the other statements are reset at the end of the fiscal year.
How do you calculate the change in retained earnings?
-answer- Net income-dividends
, Page 2 of 20
Sales - Cost of Sales - other expenses =
-answer- Operating Income or EBiT
Name four accounts that are part of total assets?
-answer- Cash, Accounts receivable, inventory, long term assets
Name three accounts that are part of total liabilities?
-answer- Bonds, accounts payable and mortgage
Name four accounts that are part of current assets?
-answer- Inventory, cash, accounts receivable and short term investments.
Name three accounts that are only included in cash flow from financing?
-answer- Common stock, dividends paid and bonds payable
Define the statement of cash flows?
-answer- Calculated for the same period of time as the incomes statement is calculated based
on the income statement and changes in the balance sheet is one of the three basic
accounting statements.
When fixed assets increase what happens to cash?
-answer- Cash will decrease
, Page 3 of 20
What is the purpose of the statement of cash flows?
-answer- Explains the change in cash over the course of the specified time frame.
Suppose the inventory turnover of a company is higher than the industry. Based on this
observation, which of the following is most likely?
-answer- The firm has too little inventory resulting in lost sales or stock-outs.
If a company wishes to obtain a bank loan, will it want to have a higher current ratio or a
lower current ratio?
-answer- Higher
The Operating Income Return on Investment (OIROI) uses what elements on the income
statement?
-answer- EBIT and total assets
Why would a company be interested in the Total Asset Turnover (TAT) ratio?
-answer- To see how efficient are at producing sales
What annual interest will be paid for a zero coupon bond?
-answer- 0%
What is the most significant characteristic of subordinated debt?
-answer- Senior debt is paid off first
WGU C214 FINANCIAL MANAGEMENT OA STUDY SET
QUESTIONS & CORRECT DETAILED ANSWERS [GRADED A+]
LATEST UPDATE
Terms in this set (142) Q & A
Trading on the NYSE is executed without a specialist (i.e. a market maker). True or False?
-answer- False
Stocks and Bonds are two types of financial instruments. True or False?
-answer- True
When revenue is matched with cost of sales in an Income statement it is called?
-answer- Matching principle
Basic balance sheet equation is what?
-answer- Equity = Assets - Liabilities
Why is the balance sheet known as the permanent statement?
-answer- Because the other statements are reset at the end of the fiscal year.
How do you calculate the change in retained earnings?
-answer- Net income-dividends
, Page 2 of 20
Sales - Cost of Sales - other expenses =
-answer- Operating Income or EBiT
Name four accounts that are part of total assets?
-answer- Cash, Accounts receivable, inventory, long term assets
Name three accounts that are part of total liabilities?
-answer- Bonds, accounts payable and mortgage
Name four accounts that are part of current assets?
-answer- Inventory, cash, accounts receivable and short term investments.
Name three accounts that are only included in cash flow from financing?
-answer- Common stock, dividends paid and bonds payable
Define the statement of cash flows?
-answer- Calculated for the same period of time as the incomes statement is calculated based
on the income statement and changes in the balance sheet is one of the three basic
accounting statements.
When fixed assets increase what happens to cash?
-answer- Cash will decrease
, Page 3 of 20
What is the purpose of the statement of cash flows?
-answer- Explains the change in cash over the course of the specified time frame.
Suppose the inventory turnover of a company is higher than the industry. Based on this
observation, which of the following is most likely?
-answer- The firm has too little inventory resulting in lost sales or stock-outs.
If a company wishes to obtain a bank loan, will it want to have a higher current ratio or a
lower current ratio?
-answer- Higher
The Operating Income Return on Investment (OIROI) uses what elements on the income
statement?
-answer- EBIT and total assets
Why would a company be interested in the Total Asset Turnover (TAT) ratio?
-answer- To see how efficient are at producing sales
What annual interest will be paid for a zero coupon bond?
-answer- 0%
What is the most significant characteristic of subordinated debt?
-answer- Senior debt is paid off first
