WGU C201 BUSINESS ACUMEN OBJECTIVE
ASSESSMENT 2025/2026 | WESTERN GOVERNORS
UNIVERSITY BUSINESS EXAM PREP WITH 300+
VERIFIED QUESTIONS, CORRECT ANSWERS &
DETAILED RATIONALES
1. What is the primary purpose of a business plan?
(A) To secure funding
(B) To outline business goals and strategies
(C) To analyze competitors
(D) To determine pricing
Correct Option: (B) To outline business goals and strategies
Rationale: A business plan serves as a roadmap for the business, articulating its
vision, objectives, and the strategies to achieve them. It helps guide decision-
making and can attract investors.
2. Which financial statement provides a snapshot of a company's financial position
at a specific point in time?
(A) Income Statement
(B) Balance Sheet
(C) Cash Flow Statement
(D) Statement of Retained Earnings
Correct Option: (B) Balance Sheet
Rationale: The balance sheet reflects a company’s assets, liabilities, and equity
at a specific moment, allowing stakeholders to assess financial health and
stability.
3. What is the concept of opportunity cost?
(A) The cost of production
(B) The value of the next best alternative forgone
(C) The total revenue generated
(D) The fixed costs associated with a decision
Correct Option: (B) The value of the next best alternative forgone
Rationale: Opportunity cost is a fundamental economic principle that highlights
the potential benefits missed when choosing one option over another,
emphasizing the trade-offs in decision-making.
4. Which of the following is a key component of a SWOT analysis?
(A) Strengths
(B) Trends
(C) Objectives
(D) Strategies
Correct Option: (A) Strengths
Rationale: SWOT analysis identifies internal strengths and weaknesses
, alongside external opportunities and threats, providing a comprehensive view of
a business's strategic position.
5. What is the primary purpose of market segmentation?
(A) To increase production
(B) To identify and target specific customer groups
(C) To reduce costs
(D) To improve employee performance
Correct Option: (B) To identify and target specific customer groups
Rationale: Market segmentation allows businesses to tailor their marketing
efforts to specific groups of consumers, enhancing relevance and effectiveness,
and ultimately driving sales.
6. Which pricing strategy involves setting prices based on competitors' prices?
(A) Cost-plus pricing
(B) Competitive pricing
(C) Value-based pricing
(D) Penetration pricing
Correct Option: (B) Competitive pricing
Rationale: Competitive pricing strategy involves observing and responding to the
pricing of competitors, ensuring that products remain attractive to consumers
without undercutting profitability.
7. What does the term "liquidity" refer to in finance?
(A) The profitability of a company
(B) The ability to convert assets to cash quickly
(C) The amount of debt a company has
(D) The overall revenue generated
Correct Option: (B) The ability to convert assets to cash quickly
Rationale: Liquidity is crucial for a company’s financial health, as it measures
how readily it can meet short-term obligations without selling fixed assets.
8. Which of the following is an example of a variable cost?
(A) Rent
(B) Salaries
(C) Raw materials
(D) Insurance
Correct Option: (C) Raw materials
Rationale: Variable costs change with the level of production; raw materials
increase as production scales up, unlike fixed costs such as rent, which remain
constant.
9. What is the primary goal of marketing?
(A) To increase production
(B) To reduce costs
(C) To meet customer needs and wants
, (D) To improve employee performance
Correct Option: (C) To meet customer needs and wants
Rationale: Marketing aims to understand and satisfy customer demands,
thereby driving sales and fostering customer loyalty.
10. What is the role of a mission statement in a business?
(A) To outline financial goals
(B) To define the company's purpose and values
(C) To analyze market competition
(D) To determine pricing strategies
Correct Option: (B) To define the company's purpose and values
Rationale: A mission statement communicates the core purpose and values of a
company, guiding its strategies and decision-making.
11. Which financial metric is used to assess a company's profitability?
(A) Current ratio
(B) Net profit margin
(C) Debt-to-equity ratio
(D) Return on assets
Correct Option: (B) Net profit margin
Rationale: The net profit margin indicates how much profit a company makes for
every dollar of revenue, reflecting its overall profitability.
12. What is the purpose of a market analysis?
(A) To evaluate employee performance
(B) To understand the competitive landscape and customer needs
(C) To determine operational efficiencies
(D) To set pricing strategies
Correct Option: (B) To understand the competitive landscape and customer
needs
Rationale: Market analysis helps businesses identify trends, assess
competition, and understand customer preferences, informing strategic
decisions.
13. What is a common method for assessing customer satisfaction?
(A) Sales revenue analysis
(B) Surveys and feedback forms
(C) Profit margin calculations
(D) Market share analysis
Correct Option: (B) Surveys and feedback forms
Rationale: Surveys and feedback forms are direct methods for gathering
customer opinions and experiences, providing valuable insights into satisfaction
levels.
14. Which of the following best describes a competitive advantage?
(A) A temporary market position
, (B) A unique attribute that allows a company to outperform competitors
(C) A marketing strategy
(D) A financial metric
Correct Option: (B) A unique attribute that allows a company to outperform
competitors
Rationale: Competitive advantages can include superior technology, brand
reputation, or customer service, enabling a firm to gain greater market share.
15. What is the primary function of human resource management?
(A) To manage production processes
(B) To recruit, train, and develop employees
(C) To oversee financial transactions
(D) To manage marketing strategies
Correct Option: (B) To recruit, train, and develop employees
Rationale: Human resource management focuses on optimizing workforce
potential, ensuring employees are skilled and aligned with organizational goals.
16. How does diversification benefit a business?
(A) By reducing risk through entering new markets or products
(B) By increasing production efficiency
(C) By lowering operational costs
(D) By focusing on a single product line
Correct Option: (A) By reducing risk through entering new markets or
products
Rationale: Diversification helps spread risk by not relying solely on one market
or product, which can stabilize revenue streams.
17. What is an example of an indirect cost?
(A) Raw materials
(B) Utilities
(C) Direct labor
(D) Equipment
Correct Option: (B) Utilities
Rationale: Indirect costs are not directly tied to production but are necessary for
operations, such as utilities for running a facility.
18. What does it mean for a company to be "customer-focused"?
(A) Prioritizing customer needs and satisfaction in decision-making
(B) Focusing solely on sales and profits
(C) Reducing costs to increase profit margins
(D) Expanding product lines regardless of customer feedback
Correct Option: (A) Prioritizing customer needs and satisfaction in decision-
making
Rationale: A customer-focused approach ensures that business strategies align
with customer preferences, enhancing loyalty and satisfaction.
ASSESSMENT 2025/2026 | WESTERN GOVERNORS
UNIVERSITY BUSINESS EXAM PREP WITH 300+
VERIFIED QUESTIONS, CORRECT ANSWERS &
DETAILED RATIONALES
1. What is the primary purpose of a business plan?
(A) To secure funding
(B) To outline business goals and strategies
(C) To analyze competitors
(D) To determine pricing
Correct Option: (B) To outline business goals and strategies
Rationale: A business plan serves as a roadmap for the business, articulating its
vision, objectives, and the strategies to achieve them. It helps guide decision-
making and can attract investors.
2. Which financial statement provides a snapshot of a company's financial position
at a specific point in time?
(A) Income Statement
(B) Balance Sheet
(C) Cash Flow Statement
(D) Statement of Retained Earnings
Correct Option: (B) Balance Sheet
Rationale: The balance sheet reflects a company’s assets, liabilities, and equity
at a specific moment, allowing stakeholders to assess financial health and
stability.
3. What is the concept of opportunity cost?
(A) The cost of production
(B) The value of the next best alternative forgone
(C) The total revenue generated
(D) The fixed costs associated with a decision
Correct Option: (B) The value of the next best alternative forgone
Rationale: Opportunity cost is a fundamental economic principle that highlights
the potential benefits missed when choosing one option over another,
emphasizing the trade-offs in decision-making.
4. Which of the following is a key component of a SWOT analysis?
(A) Strengths
(B) Trends
(C) Objectives
(D) Strategies
Correct Option: (A) Strengths
Rationale: SWOT analysis identifies internal strengths and weaknesses
, alongside external opportunities and threats, providing a comprehensive view of
a business's strategic position.
5. What is the primary purpose of market segmentation?
(A) To increase production
(B) To identify and target specific customer groups
(C) To reduce costs
(D) To improve employee performance
Correct Option: (B) To identify and target specific customer groups
Rationale: Market segmentation allows businesses to tailor their marketing
efforts to specific groups of consumers, enhancing relevance and effectiveness,
and ultimately driving sales.
6. Which pricing strategy involves setting prices based on competitors' prices?
(A) Cost-plus pricing
(B) Competitive pricing
(C) Value-based pricing
(D) Penetration pricing
Correct Option: (B) Competitive pricing
Rationale: Competitive pricing strategy involves observing and responding to the
pricing of competitors, ensuring that products remain attractive to consumers
without undercutting profitability.
7. What does the term "liquidity" refer to in finance?
(A) The profitability of a company
(B) The ability to convert assets to cash quickly
(C) The amount of debt a company has
(D) The overall revenue generated
Correct Option: (B) The ability to convert assets to cash quickly
Rationale: Liquidity is crucial for a company’s financial health, as it measures
how readily it can meet short-term obligations without selling fixed assets.
8. Which of the following is an example of a variable cost?
(A) Rent
(B) Salaries
(C) Raw materials
(D) Insurance
Correct Option: (C) Raw materials
Rationale: Variable costs change with the level of production; raw materials
increase as production scales up, unlike fixed costs such as rent, which remain
constant.
9. What is the primary goal of marketing?
(A) To increase production
(B) To reduce costs
(C) To meet customer needs and wants
, (D) To improve employee performance
Correct Option: (C) To meet customer needs and wants
Rationale: Marketing aims to understand and satisfy customer demands,
thereby driving sales and fostering customer loyalty.
10. What is the role of a mission statement in a business?
(A) To outline financial goals
(B) To define the company's purpose and values
(C) To analyze market competition
(D) To determine pricing strategies
Correct Option: (B) To define the company's purpose and values
Rationale: A mission statement communicates the core purpose and values of a
company, guiding its strategies and decision-making.
11. Which financial metric is used to assess a company's profitability?
(A) Current ratio
(B) Net profit margin
(C) Debt-to-equity ratio
(D) Return on assets
Correct Option: (B) Net profit margin
Rationale: The net profit margin indicates how much profit a company makes for
every dollar of revenue, reflecting its overall profitability.
12. What is the purpose of a market analysis?
(A) To evaluate employee performance
(B) To understand the competitive landscape and customer needs
(C) To determine operational efficiencies
(D) To set pricing strategies
Correct Option: (B) To understand the competitive landscape and customer
needs
Rationale: Market analysis helps businesses identify trends, assess
competition, and understand customer preferences, informing strategic
decisions.
13. What is a common method for assessing customer satisfaction?
(A) Sales revenue analysis
(B) Surveys and feedback forms
(C) Profit margin calculations
(D) Market share analysis
Correct Option: (B) Surveys and feedback forms
Rationale: Surveys and feedback forms are direct methods for gathering
customer opinions and experiences, providing valuable insights into satisfaction
levels.
14. Which of the following best describes a competitive advantage?
(A) A temporary market position
, (B) A unique attribute that allows a company to outperform competitors
(C) A marketing strategy
(D) A financial metric
Correct Option: (B) A unique attribute that allows a company to outperform
competitors
Rationale: Competitive advantages can include superior technology, brand
reputation, or customer service, enabling a firm to gain greater market share.
15. What is the primary function of human resource management?
(A) To manage production processes
(B) To recruit, train, and develop employees
(C) To oversee financial transactions
(D) To manage marketing strategies
Correct Option: (B) To recruit, train, and develop employees
Rationale: Human resource management focuses on optimizing workforce
potential, ensuring employees are skilled and aligned with organizational goals.
16. How does diversification benefit a business?
(A) By reducing risk through entering new markets or products
(B) By increasing production efficiency
(C) By lowering operational costs
(D) By focusing on a single product line
Correct Option: (A) By reducing risk through entering new markets or
products
Rationale: Diversification helps spread risk by not relying solely on one market
or product, which can stabilize revenue streams.
17. What is an example of an indirect cost?
(A) Raw materials
(B) Utilities
(C) Direct labor
(D) Equipment
Correct Option: (B) Utilities
Rationale: Indirect costs are not directly tied to production but are necessary for
operations, such as utilities for running a facility.
18. What does it mean for a company to be "customer-focused"?
(A) Prioritizing customer needs and satisfaction in decision-making
(B) Focusing solely on sales and profits
(C) Reducing costs to increase profit margins
(D) Expanding product lines regardless of customer feedback
Correct Option: (A) Prioritizing customer needs and satisfaction in decision-
making
Rationale: A customer-focused approach ensures that business strategies align
with customer preferences, enhancing loyalty and satisfaction.
