WGU C214 Quick Study for PA/OA (2025)
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Unethical behavior/scandals - CORRECT ANSWER What is a potential negative
consequence if a firm focuses only on profit maximization
Private companies are not publicly traded and keep business within their "family" - CORRECT
ANSWER How does a private company differ from a public company
To make their exports cheaper - CORRECT ANSWER Why would a country devalue their
currency
Auction market
Dealer market - CORRECT ANSWER What are the two types of secondary financial markets
Auction sells to highest bidder
Physical location
e.g. NYSE - CORRECT ANSWER What is an auction market (of the secondary financial
market)
Multiple dealers holding an inventory of securities and quote prices
Virtual, does not require physical location
e.g. NASDAQ - CORRECT ANSWER What is a dealer market (of the secondary financial
market)
True - CORRECT ANSWER True or False: Efficient and well-developed financial markets
enable more reliable stock prices
, The retained earnings were paid out as dividends to shareholders - CORRECT
ANSWER Explain why a company would have a net income of 100k but retained earnings
only increased 20k
Accumulated earnings not paid out as dividends, they have been plowed back (retained) -
CORRECT ANSWER What is retained earnings on the balance sheet
False. It is not cash on the books and cannot be used to pay bills. - CORRECT
ANSWER True or False: Retained earnings can be used to pay company bills
It is a non-cash expense - CORRECT ANSWER Why is depreciation added back to net
income when calculating CFO
Increase or decrease in operating asset accounts
e.g. accounts receivable and inventory
Increase of decrease in operating liability accounts
e.g. accounts payable and accrued wages - CORRECT ANSWER What are operating
accounts in the balance sheet
Cash outflow - CORRECT ANSWER What happens with CFO when assets increase,
cash____________
Cash inflow - CORRECT ANSWER What happens with CFO when liabilities increase,
cash__________
Cash flows from operating, investing, and financing activities - CORRECT ANSWER What
does a statement of cash flow show an investor?
The company relied on external financing - CORRECT ANSWER What does it mean if a
company has a CFO of $100, CFI of $50, CFF of $300
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Unethical behavior/scandals - CORRECT ANSWER What is a potential negative
consequence if a firm focuses only on profit maximization
Private companies are not publicly traded and keep business within their "family" - CORRECT
ANSWER How does a private company differ from a public company
To make their exports cheaper - CORRECT ANSWER Why would a country devalue their
currency
Auction market
Dealer market - CORRECT ANSWER What are the two types of secondary financial markets
Auction sells to highest bidder
Physical location
e.g. NYSE - CORRECT ANSWER What is an auction market (of the secondary financial
market)
Multiple dealers holding an inventory of securities and quote prices
Virtual, does not require physical location
e.g. NASDAQ - CORRECT ANSWER What is a dealer market (of the secondary financial
market)
True - CORRECT ANSWER True or False: Efficient and well-developed financial markets
enable more reliable stock prices
, The retained earnings were paid out as dividends to shareholders - CORRECT
ANSWER Explain why a company would have a net income of 100k but retained earnings
only increased 20k
Accumulated earnings not paid out as dividends, they have been plowed back (retained) -
CORRECT ANSWER What is retained earnings on the balance sheet
False. It is not cash on the books and cannot be used to pay bills. - CORRECT
ANSWER True or False: Retained earnings can be used to pay company bills
It is a non-cash expense - CORRECT ANSWER Why is depreciation added back to net
income when calculating CFO
Increase or decrease in operating asset accounts
e.g. accounts receivable and inventory
Increase of decrease in operating liability accounts
e.g. accounts payable and accrued wages - CORRECT ANSWER What are operating
accounts in the balance sheet
Cash outflow - CORRECT ANSWER What happens with CFO when assets increase,
cash____________
Cash inflow - CORRECT ANSWER What happens with CFO when liabilities increase,
cash__________
Cash flows from operating, investing, and financing activities - CORRECT ANSWER What
does a statement of cash flow show an investor?
The company relied on external financing - CORRECT ANSWER What does it mean if a
company has a CFO of $100, CFI of $50, CFF of $300
