WGU D076 FINANCIAL SKILLS FOR
MANAGERS PRACTICE EXAM 2026/2027
QUESTIONS AND ANSWERS
1. Which financial statement summarizes a firm’s revenues and expenses over a specific
period?
A. Balance Sheet
B. Statement of Cash Flows
C. Income Statement
D. Statement of Retained Earnings
Answer: C
Conceptual Explanation: The income statement reports the financial performance of a
company over a specific accounting period by showing revenues, expenses, and net income.
2. Which of the following represents the accounting equation?
A. Assets = Liabilities - Equity
B. Assets = Liabilities + Equity
C. Equity = Assets + Liabilities
,D. Liabilities = Assets + Equity
Answer: B
Conceptual Explanation: The fundamental accounting equation is Assets = Liabilities +
Equity, reflecting that all assets are financed by either debt or owner investment.
3. What is the primary goal of financial management in a corporation?
A. Maximize market share
B. Maximize shareholder wealth
C. Minimize tax liability
D. Maximize net income
Answer: B
Conceptual Explanation: The primary goal of financial management is to maximize the
market value of the firm’s stock, which equates to maximizing shareholder wealth.
4. A company has a Current Ratio of 2.5. What does this indicate?
A. The company has $2.50 in long-term assets for every $1 of debt.
B. The company’s debt is 2.5 times its equity.
C. The company has $2.50 in current assets for every $1 of current liabilities.
D. The company turns over its inventory 2.5 times per year.
Answer: C
, Conceptual Explanation: The Current Ratio is calculated as Current Assets divided by
Current Liabilities, measuring the firm’s ability to pay short-term obligations.
5. Which of the following is considered a non-cash expense?
A. Interest expense
B. Wages and salaries
C. Rent
D. Depreciation
Answer: D
Conceptual Explanation: Depreciation is an accounting allocation of cost over the useful
life of an asset; no cash is actually paid out when the expense is recorded.
6. What is the ‘Time Value of Money’ concept?
A. A dollar today is worth more than a dollar in the future due to its earning potential.
B. Money is worth less in the future due to inflation only.
C. The value of money remains constant over time.
D. Money grows linearly regardless of interest rates.
Answer: A
Conceptual Explanation: TVM is the idea that money available now is worth more than
the same amount in the future because it can be invested to earn interest.
MANAGERS PRACTICE EXAM 2026/2027
QUESTIONS AND ANSWERS
1. Which financial statement summarizes a firm’s revenues and expenses over a specific
period?
A. Balance Sheet
B. Statement of Cash Flows
C. Income Statement
D. Statement of Retained Earnings
Answer: C
Conceptual Explanation: The income statement reports the financial performance of a
company over a specific accounting period by showing revenues, expenses, and net income.
2. Which of the following represents the accounting equation?
A. Assets = Liabilities - Equity
B. Assets = Liabilities + Equity
C. Equity = Assets + Liabilities
,D. Liabilities = Assets + Equity
Answer: B
Conceptual Explanation: The fundamental accounting equation is Assets = Liabilities +
Equity, reflecting that all assets are financed by either debt or owner investment.
3. What is the primary goal of financial management in a corporation?
A. Maximize market share
B. Maximize shareholder wealth
C. Minimize tax liability
D. Maximize net income
Answer: B
Conceptual Explanation: The primary goal of financial management is to maximize the
market value of the firm’s stock, which equates to maximizing shareholder wealth.
4. A company has a Current Ratio of 2.5. What does this indicate?
A. The company has $2.50 in long-term assets for every $1 of debt.
B. The company’s debt is 2.5 times its equity.
C. The company has $2.50 in current assets for every $1 of current liabilities.
D. The company turns over its inventory 2.5 times per year.
Answer: C
, Conceptual Explanation: The Current Ratio is calculated as Current Assets divided by
Current Liabilities, measuring the firm’s ability to pay short-term obligations.
5. Which of the following is considered a non-cash expense?
A. Interest expense
B. Wages and salaries
C. Rent
D. Depreciation
Answer: D
Conceptual Explanation: Depreciation is an accounting allocation of cost over the useful
life of an asset; no cash is actually paid out when the expense is recorded.
6. What is the ‘Time Value of Money’ concept?
A. A dollar today is worth more than a dollar in the future due to its earning potential.
B. Money is worth less in the future due to inflation only.
C. The value of money remains constant over time.
D. Money grows linearly regardless of interest rates.
Answer: A
Conceptual Explanation: TVM is the idea that money available now is worth more than
the same amount in the future because it can be invested to earn interest.
