WGU - C214 Questions with verified answers
Agency Cost refers to what practice?
(a.) Using an agent to underwrite securities.
(b.) Using a dealer to trade securities.
(c.) Managers acting in personal interest.
(d.) None of the above. Ans✓✓✓ (c.) Managers acting in personal interest.
Corporate financial decision-making should be based on:
(a.) Audit financial statements
(b.) The corporation's 5-year plan
(c.) Market values
(d.) The Annual Report Ans✓✓✓ (c.) Market values
Diversification protects against:
(a.) Recession
(b.) Market Risk
(c.) Individual firm risk
(d.) Inflation risk Ans✓✓✓ (c.) Individual firm risk
Financial decisions should reflect:
, (a.) Shareholder interests
(b.) The largest shareholder
(c.) Equity analyst recommendations
(d.) Investment banker advice Ans✓✓✓ (a.) Shareholder interests.
Firms using different valuation methods is an example of what?
(a.) Timing issue
(b.) Seasonal effect
(c.) Interpretation error
(d.) An accounting difference Ans✓✓✓ (d.) An accounting difference
How does the IRS income statement differ from GAAP?
(a.) Expense recognition occurs in different time periods.
(b.) Actual taxes are higher than GAAP taxes.
(c.) Net income is higher
(d.) None of the above Ans✓✓✓ (a.) Expense recognition occurs in different time
periods.
If a firm automates its production line, which ratio is impacted?
(a.) Current Ratio
(b.) Quick Ratio
(c.) Fixed Asset Turnover
Agency Cost refers to what practice?
(a.) Using an agent to underwrite securities.
(b.) Using a dealer to trade securities.
(c.) Managers acting in personal interest.
(d.) None of the above. Ans✓✓✓ (c.) Managers acting in personal interest.
Corporate financial decision-making should be based on:
(a.) Audit financial statements
(b.) The corporation's 5-year plan
(c.) Market values
(d.) The Annual Report Ans✓✓✓ (c.) Market values
Diversification protects against:
(a.) Recession
(b.) Market Risk
(c.) Individual firm risk
(d.) Inflation risk Ans✓✓✓ (c.) Individual firm risk
Financial decisions should reflect:
, (a.) Shareholder interests
(b.) The largest shareholder
(c.) Equity analyst recommendations
(d.) Investment banker advice Ans✓✓✓ (a.) Shareholder interests.
Firms using different valuation methods is an example of what?
(a.) Timing issue
(b.) Seasonal effect
(c.) Interpretation error
(d.) An accounting difference Ans✓✓✓ (d.) An accounting difference
How does the IRS income statement differ from GAAP?
(a.) Expense recognition occurs in different time periods.
(b.) Actual taxes are higher than GAAP taxes.
(c.) Net income is higher
(d.) None of the above Ans✓✓✓ (a.) Expense recognition occurs in different time
periods.
If a firm automates its production line, which ratio is impacted?
(a.) Current Ratio
(b.) Quick Ratio
(c.) Fixed Asset Turnover
