WGU C213 Verified Multiple Choice and Conceptual
Actual Final Exam Questions With Reviewed 100%
Correct Detailed Answers
Guaranteed Pass!!Current Update
1. Diversification protects against
a. Systematic risk
b. Market risk
c. Idiosyncratic risk
d. Inflation risk - ANSWER c
2. Which is the best diversification for stock investment?
a. Auto company and grocery chain
b. Walmart and Costco
c. Home buider and auto company
d. Boeing and Lockheed - ANSWER a
3. If you are assessing a firm's ability to meet short term obligations, you would use which
ratio?
a. Debt ratio
b. Quick ratio
c. Gross margin
d. Financial leverage - ANSWER b
4. To assess firm efficiency, which ratio would you use?
a. Asset turnover
b. Operating margin
c. Debt ratio
d. None of the above - ANSWER a
,5. Which would have the highest value?
a. Gross margin
b. Operating margin
c. Net margin
d. All are equal - ANSWER a
6. Which is the most important profit ratio?
a. Gross Margin
b. Net Margin
c. Return on Equity
d. Return on Assets - ANSWER c
7. If the debt ratio increases, what effect does that have on ROE?
a. ROE increases
b. ROE decreases
c. ROE is unchanged
d. Cannot be determined - ANSWER a
8. What is one way a firm maximizes shareholder value?
A. By switching inventory methods
B. By reducing the firm's labor force
C. By outsourcing the production of the firm's core product
D. By avoiding investments that cost more money than they bring in -
ANSWER d
9. What is one of the two basic types of financial instruments?
A. Money Markets
B. Mutual Funds
C. Stocks
D. Options - ANSWER c
10. Why is it a challenge for a fund manager to review financial statements from other
countries?
, A. Because the U.S. Financial Accounting Standards Board is in the
beginning stages of working with the International Accounting
Standards Board on converging reporting standards.
B. Because the U.S. Generally Accepted Accounting Principles and the
International Financial Reporting Standards vary.
C. Because the U.S. Financial Accounting Standards and the International
Accounting Standards Board abandoned the project to converge
financial reporting rules.
D. Because the U.S. Financial Accounting Standards Board does not work
with the International Accounting Standards Board on mitigating
differences in reporting standards. - ANSWER b
11. What is true about the content and structure of an income statement?
A. It reports the expenses and liabilities at a point in time.
B. It reports the revenues and expenses for a period of time.
C. It reports the assets and expenses for a period of time.
D. It reports the assets, liabilities, and equity at a point in time. - ANSWER
b
12. What is true when income for tax purposes is higher than accounting income
A. Accounting income tax expenses is the same as actual income tax
payable.
B. Actual income taxes payable will be lower than accounting income tax
expense.
C. Actual income taxes payable will be the same as accounting income tax
expense.
D. Actual income taxes payable will be higher than accounting income tax
expense. - ANSWER d
13. What does the statement of cash flows report?
A. A firm's cash balance at a point in time
B. A firm's cash net income for a point in time
C. A firm's cash balance and changes for a period of time
D. A firm's cash net income for a period of time - ANSWER c
, 14. What does net income measure that the cash flow from operating activities does not?
A. Credit sales to customers
B. Payments made to suppliers of goods and services
C. Depreciation expenses
D. Payments to employees or other expenses - ANSWER b
15. Which measure of cash flow is commonly used to evaluate the change in revenue and
costs?
A. Cash flow from operating activities
B. Free cash flow to the firm
C. Cash flow from financing activities
D. Free cash flow to equity - ANSWER a
16. An analyst is comparing the ratios of two firms and needs to address accounting
differences. What would be considered an accounting difference between the two
firms?
A. The firms have different auditors
B. The firms use different inventory methods
C. The firms have different fiscal years
D. The firms are in different industries - ANSWER b
17. For the year 2013, a firm has a return on equity (ROE) that is greater than return on
assets (ROA). Which conclusion would an analyst draw from these numbers?
A. The firm is ineffectively using debt.
B. The firm is ineffectively managing their inventory
C. The firm is effectively managing their inventory
D. The firm is effectively using debt - ANSWER d
18. What is an example of an estimate used in recording transactions?
A. Deciding whether to expense or depreciate a fixed asset
B. Deciding the cost of fixed asset when calculating depreciation expense
Actual Final Exam Questions With Reviewed 100%
Correct Detailed Answers
Guaranteed Pass!!Current Update
1. Diversification protects against
a. Systematic risk
b. Market risk
c. Idiosyncratic risk
d. Inflation risk - ANSWER c
2. Which is the best diversification for stock investment?
a. Auto company and grocery chain
b. Walmart and Costco
c. Home buider and auto company
d. Boeing and Lockheed - ANSWER a
3. If you are assessing a firm's ability to meet short term obligations, you would use which
ratio?
a. Debt ratio
b. Quick ratio
c. Gross margin
d. Financial leverage - ANSWER b
4. To assess firm efficiency, which ratio would you use?
a. Asset turnover
b. Operating margin
c. Debt ratio
d. None of the above - ANSWER a
,5. Which would have the highest value?
a. Gross margin
b. Operating margin
c. Net margin
d. All are equal - ANSWER a
6. Which is the most important profit ratio?
a. Gross Margin
b. Net Margin
c. Return on Equity
d. Return on Assets - ANSWER c
7. If the debt ratio increases, what effect does that have on ROE?
a. ROE increases
b. ROE decreases
c. ROE is unchanged
d. Cannot be determined - ANSWER a
8. What is one way a firm maximizes shareholder value?
A. By switching inventory methods
B. By reducing the firm's labor force
C. By outsourcing the production of the firm's core product
D. By avoiding investments that cost more money than they bring in -
ANSWER d
9. What is one of the two basic types of financial instruments?
A. Money Markets
B. Mutual Funds
C. Stocks
D. Options - ANSWER c
10. Why is it a challenge for a fund manager to review financial statements from other
countries?
, A. Because the U.S. Financial Accounting Standards Board is in the
beginning stages of working with the International Accounting
Standards Board on converging reporting standards.
B. Because the U.S. Generally Accepted Accounting Principles and the
International Financial Reporting Standards vary.
C. Because the U.S. Financial Accounting Standards and the International
Accounting Standards Board abandoned the project to converge
financial reporting rules.
D. Because the U.S. Financial Accounting Standards Board does not work
with the International Accounting Standards Board on mitigating
differences in reporting standards. - ANSWER b
11. What is true about the content and structure of an income statement?
A. It reports the expenses and liabilities at a point in time.
B. It reports the revenues and expenses for a period of time.
C. It reports the assets and expenses for a period of time.
D. It reports the assets, liabilities, and equity at a point in time. - ANSWER
b
12. What is true when income for tax purposes is higher than accounting income
A. Accounting income tax expenses is the same as actual income tax
payable.
B. Actual income taxes payable will be lower than accounting income tax
expense.
C. Actual income taxes payable will be the same as accounting income tax
expense.
D. Actual income taxes payable will be higher than accounting income tax
expense. - ANSWER d
13. What does the statement of cash flows report?
A. A firm's cash balance at a point in time
B. A firm's cash net income for a point in time
C. A firm's cash balance and changes for a period of time
D. A firm's cash net income for a period of time - ANSWER c
, 14. What does net income measure that the cash flow from operating activities does not?
A. Credit sales to customers
B. Payments made to suppliers of goods and services
C. Depreciation expenses
D. Payments to employees or other expenses - ANSWER b
15. Which measure of cash flow is commonly used to evaluate the change in revenue and
costs?
A. Cash flow from operating activities
B. Free cash flow to the firm
C. Cash flow from financing activities
D. Free cash flow to equity - ANSWER a
16. An analyst is comparing the ratios of two firms and needs to address accounting
differences. What would be considered an accounting difference between the two
firms?
A. The firms have different auditors
B. The firms use different inventory methods
C. The firms have different fiscal years
D. The firms are in different industries - ANSWER b
17. For the year 2013, a firm has a return on equity (ROE) that is greater than return on
assets (ROA). Which conclusion would an analyst draw from these numbers?
A. The firm is ineffectively using debt.
B. The firm is ineffectively managing their inventory
C. The firm is effectively managing their inventory
D. The firm is effectively using debt - ANSWER d
18. What is an example of an estimate used in recording transactions?
A. Deciding whether to expense or depreciate a fixed asset
B. Deciding the cost of fixed asset when calculating depreciation expense
