WGU D076 Financial Skills for Manager Exam
2024 [Actual Exam] Questions & Elaborated
Answers with Rationales
Question 1: Which financial statement measures a firm’s financial performance over a specific
period?
A) Balance sheet
B) Statement of cash flows
C) Income statement
D) Statement of retained earnings
Correct Answer: C) Income statement
Explanation: The income statement (profit-and-loss) reports revenues and expenses for a given
period, showing net performance. The balance sheet is a point-in-time snapshot, while the
cash-flow statement explains liquidity changes.
Question 2: A company has current assets of $400,000 and current liabilities of $250,000. Its
current ratio is:
A) 0.63
B) 1.6
,C) 2.5
D) 1.0
Correct Answer: B) 1.6
Explanation: Current ratio = current assets ÷ current liabilities = $400,000 ÷ $250,000 = 1.6,
indicating $1.60 of short-term assets for every $1 of short-term debt.
Question 3: Depreciation expense on factory equipment is classified as:
A) Period cost
B) Selling expense
C) Product cost
D) Administrative expense
Correct Answer: C) Product cost
Explanation: Depreciation on manufacturing assets is inventoriable (product cost) that flows
through cost of goods sold, not an immediate period expense.
Question 4: Under absorption costing, which costs are excluded from inventory?
A) Direct materials
B) Direct labour
C) Variable manufacturing overhead
, D) Fixed manufacturing overhead
Correct Answer: None (trick question—all are included); closest textbook distractor would be “fixed
manufacturing overhead” if the question read “variable costing.” Since the stem asks what is
excluded under absorption, none are excluded. (Yet to keep four choices, the question is rewritten
below.)
Revised Question 4: Under variable costing, which cost is excluded from inventory?
A) Direct materials
B) Direct labour
C) Variable manufacturing overhead
D) Fixed manufacturing overhead
Correct Answer: D) Fixed manufacturing overhead
Explanation: Variable costing treats fixed factory overhead as a period expense, expensing it
immediately while the other three costs are still inventoried.
Question 5: The break-even point in units equals:
A) Fixed costs ÷ (Sales price – Variable cost per unit)
B) Variable costs ÷ Contribution margin ratio
C) Fixed costs ÷ Gross margin %
D) Sales ÷ Variable cost per unit
2024 [Actual Exam] Questions & Elaborated
Answers with Rationales
Question 1: Which financial statement measures a firm’s financial performance over a specific
period?
A) Balance sheet
B) Statement of cash flows
C) Income statement
D) Statement of retained earnings
Correct Answer: C) Income statement
Explanation: The income statement (profit-and-loss) reports revenues and expenses for a given
period, showing net performance. The balance sheet is a point-in-time snapshot, while the
cash-flow statement explains liquidity changes.
Question 2: A company has current assets of $400,000 and current liabilities of $250,000. Its
current ratio is:
A) 0.63
B) 1.6
,C) 2.5
D) 1.0
Correct Answer: B) 1.6
Explanation: Current ratio = current assets ÷ current liabilities = $400,000 ÷ $250,000 = 1.6,
indicating $1.60 of short-term assets for every $1 of short-term debt.
Question 3: Depreciation expense on factory equipment is classified as:
A) Period cost
B) Selling expense
C) Product cost
D) Administrative expense
Correct Answer: C) Product cost
Explanation: Depreciation on manufacturing assets is inventoriable (product cost) that flows
through cost of goods sold, not an immediate period expense.
Question 4: Under absorption costing, which costs are excluded from inventory?
A) Direct materials
B) Direct labour
C) Variable manufacturing overhead
, D) Fixed manufacturing overhead
Correct Answer: None (trick question—all are included); closest textbook distractor would be “fixed
manufacturing overhead” if the question read “variable costing.” Since the stem asks what is
excluded under absorption, none are excluded. (Yet to keep four choices, the question is rewritten
below.)
Revised Question 4: Under variable costing, which cost is excluded from inventory?
A) Direct materials
B) Direct labour
C) Variable manufacturing overhead
D) Fixed manufacturing overhead
Correct Answer: D) Fixed manufacturing overhead
Explanation: Variable costing treats fixed factory overhead as a period expense, expensing it
immediately while the other three costs are still inventoried.
Question 5: The break-even point in units equals:
A) Fixed costs ÷ (Sales price – Variable cost per unit)
B) Variable costs ÷ Contribution margin ratio
C) Fixed costs ÷ Gross margin %
D) Sales ÷ Variable cost per unit
