WGU C201 Business Acumen Chapter 17: Financial
Management questions with verified answers
3 Characteristics Making Commercial Paper Low Risk Ans✓✓✓ Maturity that
ranges from 1 to 270 days.
Large amounts of money can be raised.
Rates that are typically 1 to 2 percent less that those charged by banks.
Chief Financial Officer Ans✓✓✓ Leader of the financial team.
Reports to Chief Executive Officer.
May be on board of directors.
This person and CEO must certify accuracy of financial statements.
Commercial Paper Ans✓✓✓ Issued by a company as an IUO.
Unsecured.
Controller Ans✓✓✓ Chief accounting manager.
Keeps books.
Prepares financial statements.
Current Assets (also short term assets) Ans✓✓✓ Cash and cash assets that are
expected to be converted to cash within one year.
Examples: cash, marketable securities, inventory, accounting receivables.
Debt Capital Ans✓✓✓ Funds from borrowing
, Describe the disadvantages of equity capital. Ans✓✓✓ If you raise funds from
shareholders, the returns to shareholders increase as the earnings increase.
The rate isn't like an interest rate.
Also shareholders have the right to vote on major decisions and the right to elect
board of directors.
Equity capital is more expensive than debt capital.
Creditors accept a lower rate of return than shareholders.
Interest from debt capital can be deducted. Dividends paid to shareholders
cannot be deducted.
Equity Capital Ans✓✓✓ Funds from firm's owners reinvesting
Explain why companies frequently choose debt. Ans✓✓✓ Because they benefit
from using leverage. Leverage increases potential returns to shareholders, but
also increase risk.
Creditors will accept a lower rate of return.
Creditors have a senior claim to equity.
Interest paid to creditors can be deducted.
Financial Controls - Financial Planning Ans✓✓✓ A good financial plan also
includes financial control, a process of comparing actual revenues, costs, and
expenses with forecasts. This comparison may reveal significant differences
between projected and actual figures, so it is important to discover them early to
take quick action.
Financial Structure Ans✓✓✓ Chief Financial Officer, Vice President of Finance,
Treasurer, and Controller
Management questions with verified answers
3 Characteristics Making Commercial Paper Low Risk Ans✓✓✓ Maturity that
ranges from 1 to 270 days.
Large amounts of money can be raised.
Rates that are typically 1 to 2 percent less that those charged by banks.
Chief Financial Officer Ans✓✓✓ Leader of the financial team.
Reports to Chief Executive Officer.
May be on board of directors.
This person and CEO must certify accuracy of financial statements.
Commercial Paper Ans✓✓✓ Issued by a company as an IUO.
Unsecured.
Controller Ans✓✓✓ Chief accounting manager.
Keeps books.
Prepares financial statements.
Current Assets (also short term assets) Ans✓✓✓ Cash and cash assets that are
expected to be converted to cash within one year.
Examples: cash, marketable securities, inventory, accounting receivables.
Debt Capital Ans✓✓✓ Funds from borrowing
, Describe the disadvantages of equity capital. Ans✓✓✓ If you raise funds from
shareholders, the returns to shareholders increase as the earnings increase.
The rate isn't like an interest rate.
Also shareholders have the right to vote on major decisions and the right to elect
board of directors.
Equity capital is more expensive than debt capital.
Creditors accept a lower rate of return than shareholders.
Interest from debt capital can be deducted. Dividends paid to shareholders
cannot be deducted.
Equity Capital Ans✓✓✓ Funds from firm's owners reinvesting
Explain why companies frequently choose debt. Ans✓✓✓ Because they benefit
from using leverage. Leverage increases potential returns to shareholders, but
also increase risk.
Creditors will accept a lower rate of return.
Creditors have a senior claim to equity.
Interest paid to creditors can be deducted.
Financial Controls - Financial Planning Ans✓✓✓ A good financial plan also
includes financial control, a process of comparing actual revenues, costs, and
expenses with forecasts. This comparison may reveal significant differences
between projected and actual figures, so it is important to discover them early to
take quick action.
Financial Structure Ans✓✓✓ Chief Financial Officer, Vice President of Finance,
Treasurer, and Controller
