WGU C214 Financial Management OA
Study Set Question and answers
verified to pass 2025/2026
Trading on the NYSE is executed without a specialist (i.e. a market maker). True or False? - correct
answer ✔False
Stocks and Bonds are two types of financial instruments. True or False? - correct answer ✔True
When revenue is matched with cost of sales in an Income statement it is called? - correct answer
✔Matching principle
Basic balance sheet equation is what? - correct answer ✔Equity = Assets - Liabilities
Why is the balance sheet known as the permanent statement? - correct answer ✔Because the other
statements are reset at the end of the fiscal year.
How do you calculate the change in retained earnings? - correct answer ✔Net income-dividends
Sales - Cost of Sales - other expenses = - correct answer ✔Operating Income or EBiT
Name four accounts that are part of total assets? - correct answer ✔Cash, Accounts receivable,
inventory, long term assets
Name three accounts that are part of total liabilities? - correct answer ✔Bonds, accounts payable and
mortgage
, Name four accounts that are part of current assets? - correct answer ✔Inventory, cash, accounts
receivable and short term investments.
Name three accounts that are only included in cash flow from financing? - correct answer ✔Common
stock, dividends paid and bonds payable
Define the statement of cash flows? - correct answer ✔Calculated for the same period of time as the
incomes statement is calculated based on the income statement and changes in the balance sheet is one
of the three basic accounting statements.
When fixed assets increase what happens to cash? - correct answer ✔Cash will decrease
What is the purpose of the statement of cash flows? - correct answer ✔Explains the change in cash
over the course of the specified time frame.
Suppose the inventory turnover of a company is higher than the industry. Based on this observation,
which of the following is most likely? - correct answer ✔The firm has too little inventory resulting in
lost sales or stock-outs.
If a company wishes to obtain a bank loan, will it want to have a higher current ratio or a lower current
ratio? - correct answer ✔Higher
The Operating Income Return on Investment (OIROI) uses what elements on the income statement? -
correct answer ✔EBIT and total assets
Why would a company be interested in the Total Asset Turnover (TAT) ratio? - correct answer ✔To see
how efficient are at producing sales
What annual interest will be paid for a zero coupon bond? - correct answer ✔0%
Study Set Question and answers
verified to pass 2025/2026
Trading on the NYSE is executed without a specialist (i.e. a market maker). True or False? - correct
answer ✔False
Stocks and Bonds are two types of financial instruments. True or False? - correct answer ✔True
When revenue is matched with cost of sales in an Income statement it is called? - correct answer
✔Matching principle
Basic balance sheet equation is what? - correct answer ✔Equity = Assets - Liabilities
Why is the balance sheet known as the permanent statement? - correct answer ✔Because the other
statements are reset at the end of the fiscal year.
How do you calculate the change in retained earnings? - correct answer ✔Net income-dividends
Sales - Cost of Sales - other expenses = - correct answer ✔Operating Income or EBiT
Name four accounts that are part of total assets? - correct answer ✔Cash, Accounts receivable,
inventory, long term assets
Name three accounts that are part of total liabilities? - correct answer ✔Bonds, accounts payable and
mortgage
, Name four accounts that are part of current assets? - correct answer ✔Inventory, cash, accounts
receivable and short term investments.
Name three accounts that are only included in cash flow from financing? - correct answer ✔Common
stock, dividends paid and bonds payable
Define the statement of cash flows? - correct answer ✔Calculated for the same period of time as the
incomes statement is calculated based on the income statement and changes in the balance sheet is one
of the three basic accounting statements.
When fixed assets increase what happens to cash? - correct answer ✔Cash will decrease
What is the purpose of the statement of cash flows? - correct answer ✔Explains the change in cash
over the course of the specified time frame.
Suppose the inventory turnover of a company is higher than the industry. Based on this observation,
which of the following is most likely? - correct answer ✔The firm has too little inventory resulting in
lost sales or stock-outs.
If a company wishes to obtain a bank loan, will it want to have a higher current ratio or a lower current
ratio? - correct answer ✔Higher
The Operating Income Return on Investment (OIROI) uses what elements on the income statement? -
correct answer ✔EBIT and total assets
Why would a company be interested in the Total Asset Turnover (TAT) ratio? - correct answer ✔To see
how efficient are at producing sales
What annual interest will be paid for a zero coupon bond? - correct answer ✔0%
