WGU C214 Study Guide Multi Choice
version Question and answers already
passed 2025/2026
Trading on the NYSE uses a specialist, uses a market maker). - correct answer ✔
If the value of a dollar increases, the price of imports: - correct answer ✔Decreases
Stocks and bonds are two types of financial instruments - correct answer ✔
The matching principle in accrual accounting requires that: - correct answer ✔Revenues be recognized
when the earnings process is complete and matches expenses to revenues recognized.
A basic equation for the balance sheet is: - correct answer ✔Equity = Assets - Liabilities
Why is the Balance Sheet known as a 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 MINUS
DIVIDENDS
Which of the following is generally true? - correct answer ✔OPERATING INCOME AND EBIT ARE THE
SAME
Which components are part of total assets? - correct answer ✔Cash Accounts Receivable, Inventory,
Long Term Assets
, Which components are part of current assets? - correct answer ✔Inventory, Cash, Accounts
Receivable, Short Term Investments
Which components are part of Total Liabilities? - correct answer ✔Bonds, Accounts Payable, Mortgage
When Fixed Assets increase what happens to Cash? - correct answer ✔cash decreases
Which is the purpose of the statement of cash flows? - correct answer ✔explains the change in cash
balance for one period of time
The OIROI (Operating Income Return on Investment) uses what elements on the income statement? -
correct answer ✔EBIT, Total Assets
Why would a company be interested in the TAT(Total Asset Turnover) ratio? - correct answer ✔How
efficient assets are at producing sales
You are contemplating buying an annual bond or a semi-annual bond. Is there any difference in the price
if the bond has the same data: 1,000 face value with a 4% coupon rate. The bonds mature in 5 years
having identical YTMs of 4.8%. Why is there a price difference? - correct answer ✔Price is higher with
additional compounding periods
One of your friends is recommending a stock if it sells for more than $165.00 per share. The growth rate
is 4% and the latest dividend was $6.00. You are expecting an 11% return. Why should you buy or not
buy the stock? - correct answer ✔Not Buy - The calculated price is too low
What does the beta coefficient represent? - correct answer ✔It is a statistically-derived measure of
volatility
Why is depreciation expense taken out of the net income calculation, yet added back at the end? -
correct answer ✔Because depreciation expense is tax deductible
version Question and answers already
passed 2025/2026
Trading on the NYSE uses a specialist, uses a market maker). - correct answer ✔
If the value of a dollar increases, the price of imports: - correct answer ✔Decreases
Stocks and bonds are two types of financial instruments - correct answer ✔
The matching principle in accrual accounting requires that: - correct answer ✔Revenues be recognized
when the earnings process is complete and matches expenses to revenues recognized.
A basic equation for the balance sheet is: - correct answer ✔Equity = Assets - Liabilities
Why is the Balance Sheet known as a 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 MINUS
DIVIDENDS
Which of the following is generally true? - correct answer ✔OPERATING INCOME AND EBIT ARE THE
SAME
Which components are part of total assets? - correct answer ✔Cash Accounts Receivable, Inventory,
Long Term Assets
, Which components are part of current assets? - correct answer ✔Inventory, Cash, Accounts
Receivable, Short Term Investments
Which components are part of Total Liabilities? - correct answer ✔Bonds, Accounts Payable, Mortgage
When Fixed Assets increase what happens to Cash? - correct answer ✔cash decreases
Which is the purpose of the statement of cash flows? - correct answer ✔explains the change in cash
balance for one period of time
The OIROI (Operating Income Return on Investment) uses what elements on the income statement? -
correct answer ✔EBIT, Total Assets
Why would a company be interested in the TAT(Total Asset Turnover) ratio? - correct answer ✔How
efficient assets are at producing sales
You are contemplating buying an annual bond or a semi-annual bond. Is there any difference in the price
if the bond has the same data: 1,000 face value with a 4% coupon rate. The bonds mature in 5 years
having identical YTMs of 4.8%. Why is there a price difference? - correct answer ✔Price is higher with
additional compounding periods
One of your friends is recommending a stock if it sells for more than $165.00 per share. The growth rate
is 4% and the latest dividend was $6.00. You are expecting an 11% return. Why should you buy or not
buy the stock? - correct answer ✔Not Buy - The calculated price is too low
What does the beta coefficient represent? - correct answer ✔It is a statistically-derived measure of
volatility
Why is depreciation expense taken out of the net income calculation, yet added back at the end? -
correct answer ✔Because depreciation expense is tax deductible
