WGU C214 Study Guide Multi Choice
version Question and answers rated
A+ 2025/2026
Trading on the NYSE is executed without a specialist (i.e. a market maker). (T/F) - correct answer ✔F
Stocks and bonds are two types of financial instruments (T/F) - correct answer ✔True
The matching principle in accrual accounting requires that:
a. Revenues be recognized when the earnings process is complete and matches expenses to revenues
recognized.
b. Expenses are matched to the year in which they are incurred
c. Revenues are matched to the year in which they are booked
d. Revenues should be large enough to match expenses - correct answer ✔a
A high-quality customer just purchased $500,000 worth of product from your company. The contract
calls for immediate delivery of the product with a cash payment of $300,000 today and $200,000 to be
paid 60 days. The expense associated with the product is $300,000, of which $100,000 has not been
paid to your supplier. Under accrual based accounting system, you will most likely report
a. revenues of $300,000 and expenses of $300,000.
b. revenues of $300,000 and expenses of $200,000.
c. revenues of $500,000 and expenses of $300,000.
d. revenues of $500,000 and expenses of $200,000. - correct answer ✔c
A firm reported retained earnings of $300 in 12/31/20x2. For 12/31/20x3, the firm reports retained
earnings of $400 and pays dividends of $25. What was net income in 20x3
a. 300
,b. 400
c. 125
d. 100 - correct answer ✔c
A basic equation for the balance sheet is:
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities - correct answer ✔a
Why is the Balance Sheet known as a permanent statement?
a. Because the statement is sent to the SEC.
b. Because the other statements are reset at the end of the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders. - correct answer ✔b
How do you calculate the change in Retained Earnings?
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends - correct answer ✔d
Which of the following is generally true?
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net Income
,c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net income - correct answer ✔c
Which components are part of total assets?
a. Cash, Accounts Receivable, Short Term Debt
b. Cash Accounts Receivable, Inventory, Long Term Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity - correct answer ✔b
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term Investments - correct answer ✔d
Which components are part of Total Liabilities?
a. Accounts Payable, Accounts Receivable, Short Term Debt
b. Long Term Debt, Common Stock, Retained Earnings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term Investments - correct answer ✔c
Intel reported the following for 2014:
Net Income 100,000
Depreciation 20,000
Change in A/R 10,000
, What is the cash flow from operating activities (CF0)?
a. 100,000
b. 110,000
c. 120,000
d. (130,000) - correct answer ✔b
Intel reported the following for 2014:
Gross Equipment (1/1/14) 50,000
Gross Equipment (12/31/14) 65,000
Net income 100,000
Depreciation 20,000
What is the cash flow from investing activities for 2014?
a. 100,000
b. 80,000
c. (15,000)
d. 15,000 - correct answer ✔c
What is the Cash Flow from Operations given the following information?
Net Income 450,000
Change in Accounts Receivable 120,000
Change in Inventory - 90,000
Change in PP&E 60,000
Depreciation Expense 110,000
Change in Accounts Payable 50,000
Change in Accrued Expenses - 75,000
version Question and answers rated
A+ 2025/2026
Trading on the NYSE is executed without a specialist (i.e. a market maker). (T/F) - correct answer ✔F
Stocks and bonds are two types of financial instruments (T/F) - correct answer ✔True
The matching principle in accrual accounting requires that:
a. Revenues be recognized when the earnings process is complete and matches expenses to revenues
recognized.
b. Expenses are matched to the year in which they are incurred
c. Revenues are matched to the year in which they are booked
d. Revenues should be large enough to match expenses - correct answer ✔a
A high-quality customer just purchased $500,000 worth of product from your company. The contract
calls for immediate delivery of the product with a cash payment of $300,000 today and $200,000 to be
paid 60 days. The expense associated with the product is $300,000, of which $100,000 has not been
paid to your supplier. Under accrual based accounting system, you will most likely report
a. revenues of $300,000 and expenses of $300,000.
b. revenues of $300,000 and expenses of $200,000.
c. revenues of $500,000 and expenses of $300,000.
d. revenues of $500,000 and expenses of $200,000. - correct answer ✔c
A firm reported retained earnings of $300 in 12/31/20x2. For 12/31/20x3, the firm reports retained
earnings of $400 and pays dividends of $25. What was net income in 20x3
a. 300
,b. 400
c. 125
d. 100 - correct answer ✔c
A basic equation for the balance sheet is:
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities - correct answer ✔a
Why is the Balance Sheet known as a permanent statement?
a. Because the statement is sent to the SEC.
b. Because the other statements are reset at the end of the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders. - correct answer ✔b
How do you calculate the change in Retained Earnings?
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends - correct answer ✔d
Which of the following is generally true?
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net Income
,c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net income - correct answer ✔c
Which components are part of total assets?
a. Cash, Accounts Receivable, Short Term Debt
b. Cash Accounts Receivable, Inventory, Long Term Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity - correct answer ✔b
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term Investments - correct answer ✔d
Which components are part of Total Liabilities?
a. Accounts Payable, Accounts Receivable, Short Term Debt
b. Long Term Debt, Common Stock, Retained Earnings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term Investments - correct answer ✔c
Intel reported the following for 2014:
Net Income 100,000
Depreciation 20,000
Change in A/R 10,000
, What is the cash flow from operating activities (CF0)?
a. 100,000
b. 110,000
c. 120,000
d. (130,000) - correct answer ✔b
Intel reported the following for 2014:
Gross Equipment (1/1/14) 50,000
Gross Equipment (12/31/14) 65,000
Net income 100,000
Depreciation 20,000
What is the cash flow from investing activities for 2014?
a. 100,000
b. 80,000
c. (15,000)
d. 15,000 - correct answer ✔c
What is the Cash Flow from Operations given the following information?
Net Income 450,000
Change in Accounts Receivable 120,000
Change in Inventory - 90,000
Change in PP&E 60,000
Depreciation Expense 110,000
Change in Accounts Payable 50,000
Change in Accrued Expenses - 75,000
