WGU C214 Concepts Only Multi
Choice Version Question and answers
correctly solved 2025/2026
Trading on the NYSE is executed without a specialist (i.e. a market maker). - correct answer ✔False
Stocks and bonds are two types of financial instruments. - correct answer ✔True
The matching principle in accrual accounting requires that: - correct answer ✔a. 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 ✔a. Equity = Assets - Liabilities
Why is the Balance Sheet known as a permanent statement? - correct answer ✔b. Because the other
statements are reset at the end of the fiscal year.
How do you calculate the change in Retained Earnings? - correct answer ✔d. Net Income - Dividends
Which of the following is generally true? - correct answer ✔c. Operating Income and EBIT are the same.
Which components are part of total assets? - correct answer ✔b. Cash Accounts Receivable, Inventory,
Long Term Assets
Which components are part of current assets? - correct answer ✔d. Inventory, Cash, Accounts
Receivable, Short Term Investments
,Which components are part of Total Liabilities? - correct answer ✔c. Bonds, Accounts Payable,
Mortgage
When Fixed Assets increase what happens to Cash? - correct answer ✔c. Cash decreases.
Which is the purpose of the statement of cash flows? - correct answer ✔c. 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 ✔b. EBIT, Total Assets
Why would a company be interested in the TAT(Total Asset Turnover) ratio? - correct answer ✔c. How
efficient assets are at producing sales
Which of the following gives the largest effective rate (APY)? - correct answer ✔b. 18.6% compounded
daily
What does the beta coefficient represent? - correct answer ✔a. 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 ✔d. Because depreciation expense is tax deductible.
Why is the NPV preferred over the IRR? Pick Two - correct answer ✔b. It measures the dollar value.
c. It is more reliable.
What does the Degree of Financial Leverage indicate? - correct answer ✔c. The reliance on debt
, If a company has a high degree of financial leverage, what does that tell us about the firm's risk profile? -
correct answer ✔d. Higher profits to shareholders
What is the cash cycle? - correct answer ✔d. The amount of time to regenerate cash
Why is float important to understand? - correct answer ✔d. To time cash expenditures.
What should a company do to manage its working capital? - correct answer ✔a. Collect quickly and pay
slowly.
What would be a source of information to determine Replacement Cost? - correct answer ✔a. Building
Appraisal
What does the Sarbanes-Oxley Act require companies to do? - correct answer ✔d. Have internal
control audits.
FINRA (Financial Industry Regulatory Authority) does the following: - correct answer ✔d. Prosecutes
naughty stock brokers
If a product is made 100% domestically, what can affect its domestic market? - correct answer ✔b.
International competition
If a company makes its product in a foreign country where labor costs are much lower, what happens? -
correct answer ✔d. Profits go up and domestic employment decreases.
If the value of a dollar increases, the price of imports: - correct answer ✔b. Decreases
Choice Version Question and answers
correctly solved 2025/2026
Trading on the NYSE is executed without a specialist (i.e. a market maker). - correct answer ✔False
Stocks and bonds are two types of financial instruments. - correct answer ✔True
The matching principle in accrual accounting requires that: - correct answer ✔a. 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 ✔a. Equity = Assets - Liabilities
Why is the Balance Sheet known as a permanent statement? - correct answer ✔b. Because the other
statements are reset at the end of the fiscal year.
How do you calculate the change in Retained Earnings? - correct answer ✔d. Net Income - Dividends
Which of the following is generally true? - correct answer ✔c. Operating Income and EBIT are the same.
Which components are part of total assets? - correct answer ✔b. Cash Accounts Receivable, Inventory,
Long Term Assets
Which components are part of current assets? - correct answer ✔d. Inventory, Cash, Accounts
Receivable, Short Term Investments
,Which components are part of Total Liabilities? - correct answer ✔c. Bonds, Accounts Payable,
Mortgage
When Fixed Assets increase what happens to Cash? - correct answer ✔c. Cash decreases.
Which is the purpose of the statement of cash flows? - correct answer ✔c. 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 ✔b. EBIT, Total Assets
Why would a company be interested in the TAT(Total Asset Turnover) ratio? - correct answer ✔c. How
efficient assets are at producing sales
Which of the following gives the largest effective rate (APY)? - correct answer ✔b. 18.6% compounded
daily
What does the beta coefficient represent? - correct answer ✔a. 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 ✔d. Because depreciation expense is tax deductible.
Why is the NPV preferred over the IRR? Pick Two - correct answer ✔b. It measures the dollar value.
c. It is more reliable.
What does the Degree of Financial Leverage indicate? - correct answer ✔c. The reliance on debt
, If a company has a high degree of financial leverage, what does that tell us about the firm's risk profile? -
correct answer ✔d. Higher profits to shareholders
What is the cash cycle? - correct answer ✔d. The amount of time to regenerate cash
Why is float important to understand? - correct answer ✔d. To time cash expenditures.
What should a company do to manage its working capital? - correct answer ✔a. Collect quickly and pay
slowly.
What would be a source of information to determine Replacement Cost? - correct answer ✔a. Building
Appraisal
What does the Sarbanes-Oxley Act require companies to do? - correct answer ✔d. Have internal
control audits.
FINRA (Financial Industry Regulatory Authority) does the following: - correct answer ✔d. Prosecutes
naughty stock brokers
If a product is made 100% domestically, what can affect its domestic market? - correct answer ✔b.
International competition
If a company makes its product in a foreign country where labor costs are much lower, what happens? -
correct answer ✔d. Profits go up and domestic employment decreases.
If the value of a dollar increases, the price of imports: - correct answer ✔b. Decreases
