WGU MBA Finance C214 Question and
answers correctly solved 2025/2026
Accrual Accounting - correct answer ✔Accounting system based on recording accounts based on
historical prices and the matching principle
Matching Principle - correct answer ✔Accrual accounting principle to match revenues and expenses in
the same period
Historical cost principle - correct answer ✔Accrual accounting principle to recorded assets, liabilities,
and equity at historical levels. When an asset is purchased or liability incurred, it is recorded at cost.
Accumulated depreciation - correct answer ✔The total amount of depreciation claimed against the
fixed assets of the firm.
Marketable Securities - correct answer ✔Short-term, high quality securities such as US Treasury Bills
and certificates of deposits (CDs)
Accounts Receivable - correct answer ✔The balance in AR represents cash not yet collected from
customers on goods previously sold.
Inventories - correct answer ✔Least liquid current asset. Include, WIP and finished goods.
Fixed Assets - correct answer ✔Provide benefit to the firm for more than one year and are usually
recorded on the balance sheet at historical cost. (Typically PP&E)
Gross PP&E - correct answer ✔Original cost of all non-current assets held for use. Offset by
accumulated depreciation
,Book value - correct answer ✔The accounting value recorded on the balance sheet.
Net PP&E - correct answer ✔Gross PP&E minus accumulated depreciation.
Current Liablities - correct answer ✔Obligations that require cash in the next year and listed in order of
maturity.
Accounts Payable - correct answer ✔Money owed to suppliers as a result of purchases made on credit.
Notes Payable - correct answer ✔Involves explicit interest-bearing arrangement with a lender
Accurals - correct answer ✔Expenses incurred by not yet paid.
Accrued wages - correct answer ✔Wages that the company owes to employees, but has not paid yet.
Long-Term Liabilities - correct answer ✔Debt obligations with maturity longer than one year.Can be
significantly different than market value.
Equity - correct answer ✔Includes common stock, additional paid in capital and retained earnings.
Common stock - correct answer ✔Equity sold to common share holders at par value. Last in line to
receive money back in the event of bankruptcy.
Retained earnings - correct answer ✔Cumulative total of earnings not paid out as dividends to
stockholders over the entire history of the entity.
, RE Forcasting - correct answer ✔Change in the RE account from year to year. New RE =Old RE + Change
In RE
Operating Income Return on Investment (OIROI) - correct answer ✔The relationship between operating
profit (EBIT) and the company's asset base. How much pre-tax, pre-financing profit the company
generates per dollar of assets
Debt Ratio - correct answer ✔Proportion of the firm's assets financed with debt.
Interest Bearing Debt to Total Capital (IBDTC) - correct answer ✔More precise measure of a firm's
financial structure.
Return on Assets (ROA) - correct answer ✔Comparable across industries and a good profitability ratio
to use when benchmarking a firm against a multi-industry good.
Gross Margin (Ratio) - correct answer ✔Measures the percent of revenue remaining after the COGS.
High margins are associated with an efficient production process.
Operating Margin - correct answer ✔Percent of sales remaining after covering the COGS and operating
expenses. Used to compare firms with different capital structures.
DuPont Equation - correct answer ✔A formula that shows that the rate of return on equity can be
found as the product of profit margin, total assets turnover, and the equity multiplier. It shows the
relationships among asset management, debt management, and profitability ratios.
Trend Analysis - correct answer ✔Compare ratios over time, current year to previous years. Looks
backward 5 years and forward 3 years.
Cross-Sectional Analysis - correct answer ✔Compare ratios to peer groups.
answers correctly solved 2025/2026
Accrual Accounting - correct answer ✔Accounting system based on recording accounts based on
historical prices and the matching principle
Matching Principle - correct answer ✔Accrual accounting principle to match revenues and expenses in
the same period
Historical cost principle - correct answer ✔Accrual accounting principle to recorded assets, liabilities,
and equity at historical levels. When an asset is purchased or liability incurred, it is recorded at cost.
Accumulated depreciation - correct answer ✔The total amount of depreciation claimed against the
fixed assets of the firm.
Marketable Securities - correct answer ✔Short-term, high quality securities such as US Treasury Bills
and certificates of deposits (CDs)
Accounts Receivable - correct answer ✔The balance in AR represents cash not yet collected from
customers on goods previously sold.
Inventories - correct answer ✔Least liquid current asset. Include, WIP and finished goods.
Fixed Assets - correct answer ✔Provide benefit to the firm for more than one year and are usually
recorded on the balance sheet at historical cost. (Typically PP&E)
Gross PP&E - correct answer ✔Original cost of all non-current assets held for use. Offset by
accumulated depreciation
,Book value - correct answer ✔The accounting value recorded on the balance sheet.
Net PP&E - correct answer ✔Gross PP&E minus accumulated depreciation.
Current Liablities - correct answer ✔Obligations that require cash in the next year and listed in order of
maturity.
Accounts Payable - correct answer ✔Money owed to suppliers as a result of purchases made on credit.
Notes Payable - correct answer ✔Involves explicit interest-bearing arrangement with a lender
Accurals - correct answer ✔Expenses incurred by not yet paid.
Accrued wages - correct answer ✔Wages that the company owes to employees, but has not paid yet.
Long-Term Liabilities - correct answer ✔Debt obligations with maturity longer than one year.Can be
significantly different than market value.
Equity - correct answer ✔Includes common stock, additional paid in capital and retained earnings.
Common stock - correct answer ✔Equity sold to common share holders at par value. Last in line to
receive money back in the event of bankruptcy.
Retained earnings - correct answer ✔Cumulative total of earnings not paid out as dividends to
stockholders over the entire history of the entity.
, RE Forcasting - correct answer ✔Change in the RE account from year to year. New RE =Old RE + Change
In RE
Operating Income Return on Investment (OIROI) - correct answer ✔The relationship between operating
profit (EBIT) and the company's asset base. How much pre-tax, pre-financing profit the company
generates per dollar of assets
Debt Ratio - correct answer ✔Proportion of the firm's assets financed with debt.
Interest Bearing Debt to Total Capital (IBDTC) - correct answer ✔More precise measure of a firm's
financial structure.
Return on Assets (ROA) - correct answer ✔Comparable across industries and a good profitability ratio
to use when benchmarking a firm against a multi-industry good.
Gross Margin (Ratio) - correct answer ✔Measures the percent of revenue remaining after the COGS.
High margins are associated with an efficient production process.
Operating Margin - correct answer ✔Percent of sales remaining after covering the COGS and operating
expenses. Used to compare firms with different capital structures.
DuPont Equation - correct answer ✔A formula that shows that the rate of return on equity can be
found as the product of profit margin, total assets turnover, and the equity multiplier. It shows the
relationships among asset management, debt management, and profitability ratios.
Trend Analysis - correct answer ✔Compare ratios over time, current year to previous years. Looks
backward 5 years and forward 3 years.
Cross-Sectional Analysis - correct answer ✔Compare ratios to peer groups.
