WGU C214 Financial Management Concepts Practice Exam
Questions with complete solution 2025/2026
1. The matching principle in accrual accounting requires a
that:
a. Expenses are matched to revenue recognition.
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
expens-es
2. The addition to retained earnings each year is: b
a. Net Income
b. Net Income minus dividends
c. Net Income plus dividends
d. Net Income times the Payout Ratio
3. Net working capital equals: c
a. Current assets
b. Current liabilities
c. Current assets minus current liabilities
d. None of the above
4. What does the Sarbanes-Oxley Act require companies d
to do?
a. Have a board of directors
b. Register all foreign sales
c. Make estimated tax payments
d. Have transparent, accurate financial statements
5. If a company produces and sells a product only
in the b U.S., what international developments
may affect its sales?
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,WGU C214 Financial Management Concepts Practice Exam
Fluctuating exchange rates
Imports of competing products
Immigration policy
Inflation in Europe
6. Which is not a reason to calculate WACC? b
a. To measure the overall cost of financing
b. Needed to calculate Cash Flow Financing
c. It is the minimum required return for
investment projects
d. Measures investors' required return on firm
securi-ties
7. If a firm's goal is to maximize stockholder wealth, c
which would the firm avoid?
a. Stock buybacks
b. Risky long-term investments
c. Investments with negative NPV
d. Transparency in financial statements
8. In which market transaction is the corporation not b
involved?
a. Primary Markets
b. Secondary Markets
c. IPO
d. Buy Backs
9. What does Beta measure? b
a. The yield on the S&P 500
b. The relative riskiness of an individual stock
c. Indicates the market value of the stock
d. Stocks to avoid purchasing
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, WGU C214 Financial Management Concepts Practice Exam
1 Which accounting decision uses estimates? a
0. Life of a new asset
Accounts payable
Amortization schedule for a loan
Cost of a new machine
11. An investment with a term of less than one year is: b
a. A current liability
b. A current asset
c. Is in retained earnings
d. Is a long-term liability
12. Which does not affect the required yield on a bond? d
a. Riskiness of the issuer
b. Collateralization
c. Treasury yields
d. Face Value
13. If the yield of a bond is higher than the coupon rate, c
what is the price?
a. Premium price
b. Par price
c. Discount price
d. Secondary market price
14. Why would a company buy back outstanding stock? d
a. To boost the price of the stock
b. To increase financial leverage
c. Lack of investment opportunities
d. All of the above
15. Which cash flow statement contains income state- a
ment items?
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,WGU C214 Financial Management Concepts Practice Exam
CFO
CFI
CFF
None of above
16. Why are accurate sales forecasts important? b
a. To determine the appropriate debt/equity ratio
b. To have right amount of production resources
c. To determine WACC
d. The time value of money
17. If a firm cannot access markets sufficiently to meet d
their DFN, what strategies might they use?
a. Slow sales growth
b. Lower dividend payout
c. Increase the net margin
d. All of the above.
18. To induce an investor to purchase a risky security, the c
investor must receive
a. A Prospectus
b. Collateral
c. Risk Premium
d. Favorable tax treatment
19. If two companies use different inventory valuation b
methods, it is called
a. A valuation difference
b. An accounting difference
c. A trend difference
d. None of above
20. d
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Questions with complete solution 2025/2026
1. The matching principle in accrual accounting requires a
that:
a. Expenses are matched to revenue recognition.
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
expens-es
2. The addition to retained earnings each year is: b
a. Net Income
b. Net Income minus dividends
c. Net Income plus dividends
d. Net Income times the Payout Ratio
3. Net working capital equals: c
a. Current assets
b. Current liabilities
c. Current assets minus current liabilities
d. None of the above
4. What does the Sarbanes-Oxley Act require companies d
to do?
a. Have a board of directors
b. Register all foreign sales
c. Make estimated tax payments
d. Have transparent, accurate financial statements
5. If a company produces and sells a product only
in the b U.S., what international developments
may affect its sales?
1/
41
,WGU C214 Financial Management Concepts Practice Exam
Fluctuating exchange rates
Imports of competing products
Immigration policy
Inflation in Europe
6. Which is not a reason to calculate WACC? b
a. To measure the overall cost of financing
b. Needed to calculate Cash Flow Financing
c. It is the minimum required return for
investment projects
d. Measures investors' required return on firm
securi-ties
7. If a firm's goal is to maximize stockholder wealth, c
which would the firm avoid?
a. Stock buybacks
b. Risky long-term investments
c. Investments with negative NPV
d. Transparency in financial statements
8. In which market transaction is the corporation not b
involved?
a. Primary Markets
b. Secondary Markets
c. IPO
d. Buy Backs
9. What does Beta measure? b
a. The yield on the S&P 500
b. The relative riskiness of an individual stock
c. Indicates the market value of the stock
d. Stocks to avoid purchasing
2/
41
, WGU C214 Financial Management Concepts Practice Exam
1 Which accounting decision uses estimates? a
0. Life of a new asset
Accounts payable
Amortization schedule for a loan
Cost of a new machine
11. An investment with a term of less than one year is: b
a. A current liability
b. A current asset
c. Is in retained earnings
d. Is a long-term liability
12. Which does not affect the required yield on a bond? d
a. Riskiness of the issuer
b. Collateralization
c. Treasury yields
d. Face Value
13. If the yield of a bond is higher than the coupon rate, c
what is the price?
a. Premium price
b. Par price
c. Discount price
d. Secondary market price
14. Why would a company buy back outstanding stock? d
a. To boost the price of the stock
b. To increase financial leverage
c. Lack of investment opportunities
d. All of the above
15. Which cash flow statement contains income state- a
ment items?
3/
41
,WGU C214 Financial Management Concepts Practice Exam
CFO
CFI
CFF
None of above
16. Why are accurate sales forecasts important? b
a. To determine the appropriate debt/equity ratio
b. To have right amount of production resources
c. To determine WACC
d. The time value of money
17. If a firm cannot access markets sufficiently to meet d
their DFN, what strategies might they use?
a. Slow sales growth
b. Lower dividend payout
c. Increase the net margin
d. All of the above.
18. To induce an investor to purchase a risky security, the c
investor must receive
a. A Prospectus
b. Collateral
c. Risk Premium
d. Favorable tax treatment
19. If two companies use different inventory valuation b
methods, it is called
a. A valuation difference
b. An accounting difference
c. A trend difference
d. None of above
20. d
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