WGU D076 Financial Skills for Managers – Unit 2 Overview of Finance 2026
Module 1: What is Finance? (Questions 1-45)
Question 1
What is the primary question that both individuals and companies must consider
when making financial decisions?
A) How quickly can the action be completed?
B) Will the benefits of the action outweigh the costs?
C) Is the action legal according to federal statutes?
D) What will competitors think of the decision?
Answer: B
Rationale: The core principle of finance is cost-benefit analysis. Every financial
decision, whether personal or corporate, should only be taken if the expected
benefits exceed the associated costs .
Question 2
Which of the following best defines finance?
A) The recording of past business transactions
,B) The study of managing and allocating funds at the personal or business level
C) The process of preparing tax returns
D) The art of increasing stock market returns
Answer: B
Rationale: Finance is the study of managing and allocating funds at the personal
or business level. It involves forward-thinking actions and future decision-making,
including investing, forecasting, budgeting, saving, borrowing, and lending .
Question 3
What is the primary difference between finance and accounting?
A) Finance focuses on the past, while accounting is forward-looking
B) Finance focuses on the future, while accounting is generally backward-looking
C) There is no difference; they are the same discipline
D) Finance deals only with personal money, accounting deals with business
money
Answer: B
,Rationale: Finance is forward-looking, focusing on future decisions and allocations
of capital. Accounting is backward-looking, focusing on recording and reporting
past transactions. Finance emphasizes decision-making under uncertainty .
Question 4
What is the main objective of personal financial goals?
A) To maximize stock investments
B) To maximize owner wealth
C) To maximize charity donations
D) To maximize individual utility
Answer: D
Rationale: The main objective of personal financial goals is to maximize individual
utility—increasing satisfaction or happiness by taking care of necessities and
achieving priorities. For businesses, the focus is on maximizing owner/shareholder
wealth .
Question 5
Which area of finance deals with sources of funding, capital structure, and actions
managers take to increase firm value for its owners?
, A) Investments
B) Financial Institutions
C) Business Finance (Corporate Finance)
D) Personal Finance
Answer: C
Rationale: Business finance (also called managerial finance, financial
management, or corporate finance) deals with sources of funding, capital
structure, and actions managers take to increase the value of a firm for its
owners. Its primary focus is increasing shareholder wealth .
Question 6
Which subspecialty of finance involves deciding which assets to invest in to create
wealth in the future?
A) Business Finance
B) Investments
C) Financial Institutions
D) Risk Management
Module 1: What is Finance? (Questions 1-45)
Question 1
What is the primary question that both individuals and companies must consider
when making financial decisions?
A) How quickly can the action be completed?
B) Will the benefits of the action outweigh the costs?
C) Is the action legal according to federal statutes?
D) What will competitors think of the decision?
Answer: B
Rationale: The core principle of finance is cost-benefit analysis. Every financial
decision, whether personal or corporate, should only be taken if the expected
benefits exceed the associated costs .
Question 2
Which of the following best defines finance?
A) The recording of past business transactions
,B) The study of managing and allocating funds at the personal or business level
C) The process of preparing tax returns
D) The art of increasing stock market returns
Answer: B
Rationale: Finance is the study of managing and allocating funds at the personal
or business level. It involves forward-thinking actions and future decision-making,
including investing, forecasting, budgeting, saving, borrowing, and lending .
Question 3
What is the primary difference between finance and accounting?
A) Finance focuses on the past, while accounting is forward-looking
B) Finance focuses on the future, while accounting is generally backward-looking
C) There is no difference; they are the same discipline
D) Finance deals only with personal money, accounting deals with business
money
Answer: B
,Rationale: Finance is forward-looking, focusing on future decisions and allocations
of capital. Accounting is backward-looking, focusing on recording and reporting
past transactions. Finance emphasizes decision-making under uncertainty .
Question 4
What is the main objective of personal financial goals?
A) To maximize stock investments
B) To maximize owner wealth
C) To maximize charity donations
D) To maximize individual utility
Answer: D
Rationale: The main objective of personal financial goals is to maximize individual
utility—increasing satisfaction or happiness by taking care of necessities and
achieving priorities. For businesses, the focus is on maximizing owner/shareholder
wealth .
Question 5
Which area of finance deals with sources of funding, capital structure, and actions
managers take to increase firm value for its owners?
, A) Investments
B) Financial Institutions
C) Business Finance (Corporate Finance)
D) Personal Finance
Answer: C
Rationale: Business finance (also called managerial finance, financial
management, or corporate finance) deals with sources of funding, capital
structure, and actions managers take to increase the value of a firm for its
owners. Its primary focus is increasing shareholder wealth .
Question 6
Which subspecialty of finance involves deciding which assets to invest in to create
wealth in the future?
A) Business Finance
B) Investments
C) Financial Institutions
D) Risk Management
