WGU C214 Financial Management Retake
Exam Actual Exam 2026/2027 –
Complete Exam-Style Questions &
Answers | 100% Certified Verified – Pass
Guaranteed – A+ Graded
Domain 1: Financial Environment & Statement Analysis (Questions 1-30)
1. The matching principle in accrual accounting requires that:
• A) Expenses are matched to the year in which they are incurred
• B) Revenues are matched to the year in which they are booked
• C) Expenses are matched to revenue recognition
• D) Revenues should be large enough to match expenses
,,,,answer,,,,: C
Rationale: The matching principle requires that expenses be recognized in the
same period as the revenues they helped generate, providing an accurate picture of
profitability.
2. The addition to retained earnings each year is calculated as:
• A) Net Income
• B) Net Income minus dividends
• C) Net Income plus dividends
• D) Revenue minus expenses
,,,,answer,,,,: B
,Rationale: Retained earnings represent cumulative net income not distributed to
shareholders as dividends. The formula is: Beginning RE + Net Income -
Dividends = Ending RE.
3. The balance sheet is known as a "permanent statement" because:
• A) It records transactions over a period of time
• B) Other statements reset to zero each period
• C) It never changes
• D) It only includes cash accounts
,,,,answer,,,,: B
Rationale: Balance sheet accounts carry forward from period to period, while
income statement and cash flow statement accounts reset.
4. Total assets include which of the following components?
• A) Cash only
• B) Cash, accounts receivable, and inventory
• C) Cash, accounts receivable, inventory, and long-term assets
• D) Cash, inventory, and bonds payable
,,,,answer,,,,: C
Rationale: Total assets = Current Assets + Long-Term Assets. Current assets
include cash, AR, inventory, and short-term investments.
5. The balance sheet equation is:
• A) Assets = Liabilities - Equity
• B) Assets = Liabilities + Equity
• C) Assets + Liabilities = Equity
• D) Equity = Assets × Liabilities
,,,,answer,,,,: B
Rationale: The fundamental accounting equation states that a company's assets are
financed by either debt (liabilities) or equity.
6. Operating Income and EBIT (Earnings Before Interest and Taxes) are:
• A) Always different values
, • B) The same
• C) Only the same for service companies
• D) Calculated using different formulas
,,,,answer,,,,: B
Rationale: Operating Income and EBIT are interchangeable terms, both
representing earnings from core operations before interest and taxes.
7. Which type of financial statement is considered "temporary" and resets
each period?
• A) Balance Sheet
• B) Income Statement
• C) Statement of Cash Flows
• D) Statement of Retained Earnings
,,,,answer,,,,: B
Rationale: The income statement reports activity over a specific period and
accounts are closed to retained earnings at period end.
8. The formula for Total Liabilities on the balance sheet includes:
• A) Cash and accounts receivable
• B) Bonds payable and accounts payable
• C) Common stock and retained earnings
• D) Inventory and equipment
,,,,answer,,,,: B
Rationale: Total liabilities include current liabilities (AP, accrued expenses) and
long-term liabilities (bonds payable, mortgages).
9. Which of the following is NOT a component of current assets?
• A) Cash
• B) Accounts Receivable
• C) Inventory
• D) Bonds Payable
,,,,answer,,,,: D
Exam Actual Exam 2026/2027 –
Complete Exam-Style Questions &
Answers | 100% Certified Verified – Pass
Guaranteed – A+ Graded
Domain 1: Financial Environment & Statement Analysis (Questions 1-30)
1. The matching principle in accrual accounting requires that:
• A) Expenses are matched to the year in which they are incurred
• B) Revenues are matched to the year in which they are booked
• C) Expenses are matched to revenue recognition
• D) Revenues should be large enough to match expenses
,,,,answer,,,,: C
Rationale: The matching principle requires that expenses be recognized in the
same period as the revenues they helped generate, providing an accurate picture of
profitability.
2. The addition to retained earnings each year is calculated as:
• A) Net Income
• B) Net Income minus dividends
• C) Net Income plus dividends
• D) Revenue minus expenses
,,,,answer,,,,: B
,Rationale: Retained earnings represent cumulative net income not distributed to
shareholders as dividends. The formula is: Beginning RE + Net Income -
Dividends = Ending RE.
3. The balance sheet is known as a "permanent statement" because:
• A) It records transactions over a period of time
• B) Other statements reset to zero each period
• C) It never changes
• D) It only includes cash accounts
,,,,answer,,,,: B
Rationale: Balance sheet accounts carry forward from period to period, while
income statement and cash flow statement accounts reset.
4. Total assets include which of the following components?
• A) Cash only
• B) Cash, accounts receivable, and inventory
• C) Cash, accounts receivable, inventory, and long-term assets
• D) Cash, inventory, and bonds payable
,,,,answer,,,,: C
Rationale: Total assets = Current Assets + Long-Term Assets. Current assets
include cash, AR, inventory, and short-term investments.
5. The balance sheet equation is:
• A) Assets = Liabilities - Equity
• B) Assets = Liabilities + Equity
• C) Assets + Liabilities = Equity
• D) Equity = Assets × Liabilities
,,,,answer,,,,: B
Rationale: The fundamental accounting equation states that a company's assets are
financed by either debt (liabilities) or equity.
6. Operating Income and EBIT (Earnings Before Interest and Taxes) are:
• A) Always different values
, • B) The same
• C) Only the same for service companies
• D) Calculated using different formulas
,,,,answer,,,,: B
Rationale: Operating Income and EBIT are interchangeable terms, both
representing earnings from core operations before interest and taxes.
7. Which type of financial statement is considered "temporary" and resets
each period?
• A) Balance Sheet
• B) Income Statement
• C) Statement of Cash Flows
• D) Statement of Retained Earnings
,,,,answer,,,,: B
Rationale: The income statement reports activity over a specific period and
accounts are closed to retained earnings at period end.
8. The formula for Total Liabilities on the balance sheet includes:
• A) Cash and accounts receivable
• B) Bonds payable and accounts payable
• C) Common stock and retained earnings
• D) Inventory and equipment
,,,,answer,,,,: B
Rationale: Total liabilities include current liabilities (AP, accrued expenses) and
long-term liabilities (bonds payable, mortgages).
9. Which of the following is NOT a component of current assets?
• A) Cash
• B) Accounts Receivable
• C) Inventory
• D) Bonds Payable
,,,,answer,,,,: D
