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WGU C214 CONCEPTS ONLY MULTI
CHOICE VERSION||ACTUAL
QUESTIONS WITH ANSWERS
If a company makes its product in a foreign country where labor costs are much
lower, what happens?
a. Profits and domestic employment goes up
b. Costs go up and domestic employment goes down
c. Costs stay the same and domestic employment increases
d. Profits go up and domestic employment decreases. - correct-answer -d
If the value of a dollar increases, the price of imports:
a. Increases
b. Decreases
c. Stays the same
d. Fluctuates - correct-answer -b
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Why would a farmer buy a hedge when he signs a contract to sell produce
overseas?
a. To avoid tariffs
b. To reduce currency risk
c. To increase profits
d. To avoid competition - correct-answer -b
A basic equation for the balance sheet is:
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities - correct-answer -a
Why is the Balance Sheet known as a permanent statement?
a. Because the statement is sent to the SEC.
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b. Because the other statements are reset at the end of the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders. - correct-answer -b
How do you calculate the change in Retained Earnings?
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends - correct-answer -d
Which of the following is generally true?
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net Income
c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net income - correct-answer -c
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Which components are part of total assets?
a. Cash, Accounts Receivable, Short Term Debt
b. Cash Accounts Receivable, Inventory, Long Term Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity - correct-answer -b
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term Investments - correct-answer
-d
Suppose the inventory turnover of a company is higher than the industry. Based
on this observation, which of the following is most likely?
a. The firm has lower liquidity than the industry average.
b. The firm has too much inventory thus impairing overall liquidity.
WGU C214 CONCEPTS ONLY MULTI
CHOICE VERSION||ACTUAL
QUESTIONS WITH ANSWERS
If a company makes its product in a foreign country where labor costs are much
lower, what happens?
a. Profits and domestic employment goes up
b. Costs go up and domestic employment goes down
c. Costs stay the same and domestic employment increases
d. Profits go up and domestic employment decreases. - correct-answer -d
If the value of a dollar increases, the price of imports:
a. Increases
b. Decreases
c. Stays the same
d. Fluctuates - correct-answer -b
,2|Page
Why would a farmer buy a hedge when he signs a contract to sell produce
overseas?
a. To avoid tariffs
b. To reduce currency risk
c. To increase profits
d. To avoid competition - correct-answer -b
A basic equation for the balance sheet is:
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities - correct-answer -a
Why is the Balance Sheet known as a permanent statement?
a. Because the statement is sent to the SEC.
,3|Page
b. Because the other statements are reset at the end of the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders. - correct-answer -b
How do you calculate the change in Retained Earnings?
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends - correct-answer -d
Which of the following is generally true?
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net Income
c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net income - correct-answer -c
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Which components are part of total assets?
a. Cash, Accounts Receivable, Short Term Debt
b. Cash Accounts Receivable, Inventory, Long Term Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity - correct-answer -b
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term Investments - correct-answer
-d
Suppose the inventory turnover of a company is higher than the industry. Based
on this observation, which of the following is most likely?
a. The firm has lower liquidity than the industry average.
b. The firm has too much inventory thus impairing overall liquidity.
