WGU C708 Principles of Finance Exam 2023 Questions
and Answers (Verified Answers)
1. The credit manager for a company is responsible for setting the company's
credit policy regarding availability and limits for customers. What is one of the
additional responsibilities of this credit manager?
A. Purchasing insurance
B. Collecting past-due accounts
C. Monitoring accounts payable
D. Investing excess cash
B. Collecting past-due accounts
2. Which activity is financial management responsible for?
A. Researching different products to bring to market
B. Reporting past earnings for shares of stock
C. Ensuring sufficient financing is available
D. Verifying the balance sheet is properly constructed
C. Ensuring sufficient financing is available
3. What is one of the main areas of the financial environment?
A. Human resources
B. Marketing
C. Investments
D. Foreign relations
C. Investments
4. What is a common challenge in the world of finance?
A. It causes investor anxiety due to a volatile stock market
B. It generally operates with a high degree of uncertainty
C. It is difficult to abide by generally accepted accounting principles. (GAAP)
D. It has to comply with banking regulations that are subject to change
B. It generally operates with a high degree of uncertainty
,5. Which variable must be considered when a corporation's finance department is
determining the best strategy for financing a project?
A. The amount of trade credit from suppliers for the project
B. Recent changes to the federal funds rate
C. The bid-ask spread for the company's stock
D. The amount of debt and equity financing currently in use
D. The amount of debt and equity financing currently in use
6. An individual is interested in establishing a lawn care business as a sole
proprietorship. What will be a disadvantage of choosing this business model?
A. Frozen investments
B. Unlimited liability
C. Government regulations
D. Management disagreements
B. Unlimited liability
7. What is one benefit of a sole proprietorship?
A. The owner has uninterrupted control of the business
B. The company can continue to exist with the death of the owner
C. The business is taxed separately from the owner's personal taxes
D. The personal assets of stockholders are protected
A. The owner has uninterrupted control of the business
8. What is a disadvantage of a general partnership?
A. Owner's personal assets are not protected against claims of creditors
B. Annual reports must be filed to shareholders
C. Losses from the business are deductible on an individual's tax return
D. Complex business filing paperwork is required
A. Owner's personal assets are not protected against claims of creditors
9. What is one advantage of an LLC?
A. Limited personal liability
, B. Flexibility in obtaining funding from venture capitalists
C. Membership interest not easily transferable
D. Number of members fixed at 100
A. Limited personal liability
10. What is an example of potential principal-agent problem?
A. Changing the company's dividend policy to bolster stock values
B. Corporate executives buying other companies to expand their influence
C. Disagreement among managers on the direction of their firm
D. Missing revenue estimates during a recession
B. Corporate executives buying other companies to expand their influence
11. An individual decides to sell corporate bonds to another investor. Which type
of financial market or institution would be involved in this transaction?
A. Retail securities firm
B. Mortgage lender
C. Insurance company
D. United States Treasury
A. Retail securities firm
12. A firm wants to sell new shares of stock. Which other institution is involved in
this type of transaction?
A. Insurance company
B. Investment banking firm
C. Savings and loan
D. Hedge fund
B. Investment banking firm
13. A partnership needs funds to purchase technology equipment. It will be able
to repay those funds in under a year's time. Which organization should the
partnership contact to obtain the needed funds?
A. Retail bank
B. Insurance company
and Answers (Verified Answers)
1. The credit manager for a company is responsible for setting the company's
credit policy regarding availability and limits for customers. What is one of the
additional responsibilities of this credit manager?
A. Purchasing insurance
B. Collecting past-due accounts
C. Monitoring accounts payable
D. Investing excess cash
B. Collecting past-due accounts
2. Which activity is financial management responsible for?
A. Researching different products to bring to market
B. Reporting past earnings for shares of stock
C. Ensuring sufficient financing is available
D. Verifying the balance sheet is properly constructed
C. Ensuring sufficient financing is available
3. What is one of the main areas of the financial environment?
A. Human resources
B. Marketing
C. Investments
D. Foreign relations
C. Investments
4. What is a common challenge in the world of finance?
A. It causes investor anxiety due to a volatile stock market
B. It generally operates with a high degree of uncertainty
C. It is difficult to abide by generally accepted accounting principles. (GAAP)
D. It has to comply with banking regulations that are subject to change
B. It generally operates with a high degree of uncertainty
,5. Which variable must be considered when a corporation's finance department is
determining the best strategy for financing a project?
A. The amount of trade credit from suppliers for the project
B. Recent changes to the federal funds rate
C. The bid-ask spread for the company's stock
D. The amount of debt and equity financing currently in use
D. The amount of debt and equity financing currently in use
6. An individual is interested in establishing a lawn care business as a sole
proprietorship. What will be a disadvantage of choosing this business model?
A. Frozen investments
B. Unlimited liability
C. Government regulations
D. Management disagreements
B. Unlimited liability
7. What is one benefit of a sole proprietorship?
A. The owner has uninterrupted control of the business
B. The company can continue to exist with the death of the owner
C. The business is taxed separately from the owner's personal taxes
D. The personal assets of stockholders are protected
A. The owner has uninterrupted control of the business
8. What is a disadvantage of a general partnership?
A. Owner's personal assets are not protected against claims of creditors
B. Annual reports must be filed to shareholders
C. Losses from the business are deductible on an individual's tax return
D. Complex business filing paperwork is required
A. Owner's personal assets are not protected against claims of creditors
9. What is one advantage of an LLC?
A. Limited personal liability
, B. Flexibility in obtaining funding from venture capitalists
C. Membership interest not easily transferable
D. Number of members fixed at 100
A. Limited personal liability
10. What is an example of potential principal-agent problem?
A. Changing the company's dividend policy to bolster stock values
B. Corporate executives buying other companies to expand their influence
C. Disagreement among managers on the direction of their firm
D. Missing revenue estimates during a recession
B. Corporate executives buying other companies to expand their influence
11. An individual decides to sell corporate bonds to another investor. Which type
of financial market or institution would be involved in this transaction?
A. Retail securities firm
B. Mortgage lender
C. Insurance company
D. United States Treasury
A. Retail securities firm
12. A firm wants to sell new shares of stock. Which other institution is involved in
this type of transaction?
A. Insurance company
B. Investment banking firm
C. Savings and loan
D. Hedge fund
B. Investment banking firm
13. A partnership needs funds to purchase technology equipment. It will be able
to repay those funds in under a year's time. Which organization should the
partnership contact to obtain the needed funds?
A. Retail bank
B. Insurance company
