WGU C214 EXAM 100 QUESTIONS & CORRECT
ANSWERS LATEST 2025
Which will be larger: actual taxes payable or accounting income tax expense -
ANSWER-Accounting tax expense will be higher; actual taxes based on IRS rules
will be lower
Which cash flow measures the change in long term assets? - ANSWER-Cash flow
investing
Which financial ratios measure "efficiency"? - ANSWER-Asset turnover and Fixed
Asset turnover
Which ratio is the best measure of a firm's ability to pay bills? - ANSWER-Quick
ratio
Which decision requires using subjective estimates? - ANSWER-Useful
(depreciable) life of a new asset
What is the yield to maturity of a bond? - ANSWER-The return earned from
purchase date to maturity
If a bond pays $50 interest per year and yields 4%, what is its price? - ANSWER-
Premium price; i.e. $50 interest = 5% coupon; if Coupon>Yield, premium price
, If a firm buys a 90-day Treasury bill, where is it carried on the balance sheet? -
ANSWER-Current asset
How does a "prudent investor" select investments? - ANSWER-Seeks the highest
return for "reasonable" amount of risk
What is added to net income to derive net cash flow? - ANSWER-Depreciation
expense
What is the difference between WACC and CAPM's required return? - ANSWER-
CAPM includes only equity required return; WACC includes debt & equity
What do points on the Efficient Frontier measure? - ANSWER-The maximum
return for a given level of risk; maximum Return-to-risk ratio
What is Beta? - ANSWER-Measure of volatility of a stock's risk relative to the
market
Why are accurate forecasts important? - ANSWER-Plan for resources to support
sales
Which leverage measure shows the impact of EBIT changes on pre-tax profit -
ANSWER-Financial leverage
Which ratios are used in working capital management? - ANSWER-Cash ratio,
Current ratio
ANSWERS LATEST 2025
Which will be larger: actual taxes payable or accounting income tax expense -
ANSWER-Accounting tax expense will be higher; actual taxes based on IRS rules
will be lower
Which cash flow measures the change in long term assets? - ANSWER-Cash flow
investing
Which financial ratios measure "efficiency"? - ANSWER-Asset turnover and Fixed
Asset turnover
Which ratio is the best measure of a firm's ability to pay bills? - ANSWER-Quick
ratio
Which decision requires using subjective estimates? - ANSWER-Useful
(depreciable) life of a new asset
What is the yield to maturity of a bond? - ANSWER-The return earned from
purchase date to maturity
If a bond pays $50 interest per year and yields 4%, what is its price? - ANSWER-
Premium price; i.e. $50 interest = 5% coupon; if Coupon>Yield, premium price
, If a firm buys a 90-day Treasury bill, where is it carried on the balance sheet? -
ANSWER-Current asset
How does a "prudent investor" select investments? - ANSWER-Seeks the highest
return for "reasonable" amount of risk
What is added to net income to derive net cash flow? - ANSWER-Depreciation
expense
What is the difference between WACC and CAPM's required return? - ANSWER-
CAPM includes only equity required return; WACC includes debt & equity
What do points on the Efficient Frontier measure? - ANSWER-The maximum
return for a given level of risk; maximum Return-to-risk ratio
What is Beta? - ANSWER-Measure of volatility of a stock's risk relative to the
market
Why are accurate forecasts important? - ANSWER-Plan for resources to support
sales
Which leverage measure shows the impact of EBIT changes on pre-tax profit -
ANSWER-Financial leverage
Which ratios are used in working capital management? - ANSWER-Cash ratio,
Current ratio
