WGU C214 Financial Management Concepts Practice Exam
The matching principle in accrual ac-
counting requires that:
a. Expenses are matched to revenue
recognition.
b. Expenses are matched to the year in
a
which they are incurred
c. Revenues are matched to the year in
which they are booked
d. Revenues should be large enough to
match expenses
The addition to retained earnings each
year is:
a. Net Income
b
b. Net Income minus dividends
c. Net Income plus dividends
d. Net Income times the Payout Ratio
Net working capital equals:
a. Current assets
b. Current liabilities c
c. Current assets minus current liabilities
d. None of the above
What does the Sarbanes-Oxley Act re-
quire companies to do?
a. Have a board of directors
b. Register all foreign sales d
c. Make estimated tax payments
d. Have transparent, accurate financial
statements
If a company produces and sells a prod-
uct only in the U.S., what international
developments may affect its sales?
a. Fluctuating exchange rates b
b. Imports of competing products
c. Immigration policy
d. Inflation in Europe
Which is not a reason to calculate
WACC?
, WGU C214 Financial Management Concepts Practice Exam
a. To measure the overall cost of financ-
ing
b. Needed to calculate Cash Flow Fi-
nancing
b
c. It is the minimum required return for
investment projects
d. Measures investors' required return on
firm securities
If a firm's goal is to maximize stockholder
wealth, which would the firm avoid?
a. Stock buybacks
c
b. Risky long-term investments
c. Investments with negative NPV
d. Transparency in financial statements
In which market transaction is the corpo-
ration not involved?
a. Primary Markets
b
b. Secondary Markets
c. IPO
d. Buy Backs
What does Beta measure?
a. The yield on the S&P 500
b. The relative riskiness of an individual
b
stock
c. Indicates the market value of the stock
d. Stocks to avoid purchasing
Which accounting decision uses esti-
mates?
a. Life of a new asset
a
b. Accounts payable
c. Amortization schedule for a loan
d. Cost of a new machine
An investment with a term of less than
one year is:
b
a. A current liability
b. A current asset
, WGU C214 Financial Management Concepts Practice Exam
c. Is in retained earnings
d. Is a long-term liability
Which does not affect the required yield
on a bond?
a. Riskiness of the issuer
d
b. Collateralization
c. Treasury yields
d. Face Value
If the yield of a bond is higher than the
coupon rate, what is the price?
a. Premium price
c
b. Par price
c. Discount price
d. Secondary market price
Why would a company buy back out-
standing stock?
a. To boost the price of the stock
d
b. To increase financial leverage
c. Lack of investment opportunities
d. All of the above
Which cash flow statement contains in-
come statement items?
a. CFO
a
b. CFI
c. CFF
d. None of above
Why are accurate sales forecasts impor-
tant?
a. To determine the appropriate debt/eq-
uity ratio
b
b. To have right amount of production
resources
c. To determine WACC
d. The time value of money
If a firm cannot access markets suffi-
ciently to meet their DFN, what strate-
gies might they use?
The matching principle in accrual ac-
counting requires that:
a. Expenses are matched to revenue
recognition.
b. Expenses are matched to the year in
a
which they are incurred
c. Revenues are matched to the year in
which they are booked
d. Revenues should be large enough to
match expenses
The addition to retained earnings each
year is:
a. Net Income
b
b. Net Income minus dividends
c. Net Income plus dividends
d. Net Income times the Payout Ratio
Net working capital equals:
a. Current assets
b. Current liabilities c
c. Current assets minus current liabilities
d. None of the above
What does the Sarbanes-Oxley Act re-
quire companies to do?
a. Have a board of directors
b. Register all foreign sales d
c. Make estimated tax payments
d. Have transparent, accurate financial
statements
If a company produces and sells a prod-
uct only in the U.S., what international
developments may affect its sales?
a. Fluctuating exchange rates b
b. Imports of competing products
c. Immigration policy
d. Inflation in Europe
Which is not a reason to calculate
WACC?
, WGU C214 Financial Management Concepts Practice Exam
a. To measure the overall cost of financ-
ing
b. Needed to calculate Cash Flow Fi-
nancing
b
c. It is the minimum required return for
investment projects
d. Measures investors' required return on
firm securities
If a firm's goal is to maximize stockholder
wealth, which would the firm avoid?
a. Stock buybacks
c
b. Risky long-term investments
c. Investments with negative NPV
d. Transparency in financial statements
In which market transaction is the corpo-
ration not involved?
a. Primary Markets
b
b. Secondary Markets
c. IPO
d. Buy Backs
What does Beta measure?
a. The yield on the S&P 500
b. The relative riskiness of an individual
b
stock
c. Indicates the market value of the stock
d. Stocks to avoid purchasing
Which accounting decision uses esti-
mates?
a. Life of a new asset
a
b. Accounts payable
c. Amortization schedule for a loan
d. Cost of a new machine
An investment with a term of less than
one year is:
b
a. A current liability
b. A current asset
, WGU C214 Financial Management Concepts Practice Exam
c. Is in retained earnings
d. Is a long-term liability
Which does not affect the required yield
on a bond?
a. Riskiness of the issuer
d
b. Collateralization
c. Treasury yields
d. Face Value
If the yield of a bond is higher than the
coupon rate, what is the price?
a. Premium price
c
b. Par price
c. Discount price
d. Secondary market price
Why would a company buy back out-
standing stock?
a. To boost the price of the stock
d
b. To increase financial leverage
c. Lack of investment opportunities
d. All of the above
Which cash flow statement contains in-
come statement items?
a. CFO
a
b. CFI
c. CFF
d. None of above
Why are accurate sales forecasts impor-
tant?
a. To determine the appropriate debt/eq-
uity ratio
b
b. To have right amount of production
resources
c. To determine WACC
d. The time value of money
If a firm cannot access markets suffi-
ciently to meet their DFN, what strate-
gies might they use?
