WGU C214 Concepts Only Multi Choice Version
Exam 222 Questions with Verified Answers
False - CORRECT ANSWER Trading on the NYSE is executed without a specialist (i.e.
a market maker). (T/F)
True - CORRECT ANSWER Stocks and bonds are two types of financial instruments
(T/F)
Revenues be recognized when the earnings process is complete and matches
expenses to revenues recognized. - CORRECT ANSWER The matching principle in
accrual accounting requires that:
Equity = Assets - Liabilities - CORRECT ANSWER A basic equation for the balance
sheet is:
Because the other statements are reset at the end of the fiscal year - CORRECT
ANSWER Why is the Balance Sheet known as a permanent statement?
Net Income - Dividends - CORRECT ANSWER How do you calculate the change in
Retained Earnings?
Operating Income and EBIT are the same - CORRECT ANSWER Which of the
following is generally true?
,Cash Accounts Receivable, Inventory, Long Term Assets - CORRECT ANSWER Which
components are part of total assets?
Inventory, Cash, Accounts Receivable, Short Term Investments - CORRECT
ANSWER Which components are part of current assets?
Bonds, Accounts Payable, Mortgage - CORRECT ANSWER Which components are
part of Total Liabilities?
Cash decreases - CORRECT ANSWER When Fixed Assets increase what happens to
Cash?
explains the change in cash balance for one period of time - CORRECT ANSWER
Which is the purpose of the statement of cash flows?
EBIT, Total Assets - CORRECT ANSWER The OIROI (Operating Income Return on
Investment) uses what elements on the income statement?
How efficient assets are at producing sales - CORRECT ANSWER Why would a
company be interested in the TAT-Total Asset Turnover-ratio?
a
18.6% compounded daily - CORRECT ANSWER Which of the following gives the
largest effective rate (APY)
, It is a statistically-derived measure of volatility - CORRECT ANSWER What does the
beta coefficient represent?
Because depreciation expense is tax deductible - CORRECT ANSWER Why is
depreciation expense taken out of the net income calculation, yet added back at
the end?
1-It measures the dollar value 2- It is harder to calculate - CORRECT ANSWER Why
is the NPV preferred over the IRR? Pick Two
The reliance on debt - CORRECT ANSWER What does the Degree of Financial
Leverage indicate?
Higher profits to shareholders - CORRECT ANSWER If a company has a high degree
of financial leverage, what does that tell us about the firm's risk profile?
The amount of time to regenerate cash - CORRECT ANSWER What is the cash
cycle?
To time cash expenditures - CORRECT ANSWER Why is float important to
understand?
Collect quickly and pay slowly - CORRECT ANSWER What should a company do to
manage its working capital?
Exam 222 Questions with Verified Answers
False - CORRECT ANSWER Trading on the NYSE is executed without a specialist (i.e.
a market maker). (T/F)
True - CORRECT ANSWER Stocks and bonds are two types of financial instruments
(T/F)
Revenues be recognized when the earnings process is complete and matches
expenses to revenues recognized. - CORRECT ANSWER The matching principle in
accrual accounting requires that:
Equity = Assets - Liabilities - CORRECT ANSWER A basic equation for the balance
sheet is:
Because the other statements are reset at the end of the fiscal year - CORRECT
ANSWER Why is the Balance Sheet known as a permanent statement?
Net Income - Dividends - CORRECT ANSWER How do you calculate the change in
Retained Earnings?
Operating Income and EBIT are the same - CORRECT ANSWER Which of the
following is generally true?
,Cash Accounts Receivable, Inventory, Long Term Assets - CORRECT ANSWER Which
components are part of total assets?
Inventory, Cash, Accounts Receivable, Short Term Investments - CORRECT
ANSWER Which components are part of current assets?
Bonds, Accounts Payable, Mortgage - CORRECT ANSWER Which components are
part of Total Liabilities?
Cash decreases - CORRECT ANSWER When Fixed Assets increase what happens to
Cash?
explains the change in cash balance for one period of time - CORRECT ANSWER
Which is the purpose of the statement of cash flows?
EBIT, Total Assets - CORRECT ANSWER The OIROI (Operating Income Return on
Investment) uses what elements on the income statement?
How efficient assets are at producing sales - CORRECT ANSWER Why would a
company be interested in the TAT-Total Asset Turnover-ratio?
a
18.6% compounded daily - CORRECT ANSWER Which of the following gives the
largest effective rate (APY)
, It is a statistically-derived measure of volatility - CORRECT ANSWER What does the
beta coefficient represent?
Because depreciation expense is tax deductible - CORRECT ANSWER Why is
depreciation expense taken out of the net income calculation, yet added back at
the end?
1-It measures the dollar value 2- It is harder to calculate - CORRECT ANSWER Why
is the NPV preferred over the IRR? Pick Two
The reliance on debt - CORRECT ANSWER What does the Degree of Financial
Leverage indicate?
Higher profits to shareholders - CORRECT ANSWER If a company has a high degree
of financial leverage, what does that tell us about the firm's risk profile?
The amount of time to regenerate cash - CORRECT ANSWER What is the cash
cycle?
To time cash expenditures - CORRECT ANSWER Why is float important to
understand?
Collect quickly and pay slowly - CORRECT ANSWER What should a company do to
manage its working capital?
