WGU C213 Questions and Answers A+
Graded (2025)
Trading .on .the .NYSE .is .executed .without .a .specialist .(i.e. .a .market .maker).
.(T/F) .- .CORRECT .ANSWER-F
Stocks .and .bonds .are .two .types .of .financial .instruments .(T/F) .- .CORRECT
.ANSWER-T
The .matching .principle .in .accrual .accounting .requires .that:
a. .Revenues .be .recognized .when .the .earnings .process .is .complete .and
.matches .expenses .to .revenues .recognized. .
b. .Expenses .are .matched .to .the .year .in .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 .- .CORRECT .ANSWER-
a
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.
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
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
Which .components .are .part .of .Total .Liabilities?
a. .Accounts .Payable, .Accounts .Receivable, .Short .Term .Debt
b. .Long .Term .Debt, .Common .Stock, .Retained .Earnings
c. .Bonds, .Accounts .Payable, .Mortgage
d. .Common .Stock, .Long .Term .Debt, .Short .Term .Investments .- .CORRECT
.ANSWER-c
When .Fixed .Assets .increase .what .happens .to .Cash?
a. .Cash .stays .the .same
b. .Cash .increases
c. .Cash .decreases
d. .Assets .decrease .- .CORRECT .ANSWER-c
Which .is .the .purpose .of .the .statement .of .cash .flows?
a. .serves .as .the .replacement .for .the .income .statement .and .balance .sheet
b. .explains .the .change .in .cash .balance .at .one .point .in .time
c. .explains .the .change .in .cash .balance .for .one .period .of .time
d. .both .(a) .and .(b) .above .- .CORRECT .ANSWER-c
The .OIROI .(Operating .Income .Return .on .Investment) .uses .what .elements .on .the
.income .statement?
a. .Operating .Income, .EBIT, .Total .Liabilities
b. .EBIT, .Total .Assets
c. .Sales, .Total .Assets, .Equity
d. .Net .Margin, .Total .Current .Assets .- .CORRECT .ANSWER-b
Why .would .a .company .be .interested .in .the .TAT(Total .Asset .Turnover) .ratio?
a. .How .efficient .assets .are .at .producing .income
b. .What .the .turnover .of .sales .is .to .liabilities
c. .How .efficient .assets .are .at .producing .sales
d. .How .efficient .assets .are .to .liabilities .and .equity .- .CORRECT .ANSWER-c
Which .of .the .following .gives .the .largest .effective .rate .(APY)
,a. .18.6% .compounded .monthly
b. .18.6% .compounded .daily
c. .18.6% .compounded .weekly
d. .18.6% .compounded .yearly .- .CORRECT .ANSWER-b
What .does .the .beta .coefficient .represent?
a. .It .is .a .statistically-derived .measure .of .volatility
b. .It .is .the .Expected .Return .minus .the .Growth .Rate
c. .It .is .the .volatility .of .the .Risk .Free .Return
d. .It .is .the .expected .return .for .a .basket .of .preferred .stocks .- .CORRECT
.ANSWER-a
Why .is .depreciation .expense .taken .out .of .the .net .income .calculation, .yet .added
.back .at .the .end?
a. .Because .fixed .assets .should .remain .on .the .balance .sheet
b. .Because .depreciation .is .not .a .current .asset
c. .Because .depreciation .is .a .non-cash .liability
d. .Because .depreciation .expense .is .tax .deductible .- .CORRECT .ANSWER-d
Why .is .the .NPV .preferred .over .the .IRR? .Pick .Two
a. .It .has .a .higher .dollar .value
b. .It .measures .the .dollar .value
c. .It .is .more .reliable
d. .It .is .harder .to .calculate .- .CORRECT .ANSWER-b, .c
What .does .the .Degree .of .Financial .Leverage .indicate?
a. .The .firms .cash .balance
b. .The .cost .of .financed .assets
c. .The .reliance .on .debt
d. .The .reliance .on .assets .- .CORRECT .ANSWER-c
If .a .company .has .a .high .degree .of .financial .leverage, .what .does .that .tell .us
.about .the .firm's .risk .profile?
a. .Low .Risk
b. .Appropriate .Risk
c. .Higher .ability .to .pay .debt
d. .Higher .profits .to .shareholders .- .CORRECT .ANSWER-d
What .is .the .cash .cycle?
a. .The .speed .of .collecting .cash .from .customers
b. .The .amount .of .cash .kept .in .banks
c. .The .comparison .of .debt .to .cash
d.The .amount .of .time .to .regenerate .cash .- .CORRECT .ANSWER-d
Why .is .float .important .to .understand?
a. .To .know .how .to .keep .the .company .profitable
b. .To .know .why .the .company .needs .cash
c. .To .determine .when .to .buy .fixed .assets
d. .To .time .cash .expenditures
, e. .None .of .the .above .- .CORRECT .ANSWER-d
What .should .a .company .do .to .manage .its .working .capital?
a. .Collect .quickly .and .pay .slowly
b. .Keep .a .large .cash .balance
c. .Maximize .the .use .of .long .term .investment
d. .Depreciate .assets .more .slowly .- .CORRECT .ANSWER-a
What .would .be .a .source .of .information .to .determine .Replacement .Cost?
a. .Building .Appraisal
b. .Accumulated .Depreciation .Expense
c. .Stock .price
d. .Statement .of .Cash .Flows .- .CORRECT .ANSWER-a
What .does .the .Sarbanes-Oxley .Act .require .companies .to .do?
a. .Have .a .board .of .directors
b. .Register .all .foreign .sales
c. .Make .estimated .tax .payments
d. .Have .internal .control .audits .- .CORRECT .ANSWER-d
FINRA .(Financial .Industry .Regulatory .Authority) .does .the .following: .(pick .one)
a. .No .foreign .bribery .by .corporations
b. .Regulates .bond .prices
c. .Establishes .Credit .Unions
d. .Prosecutes .naughty .stock .brokers
e. .Regulates .Hedge .Funds .- .CORRECT .ANSWER-d
If .a .product .is .made .100% .domestically, .what .can .affect .its .domestic .market?
a. .International .exchange .rates
b. .International .competition
c. .Product .tariffs
d. .International .political .regulations .- .CORRECT .ANSWER-b
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
Why .would .a .farmer .buy .a .hedge .when .he .signs .a .contract .to .sell .produce
.overseas?
a. .To .avoid .tariffs
Graded (2025)
Trading .on .the .NYSE .is .executed .without .a .specialist .(i.e. .a .market .maker).
.(T/F) .- .CORRECT .ANSWER-F
Stocks .and .bonds .are .two .types .of .financial .instruments .(T/F) .- .CORRECT
.ANSWER-T
The .matching .principle .in .accrual .accounting .requires .that:
a. .Revenues .be .recognized .when .the .earnings .process .is .complete .and
.matches .expenses .to .revenues .recognized. .
b. .Expenses .are .matched .to .the .year .in .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 .- .CORRECT .ANSWER-
a
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.
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
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
Which .components .are .part .of .Total .Liabilities?
a. .Accounts .Payable, .Accounts .Receivable, .Short .Term .Debt
b. .Long .Term .Debt, .Common .Stock, .Retained .Earnings
c. .Bonds, .Accounts .Payable, .Mortgage
d. .Common .Stock, .Long .Term .Debt, .Short .Term .Investments .- .CORRECT
.ANSWER-c
When .Fixed .Assets .increase .what .happens .to .Cash?
a. .Cash .stays .the .same
b. .Cash .increases
c. .Cash .decreases
d. .Assets .decrease .- .CORRECT .ANSWER-c
Which .is .the .purpose .of .the .statement .of .cash .flows?
a. .serves .as .the .replacement .for .the .income .statement .and .balance .sheet
b. .explains .the .change .in .cash .balance .at .one .point .in .time
c. .explains .the .change .in .cash .balance .for .one .period .of .time
d. .both .(a) .and .(b) .above .- .CORRECT .ANSWER-c
The .OIROI .(Operating .Income .Return .on .Investment) .uses .what .elements .on .the
.income .statement?
a. .Operating .Income, .EBIT, .Total .Liabilities
b. .EBIT, .Total .Assets
c. .Sales, .Total .Assets, .Equity
d. .Net .Margin, .Total .Current .Assets .- .CORRECT .ANSWER-b
Why .would .a .company .be .interested .in .the .TAT(Total .Asset .Turnover) .ratio?
a. .How .efficient .assets .are .at .producing .income
b. .What .the .turnover .of .sales .is .to .liabilities
c. .How .efficient .assets .are .at .producing .sales
d. .How .efficient .assets .are .to .liabilities .and .equity .- .CORRECT .ANSWER-c
Which .of .the .following .gives .the .largest .effective .rate .(APY)
,a. .18.6% .compounded .monthly
b. .18.6% .compounded .daily
c. .18.6% .compounded .weekly
d. .18.6% .compounded .yearly .- .CORRECT .ANSWER-b
What .does .the .beta .coefficient .represent?
a. .It .is .a .statistically-derived .measure .of .volatility
b. .It .is .the .Expected .Return .minus .the .Growth .Rate
c. .It .is .the .volatility .of .the .Risk .Free .Return
d. .It .is .the .expected .return .for .a .basket .of .preferred .stocks .- .CORRECT
.ANSWER-a
Why .is .depreciation .expense .taken .out .of .the .net .income .calculation, .yet .added
.back .at .the .end?
a. .Because .fixed .assets .should .remain .on .the .balance .sheet
b. .Because .depreciation .is .not .a .current .asset
c. .Because .depreciation .is .a .non-cash .liability
d. .Because .depreciation .expense .is .tax .deductible .- .CORRECT .ANSWER-d
Why .is .the .NPV .preferred .over .the .IRR? .Pick .Two
a. .It .has .a .higher .dollar .value
b. .It .measures .the .dollar .value
c. .It .is .more .reliable
d. .It .is .harder .to .calculate .- .CORRECT .ANSWER-b, .c
What .does .the .Degree .of .Financial .Leverage .indicate?
a. .The .firms .cash .balance
b. .The .cost .of .financed .assets
c. .The .reliance .on .debt
d. .The .reliance .on .assets .- .CORRECT .ANSWER-c
If .a .company .has .a .high .degree .of .financial .leverage, .what .does .that .tell .us
.about .the .firm's .risk .profile?
a. .Low .Risk
b. .Appropriate .Risk
c. .Higher .ability .to .pay .debt
d. .Higher .profits .to .shareholders .- .CORRECT .ANSWER-d
What .is .the .cash .cycle?
a. .The .speed .of .collecting .cash .from .customers
b. .The .amount .of .cash .kept .in .banks
c. .The .comparison .of .debt .to .cash
d.The .amount .of .time .to .regenerate .cash .- .CORRECT .ANSWER-d
Why .is .float .important .to .understand?
a. .To .know .how .to .keep .the .company .profitable
b. .To .know .why .the .company .needs .cash
c. .To .determine .when .to .buy .fixed .assets
d. .To .time .cash .expenditures
, e. .None .of .the .above .- .CORRECT .ANSWER-d
What .should .a .company .do .to .manage .its .working .capital?
a. .Collect .quickly .and .pay .slowly
b. .Keep .a .large .cash .balance
c. .Maximize .the .use .of .long .term .investment
d. .Depreciate .assets .more .slowly .- .CORRECT .ANSWER-a
What .would .be .a .source .of .information .to .determine .Replacement .Cost?
a. .Building .Appraisal
b. .Accumulated .Depreciation .Expense
c. .Stock .price
d. .Statement .of .Cash .Flows .- .CORRECT .ANSWER-a
What .does .the .Sarbanes-Oxley .Act .require .companies .to .do?
a. .Have .a .board .of .directors
b. .Register .all .foreign .sales
c. .Make .estimated .tax .payments
d. .Have .internal .control .audits .- .CORRECT .ANSWER-d
FINRA .(Financial .Industry .Regulatory .Authority) .does .the .following: .(pick .one)
a. .No .foreign .bribery .by .corporations
b. .Regulates .bond .prices
c. .Establishes .Credit .Unions
d. .Prosecutes .naughty .stock .brokers
e. .Regulates .Hedge .Funds .- .CORRECT .ANSWER-d
If .a .product .is .made .100% .domestically, .what .can .affect .its .domestic .market?
a. .International .exchange .rates
b. .International .competition
c. .Product .tariffs
d. .International .political .regulations .- .CORRECT .ANSWER-b
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
Why .would .a .farmer .buy .a .hedge .when .he .signs .a .contract .to .sell .produce
.overseas?
a. .To .avoid .tariffs
