WGU - C214: Financial Management
Question and answers verified to pass
2025/2026
If accounts receivable increases, what is the impact on CFO? - correct answer ✔CFO decreases
Are actual taxes paid the same as how on the GAAP income statement? - correct answer ✔No.
Actual Taxes = IRS Rules
Income Statement = GAAP
Which decisions require using subjective estimates? - correct answer ✔Economic life of a new asset.
If there is a 30% change of a recession, what is the probability of expansion? - correct answer ✔70%
*The sum of probabilities must equal 100%
How much interest is paid on a 6% bond over 2 years and 3 months? - correct answer ✔2 years and 3
months:
2 + (3/12) = 2 + (.25) = 2.25
6% x 1,000 = $60 per year
$60 x 2.25 = $135
, How does a "prudent investor" select investments? - correct answer ✔Seeks the highest return for
"appropriate" amount of risk.
What do points on the Efficient Frontier measure? - correct answer ✔The maximum return for a given
level of risk; maximum Return-to-Risk ratio.
What is "Beta?" - correct answer ✔Measure of a stock's risk relative to the market.
Why are accurate forecasts important? - correct answer ✔Plan for resources for production; accurate
evaluation of capital projects.
Which ratio is used in valuing a private company? - correct answer ✔PE ratio in the "Comparable
Multiples" method.
What are 3 costs associated with holding inventory? - correct answer ✔1. Product
2. Storage
3. Opportunity
What risk is eliminated by a diversified portfolio? - correct answer ✔Idiosyncratic Risk - Risk affecting a
single firm.
What are the impacts of outsourcing? - correct answer ✔Fewer U.S. jobs and lower priced products.
What are the impacts of tariffs? - correct answer ✔More U.S. jobs and higher product costs for
consumers.
What securities are exempt from FEDERAL income taxation? - correct answer ✔Municipal bond
interest is tax-exempt. Treasury securities ARE taxable.
Question and answers verified to pass
2025/2026
If accounts receivable increases, what is the impact on CFO? - correct answer ✔CFO decreases
Are actual taxes paid the same as how on the GAAP income statement? - correct answer ✔No.
Actual Taxes = IRS Rules
Income Statement = GAAP
Which decisions require using subjective estimates? - correct answer ✔Economic life of a new asset.
If there is a 30% change of a recession, what is the probability of expansion? - correct answer ✔70%
*The sum of probabilities must equal 100%
How much interest is paid on a 6% bond over 2 years and 3 months? - correct answer ✔2 years and 3
months:
2 + (3/12) = 2 + (.25) = 2.25
6% x 1,000 = $60 per year
$60 x 2.25 = $135
, How does a "prudent investor" select investments? - correct answer ✔Seeks the highest return for
"appropriate" amount of risk.
What do points on the Efficient Frontier measure? - correct answer ✔The maximum return for a given
level of risk; maximum Return-to-Risk ratio.
What is "Beta?" - correct answer ✔Measure of a stock's risk relative to the market.
Why are accurate forecasts important? - correct answer ✔Plan for resources for production; accurate
evaluation of capital projects.
Which ratio is used in valuing a private company? - correct answer ✔PE ratio in the "Comparable
Multiples" method.
What are 3 costs associated with holding inventory? - correct answer ✔1. Product
2. Storage
3. Opportunity
What risk is eliminated by a diversified portfolio? - correct answer ✔Idiosyncratic Risk - Risk affecting a
single firm.
What are the impacts of outsourcing? - correct answer ✔Fewer U.S. jobs and lower priced products.
What are the impacts of tariffs? - correct answer ✔More U.S. jobs and higher product costs for
consumers.
What securities are exempt from FEDERAL income taxation? - correct answer ✔Municipal bond
interest is tax-exempt. Treasury securities ARE taxable.
