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WGU C214 Financial Management Objective Assessment Exam Study Guide Questions and Answers (Verified Answers) 1.The goal of the corporation is to ANS maximize stock price 2.What makes an efficient market ANS Competitive market, liquidity, transparency 3.What is the relationship between risk and required return ANS As risk increases, required return increases.
4.What are the 3 main financial statements ANS Income statement, the Balance Sheet., and the statement of cash flows 1 / 4
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5.Which financial statement reflects a POINT in time (not a period in time): -
Balance sheet 6.What is Revenue ANS Amount generated by sale of products and services
7.What is Expenses: Amount incurred to manufacture products
8.What is Income ANS The difference between Revenue and Expenses 9.What are Assets ANS Items that are owned by the company Land, building, equipment, machinery, supplies, inventory 10.What's the difference between a long term asset and a short term asset?-
: Short term assets are expected to be converted to cash within one
year, long term assets are typically more valuable but less liquid (projected to keep for more than a year) 11.What is Equity ANS Amounts invested in the company by shareholders/investors.Happens when somebody buys stock in your company.
12.What is reported on the Income Statement 2 / 4
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ANS Revenues, Expenses and In- come (Income statement is the FIRST statement a company has to prepare) 13.What is reported on the Balance Sheet ANS assets, liabilities, equity Assets = Liability + Equity 14.What equation is the foundation for all of financial accounting ANS Assets = Liability + Equity 15.What are liabilities ANS Amounts owed by the company to others.i.e. Accounts payable, salaries payable, income tax payable. If you see the word "payable" it's a liability.
16.What are short term vs long term liabilities ANS Short term liabilities are those debts that are paid off in one year such as accounts payable, salaries payable and short term loans.Long term liabilities are due in more than a year, such as long term loans, bonds, and lease agreements. LTL are used to finance major investments such as purchasing property, plant and equipment.
17.What is the Revenue Recognition principle ANS Revenue is recognized when product or service is delivered to the customer. 3 / 4
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*The moment you deliver the product or service, you have earned the revenue and
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