Exam (elaborations)

(WGU D076) BUS 2040 Finance Skills for Managers - Complete OA Review .

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Course
ACCOUNTING

Institution
Western Governors University

(WGU D076) BUS 2040 Finance Skills for Managers - Complete OA Review .(WGU D076) BUS 2040 Finance Skills for Managers - Complete OA Review .(WGU D076) BUS 2040 Finance Skills for Managers - Complete OA Review .

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Uploaded on August 31, 2024
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Written in 2024/2025
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wgu d076 bus 2040 finance skills for managers

Institution
Western Governors University
Course
ACCOUNTING

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BUS 2040

Finance Skills for Managers

OA COMPLETE REVIEW

©WGU 2024/2025

,1. Multiple Choice: Which financial statement reports a company's
financial performance over a specific accounting period?
A) Balance Sheet
B) Income Statement
C) Cash Flow Statement
D) Statement of Shareholders' Equity
Correct Answer: B) Income Statement
Rationale: The income statement provides an overview of
revenues, expenses, net income, and earnings per share over a
specific period, reflecting a company's financial performance.

2. Fill-in-the-Blank: The __________ is a financial metric that
measures a company's ability to repay its short-term liabilities with
its short-term assets.
Correct Answer: Current Ratio
Rationale: The current ratio is an indicator of liquidity, calculated
as current assets divided by current liabilities.

3. True/False: The cost of goods sold is deducted from net sales to
calculate gross profit.
Correct Answer: True

©WGU 2024/2025

, Rationale: Gross profit is calculated by subtracting the cost of
goods sold from net sales, reflecting the profitability of a company's
core business activities.

4. Multiple Response: Select all that apply. Which of the following
are considered non-operating income?
A) Dividend income
B) Interest expense
C) Rental income
D) Sales revenue
Correct Answers: A) Dividend income, C) Rental income
Rationale: Non-operating income includes revenues and
expenses not related to the primary business activities, such as
dividend and rental income. Sales revenue is operating income,
while interest expense is a non-operating expense.

5. Multiple Choice: In capital budgeting, the __________ method
does not take into account the time value of money.
A) Net Present Value (NPV)
B) Internal Rate of Return (IRR)
C) Payback Period
D) Profitability Index
Correct Answer: C) Payback Period
©WGU 2024/2025

, Rationale: The payback period method calculates the time taken
to recover the initial investment, ignoring the time value of money,
unlike NPV and IRR which consider it.

6. Fill-in-the-Blank: The __________ is used to evaluate the
profitability and efficiency of a company's investment in assets.
Correct Answer: Return on Assets (ROA)
Rationale: ROA measures how effectively a company uses its
assets to generate earnings, calculated as net income divided by
total assets.

7. True/False: Financial leverage benefits shareholders only when
the return on investment exceeds the cost of debt.
Correct Answer: True
Rationale: Financial leverage amplifies the potential returns to
shareholders; however, it is beneficial only if the company earns
more on its investments than it pays in interest.

8. Multiple Response: Which of the following are key components
of the DuPont analysis?
A) Net Profit Margin
B) Asset Turnover
C) Equity Multiplier
D) Current Ratio
©WGU 2024/2025

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Exam (elaborations)

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