WGU C214 Final Exam Questions With Verified Answers | Latest Update (GRADED)

What does the Foreign Corrupt Practices Act forbid U.S. companies to do - Answer Prohibits U.S. firms and individuals from paying bribes to foreign officials to further business deals. 2. What are two basic types of financial instruments - Answer Stocks and Bonds 3. What are secondary markets - Answer Secondary financial markets are where securities are traded after the initial offering. 4. What do cash flows from operating activities report - Answer Operating - day to day operations Investing - Property, plant, equipment, long term items Financing - debt and equity changes 5. What does the statement of cash flows report - Answer Cash inflow and cash outflow of business for period of time 6. Write the equation that links the income statement to the balance sheet - Answer New Re= Old RE + Net Income - dividends 7. Net income 2,000 Depreciation 500 Change in operating assets 400 Change in PPE 1,000 Change on long term liabilities 600 Dividends paid 100 What is the firm's cash flow from financing activities - Answer Increase in debt 600 + (no change in stock) 0 - (dividends paid) 100 = 500 8. Describe an income statement - Answer An income statement is a financial statement that shows you how profitable your business was over a given reporting period. It shows your revenue, minus your expenses and losses 9. What item is included in the income statement and not included in the statement of cash flows - Answer Depreciation 10. A company sold goods in 2016 for $30,000 and collected the cash in 2017. In 2016, the company incurred and paid $20,000 in expenses related to the goods sold. How much income should the company report in 2016 under the accrual basis of accounting - Answer 30,000-20,000= $10,000 11. EBIT: $1,000,000 Depreciation: $30,000 Change in working capital($5,000) Net capital expenditures: $10,000 Tax rate: 40% What is the company's free cash flow - Answer 1,000,000*(1-.40) + 30,000) - (-5,000) - 10,000 = 625,000 12. Define Free Cash Flow - Answer Represents the cash available for the company to repay creditors or pay dividends and interest to investor 13. A company reported an increase in accounts payable of $4,000 during the recent period. Half of this amount is expected to be paid next period. What is the impact on the cash flow from operating activities - Answer increase of $4000 14. An architect will receive $10,000 per year (at the end of the year) PMT for 10 years. The annual interest earned on the investment is 6%. What is the present value of the architect's investment - Answer 10,000 PMT (at the end of each year) 6 I/Y 10 N CPT PV = -5 15. An employee wants to retire 20 years from today and would like to have an annual income of $300,000 per year for 10 years starting in exactly 20 years. The discount rate is 6%. What is the present value, today - Answer FUTURE 1000 PMT = 300,000 N = 10 I/Y = 6 CPT PV = 2,208,026.115 PRESENT FV = 2,208,026.115 N = 20 I/Y = 6 PV = 688,472,9797 16. A person won $75,000 in a lottery and invests this money for 2 years and 3 months at an interest rate of 6% simple interest. How much will the person have in principal and interest at the end of the period - Answer 10,125.000 17. A company shows the following financial data: Accounts receivable: $300 Inventory: $700 Fixed assets: $900 Accounts payable: $500 Long-term debt: $1000 What is the current ratio - Answer (300+700)/500 = 2.0