WGU C214 OA Financial Management

WGU C214 OA Financial Management Retake Exam Questions and Answers (2022/2023) (Verified Answers) 1. What does the Foreign Corrupt Practices Act forbid U.S. companiesto do? Prohibits U.S. firms and individuals from paying bribes toforeign officials to further business deals. 2. What are two basic types of financial instruments? Stocks and Bonds 3. What are secondary markets? Secondary financial markets are where securities are traded after the initialoffering. 4. What do cash flows from operating activities report? Operating – day to day operations Investing – Property, plant, equipment, long term itemsFinancing – debt and equity changes 5. What does the statement of cash flows report? Cash inflow andcash outflow of business for period of time 6. Write the equation that links the income statement to the balance sheet? 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? CFF Increase in debt 600 + (no change in stock) 0 – (dividends paid) 100 = 500 8. Describe an income statement? An income statement is a financial statement that shows you how profitable your business was overa 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 thestatement of cash flows. 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 basisof accounting? 30,000-20,000= $10,000 11.11. EBIT: $1,000,000 Depreciation: $30,000 Changein working capital($5,000) Net capital expenditures: $10,000Tax rate: 40% What is the company’s free cash flow? 1,000,000*(1-.40) + 30,000) – (-5,000) – 10,000 = 625,000 12. Define Free Cash Flow? Represents the cash available for the company to repay creditors or pay dividends and interest toinvestor 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 theimpact on the cashflow from operating activities? 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? 10,000 PMT (at the end of each year)6 I/Y 10 N CPT PV = - 15. An employee wants to retire 20 years from todayand would like to have an annualincome of $300,000 per year for 10 years starting in exactly 20 years. The discount rate is 6%. What is the present value, today? Future PMT = 300,000 N = 10 I/Y = 6 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 lotteryand invests this money for 2 years and 3 months at an interest rate of 6% simple interest. How much will the person have inprincipaland interest at the end of the period? 10,125.000 17. A company shows the following financialdata: Accounts receivable: $300Inventory: $700 Fixed assets: $900 Accounts payable: $500Long-term debt: $1000 What is the current ratio? (300+700)/500 = 2.0 18. What is an example of an estimate used in recording transactions? Deciding the salvage value of a fixed asset when calculating depreciation expense 19. Give an example of accounting difference?The firms use different inventory methods 20. Which securities are issued by the U.S. federal government are taxable at thefederal level? Treasury bonds 21. When will annual percentage yield (APY) be greater than the annual percentagerate (APR)?