WGU C214 Multiple Attempt Study Guide 2024

What standards are used to help US investors understand and compare foreign financial statements to domestic financial statements? - International Financial Reporting Standards When a company is optimizing its resources and maintaining or improving productivity, they are engaging in what hypothesis - Efficient Market Hypothesis What is the basic type of negotiable debt? - Bonds What is the characteristic of a stock sold in the secondary markets? - Stocks sold in the secondary markets are traded after the initial offering. If a company is engaged in lobbying for tariffs and trade restrictions, if they are successful, what are the two principal impacts? - Protection for the lobbyist and higher prices for the consumer pre reduced competition. Describe what an income statement is in one sentence? - It covers a period of time and starts with sales, takes out expenses, and ends with net income. What is the difference between taxable income and accounting income? - Accounting income is reported as net income on the income statement whereas Taxable income is used to determine the amount of tax a firm must pay. Net Income 15,000 Depreciation Exp 2,000 Change in Operating Assets 1,200 Change in PP&E 2,000 Change in long-term liab. 1,200 Dividends paid 1,500 What is the Cash Flow from Financing? - CFF= Incr Stock + Incr Debt -Dividends Paid = = -300 Net Income 121,000 Depreciation Expense 4,000 Accounts Receivable (30,000) Change in net PP&E 15,000 Accounts Payable (5,000) New Bank Loan 12,000 Dividends Paid 1,500 What is the Cash Flow from Investing? - CFI = Change in Net PPE + Depreciation Expense = 15,000 + 4,000 = 19,000 A grandmother sets up a trust for her grandson. She desires him to receive $20,000 per year. Her investment advisor finds an investment vehicle that will yield 7%. How much will the grandmother have to put into the investment? - 20000/.07= 140*12 =1680.00 What is the number of payments of a semi-annual bond if the number of years remaining are 12? - There are 24 semi-annual payments remaining bWhat is the expected rate of return for a stock that has a eta of 2.1. The market rate is 8.5% with a risk free rate of 2%. - E[R]=Rf + B(Rm - Rf) =2% + 2.1(8.5%-2.0%) =.02 + 2.1(0.0850-.02) =.01565 or 15.65% A company has a trial balance that shows $13,000 in bonds payable. On which financial statement should this be shown? - This would be shown on the Balance Sheet under Long Term Liabilities Which is the principal account comprising Cash Flow from Investing - The principal account for CFI is PP& E What is the cash effect on the Statement of Cash Flow when current liabilities decline? - Results in a decrease in cash If two companies use different inventory valuation methods, what difference would that be called in calculating net income? - Accounting Difference There are two competitors. The gross margin for Green Company is .45. The gross margin for Red Company is .40 Which company has a more productive manufacturing process? Why? - Green company has a more productive manufacturing process because the high gross margins are usually associated with and efficient production process. What is the current ratio given a balance sheet with the following account balances: Cash 10,000 Accounts Receivable 252,000 PP&E 725,000 Accounts Payable 93,000 Bank Loan 425,000 Common Stock 1,000,000 - Current Ratio = Current Assets/Current Liabilities