WGU C214 UPDATED Exam Questions and
CORRECT Answers
Revenues - CORRECT ANSWER Amounts generated by a company by the sale of items.
Expenses - CORRECT ANSWER amount that is incured by a company to manufacture
product.
Net Income - CORRECT ANSWER The difference between revenue and expenses. Revenue
minus expenses.
Assets - CORRECT ANSWER Items that are owned by a company
Accounting equations - CORRECT ANSWER Equity = Assets - liabilities
Liability - CORRECT ANSWER amount that a company owes to someone else.
Equity - CORRECT ANSWER Amount that is invested by shareholders in a company.
Income Statement - CORRECT ANSWER Reports the revenue, expenses and income of a
company.
Accrual Principle or accounting - CORRECT ANSWER Revenues should be reported in the
income statement when it is earned by the company. Earned is when the product or service is
delivered to the customer. You don't have to wait for them to pay for it. When you earn it you
can count it. Expenses are reported in the income statement when they are incurred by the
company. Not when the company pays for those expenses.
Matching Principal - CORRECT ANSWER All expenses incurred reported in income
statement.
,Depreciation expense - CORRECT ANSWER When you use equipment, value of that
equipment goes down. You will never pay cash for this expense. reported in the income
statement NOT in the cash flow statement.
statement of retained earnings - CORRECT ANSWER Shows how much of the income is
distributed to the stock holders in dividends and how much is retained by the company for future
growth and expansion.
Balance Sheet - CORRECT ANSWER Reports the accounting equations
Assets = liability+equity
Only report prepared for a POINT in time.
Statement of cash flows - CORRECT ANSWER Change in cash balance for a PERIOD of
time.
financial statements - CORRECT ANSWER income statement - Period of time
retained earning - period of time
balance sheet - point in time
cash flow - period in time
CFO cash flow from operating activities. - CORRECT ANSWER Cash flow from sales of
products and services used for regular daily operating activities (salaries, rent etc.)
accounts receivable - CORRECT ANSWER when a customer owes you money.
Current Asset
accounts payable - CORRECT ANSWER when the company owe someone money.
, Current Liability
CFI cash flow from investing activities - CORRECT ANSWER Cash generated as a result
from investment in PP&E (property plant and equipment)
Cash out flow - CORRECT ANSWER Can be written as "outflow" or can be enclosed in
brackets. (...) = outflow.
If a company invests $ in equipment that would be a cash outflow.
CFF cash flow from financing activities - CORRECT ANSWER shows the cash that is
generated from financing the business. Debt (borrowing) or equity (investors)
Simple interest - CORRECT ANSWER you own interest only on the principle (do not need
financial calculator)
compound interest - CORRECT ANSWER earn interest on principle and interest (Need
financial calculator)
PV - CORRECT ANSWER Principle Value
I/PY - CORRECT ANSWER Interst per year
N - CORRECT ANSWER Number of payments (most likely number of years)
Required rate of return - CORRECT ANSWER Benchmark for a broker to meet for rate of
return on stocks. Not included in calculations.
D1 - CORRECT ANSWER dividend paid at the end of the year (NOT TODAY)
CORRECT Answers
Revenues - CORRECT ANSWER Amounts generated by a company by the sale of items.
Expenses - CORRECT ANSWER amount that is incured by a company to manufacture
product.
Net Income - CORRECT ANSWER The difference between revenue and expenses. Revenue
minus expenses.
Assets - CORRECT ANSWER Items that are owned by a company
Accounting equations - CORRECT ANSWER Equity = Assets - liabilities
Liability - CORRECT ANSWER amount that a company owes to someone else.
Equity - CORRECT ANSWER Amount that is invested by shareholders in a company.
Income Statement - CORRECT ANSWER Reports the revenue, expenses and income of a
company.
Accrual Principle or accounting - CORRECT ANSWER Revenues should be reported in the
income statement when it is earned by the company. Earned is when the product or service is
delivered to the customer. You don't have to wait for them to pay for it. When you earn it you
can count it. Expenses are reported in the income statement when they are incurred by the
company. Not when the company pays for those expenses.
Matching Principal - CORRECT ANSWER All expenses incurred reported in income
statement.
,Depreciation expense - CORRECT ANSWER When you use equipment, value of that
equipment goes down. You will never pay cash for this expense. reported in the income
statement NOT in the cash flow statement.
statement of retained earnings - CORRECT ANSWER Shows how much of the income is
distributed to the stock holders in dividends and how much is retained by the company for future
growth and expansion.
Balance Sheet - CORRECT ANSWER Reports the accounting equations
Assets = liability+equity
Only report prepared for a POINT in time.
Statement of cash flows - CORRECT ANSWER Change in cash balance for a PERIOD of
time.
financial statements - CORRECT ANSWER income statement - Period of time
retained earning - period of time
balance sheet - point in time
cash flow - period in time
CFO cash flow from operating activities. - CORRECT ANSWER Cash flow from sales of
products and services used for regular daily operating activities (salaries, rent etc.)
accounts receivable - CORRECT ANSWER when a customer owes you money.
Current Asset
accounts payable - CORRECT ANSWER when the company owe someone money.
, Current Liability
CFI cash flow from investing activities - CORRECT ANSWER Cash generated as a result
from investment in PP&E (property plant and equipment)
Cash out flow - CORRECT ANSWER Can be written as "outflow" or can be enclosed in
brackets. (...) = outflow.
If a company invests $ in equipment that would be a cash outflow.
CFF cash flow from financing activities - CORRECT ANSWER shows the cash that is
generated from financing the business. Debt (borrowing) or equity (investors)
Simple interest - CORRECT ANSWER you own interest only on the principle (do not need
financial calculator)
compound interest - CORRECT ANSWER earn interest on principle and interest (Need
financial calculator)
PV - CORRECT ANSWER Principle Value
I/PY - CORRECT ANSWER Interst per year
N - CORRECT ANSWER Number of payments (most likely number of years)
Required rate of return - CORRECT ANSWER Benchmark for a broker to meet for rate of
return on stocks. Not included in calculations.
D1 - CORRECT ANSWER dividend paid at the end of the year (NOT TODAY)
