WGU C214 Pre-Assement
How can a private firm appropriately maximize shareholder value? - ANSBy making decisions
that keep the control of the business with the owners
Why are American regulators focused on international investing in a global marketplace? -
ANSBecause international investing in a global marketplace is the concern of
American investors
What is one of the two basic types of financial instruments? - ANSBonds
If a company outsources the manufacturing of its products to a foreign country, what are the
likeliest
outcomes? - ANSConsumer prices will decrease and Domestic employment will decrease.
What is true about the content and structure of a balance sheet? - ANSIt reports the assets,
liabilities, and equity at a point in time.
A company reported an increase in accounts receivable of $5,000 during the recent period. Half
of this
amount is expected to be collected next period.
How will this change in accounts receivable affect the cash flows from the operating activities
section? - ANSThe change will decrease cash flows from operations by $5,000.
Which statement accurately explains the recognition of revenues and expenses under
accounting income
and income for tax purposes? - ANSRevenues and expenses may be recognized in one period
for accounting income purposes and in a different period for income tax purposes.
Selected Data for 20x2 for ABD Inc.
Netincome $ 1,000
Depreciation expense $ 300
Change in operating assets $ 600
Change in net property, plant, and equipment$ 5,000
Changes in long-term liabilities $ 1,000
Dividends paid $ 200
What is the firm's cash flow from investments, using the data above and assuming no asset
disposals? - ANS$5,300 outflow
What is the basic equation for a balance sheet? - ANSAssets = Liabilities + Equity
, What do cash flows from investing activities generally relate to? - ANSA firm's purchase and
sale of long-term assets
Which transaction is reflected in cash flow from operating activities? - ANSCash sales to
customers
What does free cash flow represent? - ANSCash available for distribution after funding required
reinvestment
An analyst is comparing the ratios of two firms and needs to address timing differences. What
would be considered an example of a timing difference between the two firms? - ANSThe firms
have different fiscal years.
A company's year-end balance sheetfor 2013 shows the following:
Accounts receivable: $900
Inventory: $1200
Fixed assets: $1000
Accounts payable: $1300
Sales: $4000
Salaries expense: $275
What is their fixed asset turnover ratio? - ANS4.0
A firm has a ROE (return on equity) of 0.27 and the industry average ROE is 0.24. Which
conclusion would an analyst draw when comparing the firm to the industry? - ANSThe firm is
generating higher returns to owners than the industry.
What must have taken place for a firm to recognize revenue, in order for the firm to comply with
the accrual accounting rules? - ANSThe product must have been delivered.
A teacher won $100,000 and invests this money for 5 years at an interest rate of 4%
(compounded
annually).
How much will the teacher have in principal and interest at the end of the 5 years? -
ANS$121,665
An accountantis 40 years old with an anticipated retirement age of 70 years old. The accountant
plans to
save $6,000 per year at the end of the next 30 years to fund retirement. - ANS$336,510
An investor deposits $2,000 per year (beginning today) for 10 years in a 4% interest bearing
account. The
last cash flow is received 1 year prior to the end ofthe tenth year.
How can a private firm appropriately maximize shareholder value? - ANSBy making decisions
that keep the control of the business with the owners
Why are American regulators focused on international investing in a global marketplace? -
ANSBecause international investing in a global marketplace is the concern of
American investors
What is one of the two basic types of financial instruments? - ANSBonds
If a company outsources the manufacturing of its products to a foreign country, what are the
likeliest
outcomes? - ANSConsumer prices will decrease and Domestic employment will decrease.
What is true about the content and structure of a balance sheet? - ANSIt reports the assets,
liabilities, and equity at a point in time.
A company reported an increase in accounts receivable of $5,000 during the recent period. Half
of this
amount is expected to be collected next period.
How will this change in accounts receivable affect the cash flows from the operating activities
section? - ANSThe change will decrease cash flows from operations by $5,000.
Which statement accurately explains the recognition of revenues and expenses under
accounting income
and income for tax purposes? - ANSRevenues and expenses may be recognized in one period
for accounting income purposes and in a different period for income tax purposes.
Selected Data for 20x2 for ABD Inc.
Netincome $ 1,000
Depreciation expense $ 300
Change in operating assets $ 600
Change in net property, plant, and equipment$ 5,000
Changes in long-term liabilities $ 1,000
Dividends paid $ 200
What is the firm's cash flow from investments, using the data above and assuming no asset
disposals? - ANS$5,300 outflow
What is the basic equation for a balance sheet? - ANSAssets = Liabilities + Equity
, What do cash flows from investing activities generally relate to? - ANSA firm's purchase and
sale of long-term assets
Which transaction is reflected in cash flow from operating activities? - ANSCash sales to
customers
What does free cash flow represent? - ANSCash available for distribution after funding required
reinvestment
An analyst is comparing the ratios of two firms and needs to address timing differences. What
would be considered an example of a timing difference between the two firms? - ANSThe firms
have different fiscal years.
A company's year-end balance sheetfor 2013 shows the following:
Accounts receivable: $900
Inventory: $1200
Fixed assets: $1000
Accounts payable: $1300
Sales: $4000
Salaries expense: $275
What is their fixed asset turnover ratio? - ANS4.0
A firm has a ROE (return on equity) of 0.27 and the industry average ROE is 0.24. Which
conclusion would an analyst draw when comparing the firm to the industry? - ANSThe firm is
generating higher returns to owners than the industry.
What must have taken place for a firm to recognize revenue, in order for the firm to comply with
the accrual accounting rules? - ANSThe product must have been delivered.
A teacher won $100,000 and invests this money for 5 years at an interest rate of 4%
(compounded
annually).
How much will the teacher have in principal and interest at the end of the 5 years? -
ANS$121,665
An accountantis 40 years old with an anticipated retirement age of 70 years old. The accountant
plans to
save $6,000 per year at the end of the next 30 years to fund retirement. - ANS$336,510
An investor deposits $2,000 per year (beginning today) for 10 years in a 4% interest bearing
account. The
last cash flow is received 1 year prior to the end ofthe tenth year.
