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WGU C214 OA Financial Management Retake Exam Questions and Answers (2022/2023)
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(Verified Answers)
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1. What does the Foreign Corrupt Practices Act forbid U.S. companiesto do?
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Prohibits U.S. firms and individuals from paying bribes to foreign officials to further business deals.
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2. What are two basic types of financial instruments?
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Stocks and Bonds
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3. What are secondary markets?
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Secondary financial markets are where securities are traded after the initialoffering.
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4. What do cash flows from operating activities report?
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Operating – day to day operations
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Investing – Property, plant, equipment, long term itemsFinancing – debt and
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equity changes
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5. What does the statement of cash flows report?
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Cash inflow and cash outflow of business for period of time
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6. Write the equation that links the income statement to the balance sheet?
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New Re= Old RE + Net Income – dividends
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Net income 2,000
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Depreciation 500
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Change in operating assets 400
Change in PPE
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Change on long term liabilities 600
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Dividends paid 100
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What is the firm’s cash flow from financing activities? CFF
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Increase in debt 600 + (no change in stock) 0 – (dividends paid) 100 = 500
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8. Describe an income statement?
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An income statement is a financial statement that shows you how profitable your business was over a given reporting period. It shows your
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revenue, minus your expenses and losses
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9. What item is included in the income statement and not included in thestatement of cash flows.
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Depreciation
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10. A company sold goods in 2016 for $30,000 and collected the cash in 2017. In 2016, the company incurred and
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paid $20,000 in expenses related to the goods sold. How much income should the company report in 2016 under the
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accrual basisof accounting?
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30,000-20,000= $10,000
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11. 11.
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EBIT: $1,000,000
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Depreciation: $30,000
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Changein working capital($5,000) Net capital
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expenditures: $10,000Tax rate: 40%
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What is the company’s free cash flow?
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1,000,000*(1-.40) + 30,000) – (-5,000) – 10,000 = 625,000
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12. Define Free Cash Flow?
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Represents the cash available for the company to repay creditors or pay dividends and interest toinvestor
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13. A company reported an increase in accounts payable of $4,000 during the recent period. Half of this
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amount is expected to be paid next period. What is theimpact on the cash flow from operating activities?
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Increase of $4000
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14. An architect will receive $10,000 per year (at the end of the year) PMT for 10 years. The annual interest earned on
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the investment is 6%. What is the present value
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of the architect’s investment?
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10,000 PMT (at the end of each year)6 I/Y
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CPT PV = -7360008705
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15. An employee wants to retire 20 years from today and would like to have an annualincome of $300,000 per year for
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10 years starting in exactly 20 years. The discount rate is 6%. What is the present value, today?
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WGU C214 OA Financial Management Retake Exam Questions and Answers (2022/2023)
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(Verified Answers)
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1. What does the Foreign Corrupt Practices Act forbid U.S. companiesto do?
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Prohibits U.S. firms and individuals from paying bribes to foreign officials to further business deals.
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2. What are two basic types of financial instruments?
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Stocks and Bonds
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Sp
3. What are secondary markets?
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Secondary financial markets are where securities are traded after the initialoffering.
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Sp
4. What do cash flows from operating activities report?
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Operating – day to day operations
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Sp
Investing – Property, plant, equipment, long term itemsFinancing – debt and
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equity changes
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sh
Sp
5. What does the statement of cash flows report?
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Cash inflow and cash outflow of business for period of time
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6. Write the equation that links the income statement to the balance sheet?
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New Re= Old RE + Net Income – dividends
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Net income 2,000
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Depreciation 500
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Change in operating assets 400
Change in PPE
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Change on long term liabilities 600
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Dividends paid 100
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What is the firm’s cash flow from financing activities? CFF
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Increase in debt 600 + (no change in stock) 0 – (dividends paid) 100 = 500
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8. Describe an income statement?
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An income statement is a financial statement that shows you how profitable your business was over a given reporting period. It shows your
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revenue, minus your expenses and losses
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9. What item is included in the income statement and not included in thestatement of cash flows.
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Depreciation
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10. A company sold goods in 2016 for $30,000 and collected the cash in 2017. In 2016, the company incurred and
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paid $20,000 in expenses related to the goods sold. How much income should the company report in 2016 under the
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accrual basisof accounting?
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30,000-20,000= $10,000
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11. 11.
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EBIT: $1,000,000
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Depreciation: $30,000
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Changein working capital($5,000) Net capital
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expenditures: $10,000Tax rate: 40%
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What is the company’s free cash flow?
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1,000,000*(1-.40) + 30,000) – (-5,000) – 10,000 = 625,000
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12. Define Free Cash Flow?
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Represents the cash available for the company to repay creditors or pay dividends and interest toinvestor
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13. A company reported an increase in accounts payable of $4,000 during the recent period. Half of this
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amount is expected to be paid next period. What is theimpact on the cash flow from operating activities?
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Increase of $4000
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14. An architect will receive $10,000 per year (at the end of the year) PMT for 10 years. The annual interest earned on
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the investment is 6%. What is the present value
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of the architect’s investment?
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10,000 PMT (at the end of each year)6 I/Y
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10 N
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CPT PV = -7360008705
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15. An employee wants to retire 20 years from today and would like to have an annualincome of $300,000 per year for
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10 years starting in exactly 20 years. The discount rate is 6%. What is the present value, today?
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