WGU C214 FINANCIAL MANAGEMENT PASS THE OA EXAM|150
WGU C214 - Financial Management
QUESTIONS AND ANSWERS| UPDATE|A GRADED
Study online at https://quizlet.com/_h3b5um
1. Why are American regulators focused on international Because international in-
investing in a global marketplace? vesting in a global mar-
ketplace is the concern of
American investors.
2. What are the likeliest outcomes if a company out- Consumer prices will de-
sources the manufacturing of its products to a foreign crease.
country? Domestic employment will
decrease.
3. How can a private firm appropriately maximize share- By making decisions that
holder value? keep the control of the
business with the owners.
4. What is one of the two basic types of financial instru- Bonds
ments? or
Securities/Cheques
5. A company reported an increase in accounts receiv- The change will decrease
able of $5,000 during the recent period. Half of this cash flows from opera-
amount is expected to be collected next period. tions by $5,000.
How will this change in accounts receivable affect the
cash flows from the operating activities section?
6. Selected Data for 20x2 for ABD Inc. $5,300 Outflow
Net Income $1000
Depreciation Expense $300
Change in Operating Assets $600
Change in Net PPE $5000
Changes in Long-Term Liabilities $1000
Dividends Paid $200
What is this firm's cash flow from investments, using
the data above and assuming no asset disposals?
, WGU C214 - Financial Management
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7. What do cash flows from investing activities generally A firm's purchase and sale
relate to? of long-term assets.
8. Which transaction is reflected in cash flow from oper- Cash sales to customers.
ating activities?
9. What does free cash flow represent? Cash available for distri-
bution after funding re-
quired reinvestment.
10. What do the content and structure of a balance sheet The assets, liabilities, and
report? equity at a point in time.
11. Which statement accurately explains the recognition Revenues and expenses
of revenues and expenses under accounting income may be recognized in one
and income for tax purposes? period for accounting in-
come purposes and in a
different period for in-
come tax purposes.
12. What is the basic equation for a balance sheet? Assets=Liabilities + Equity
13. An analyst is comparing the ratios of two firms and The firms have different
needs to address timing differences. fiscal years.
What is an example of a timing difference between
these two firms?
14. A companys year end balance sheet for 2013: 4.0
AR: 900
Inventory: 1200
Fixed assets: 1000
AP: 1300
, WGU C214 - Financial Management
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Sales: 4000
Salaries: 275
What is their fixed asset turnover ratio?
15. A firm has a ROE (return on equity) of 0.27, and the The firm is generating
industry average ROE is 0.24. higher returns to owners
Which conclusion should an analyst draw when com- than the industry.
paring this firm to the industry?
16. What must have taken place for a firm to recognize The product must have
revenue, in order for the firm to comply with the ac- been delivered.
crual accounting rules?
17. A teacher won $100,000 and invests this money for $121,665
five years at an interest rate of 4% (compounded an-
nually). How much will this teacher have in principal
and interest at the end of the five years?
18. An accountant is 40 years old and has an anticipated $336,510
retirement age of 70 years old. The accountant plans
to save $6000 per year at the end of the next 30 years
to fund retirement.
How much will this accountant have upon retirement,
if the accountant is able to earn 4% annually on this
investment?
19. An investor deposits $2000 per year (beginning today) $24,973
for 10 years in a 4% interest-bearing account. The last
cash flow is received one year prior to the end of the
tenth year.
What is this investor's future balance after 10 years?
WGU C214 - Financial Management
QUESTIONS AND ANSWERS| UPDATE|A GRADED
Study online at https://quizlet.com/_h3b5um
1. Why are American regulators focused on international Because international in-
investing in a global marketplace? vesting in a global mar-
ketplace is the concern of
American investors.
2. What are the likeliest outcomes if a company out- Consumer prices will de-
sources the manufacturing of its products to a foreign crease.
country? Domestic employment will
decrease.
3. How can a private firm appropriately maximize share- By making decisions that
holder value? keep the control of the
business with the owners.
4. What is one of the two basic types of financial instru- Bonds
ments? or
Securities/Cheques
5. A company reported an increase in accounts receiv- The change will decrease
able of $5,000 during the recent period. Half of this cash flows from opera-
amount is expected to be collected next period. tions by $5,000.
How will this change in accounts receivable affect the
cash flows from the operating activities section?
6. Selected Data for 20x2 for ABD Inc. $5,300 Outflow
Net Income $1000
Depreciation Expense $300
Change in Operating Assets $600
Change in Net PPE $5000
Changes in Long-Term Liabilities $1000
Dividends Paid $200
What is this firm's cash flow from investments, using
the data above and assuming no asset disposals?
, WGU C214 - Financial Management
Study online at https://quizlet.com/_h3b5um
7. What do cash flows from investing activities generally A firm's purchase and sale
relate to? of long-term assets.
8. Which transaction is reflected in cash flow from oper- Cash sales to customers.
ating activities?
9. What does free cash flow represent? Cash available for distri-
bution after funding re-
quired reinvestment.
10. What do the content and structure of a balance sheet The assets, liabilities, and
report? equity at a point in time.
11. Which statement accurately explains the recognition Revenues and expenses
of revenues and expenses under accounting income may be recognized in one
and income for tax purposes? period for accounting in-
come purposes and in a
different period for in-
come tax purposes.
12. What is the basic equation for a balance sheet? Assets=Liabilities + Equity
13. An analyst is comparing the ratios of two firms and The firms have different
needs to address timing differences. fiscal years.
What is an example of a timing difference between
these two firms?
14. A companys year end balance sheet for 2013: 4.0
AR: 900
Inventory: 1200
Fixed assets: 1000
AP: 1300
, WGU C214 - Financial Management
Study online at https://quizlet.com/_h3b5um
Sales: 4000
Salaries: 275
What is their fixed asset turnover ratio?
15. A firm has a ROE (return on equity) of 0.27, and the The firm is generating
industry average ROE is 0.24. higher returns to owners
Which conclusion should an analyst draw when com- than the industry.
paring this firm to the industry?
16. What must have taken place for a firm to recognize The product must have
revenue, in order for the firm to comply with the ac- been delivered.
crual accounting rules?
17. A teacher won $100,000 and invests this money for $121,665
five years at an interest rate of 4% (compounded an-
nually). How much will this teacher have in principal
and interest at the end of the five years?
18. An accountant is 40 years old and has an anticipated $336,510
retirement age of 70 years old. The accountant plans
to save $6000 per year at the end of the next 30 years
to fund retirement.
How much will this accountant have upon retirement,
if the accountant is able to earn 4% annually on this
investment?
19. An investor deposits $2000 per year (beginning today) $24,973
for 10 years in a 4% interest-bearing account. The last
cash flow is received one year prior to the end of the
tenth year.
What is this investor's future balance after 10 years?
