WGU C214 Everything you need to know
to pass exam
1. What does the Foreign Corrupt Practices Act forbid U.S. companies to do - Answer-
Prohibits U.S. firms and individuals from paying bribes to foreign officials to further
business deals.
2. What are two basic types of financial instruments - Answer- Stocks and Bonds
3. What are secondary markets - Answer- Secondary financial markets are where
securities are traded after the initial offering.
4. What do cash flows from operating activities report - Answer- Operating - day to day
operations Investing - Property, plant, equipment, long term items Financing - debt and
equity changes
5. What does the statement of cash flows report - Answer- Cash inflow and cash outflow
of business for period of time
6. Write the equation that links the income statement to the balance sheet - Answer-
New Re= Old RE + Net Income - dividends
7. Net income 2,000 Depreciation 500 Change in operating assets 400 Change in
PPE 1,000 Change on long term liabilities 600 Dividends paid 100 What is the firm's
cash flow from financing activities - Answer- Increase in debt 600 + (no change in
stock) 0 - (dividends paid) 100 = 500
8. Describe an income statement - Answer- An income statement is a financial
statement that shows you how profitable your business was over a given
reporting period. It shows your revenue, minus your expenses and losses
9. What item is included in the income statement and not included in the statement
of cash flows - Answer- Depreciation
10. A company sold goods in 2016 for $30,000 and collected the cash in 2017. In
2016, the company incurred and paid $20,000 in expenses related to the goods sold.
How much income should the company report in 2016 under the accrual basis of
accounting
- Answer- 30,000-20,000= $10,000
11. EBIT: $1,000,000 Depreciation: $30,000 Change in working capital($5,000) Net
capital expenditures: $10,000 Tax rate: 40% What is the company's free cash flow -
Answer- 1,000,000*(1-.40) + 30,000) - (-5,000) - 10,000 = 625,000
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, 12. Define Free Cash Flow - Answer- Represents the cash available for the company
to repay creditors or pay dividends and interest to investor
13. A company reported an increase in accounts payable of $4,000 during the recent
period. Half of this amount is expected to be paid next period. What is the impact on
the cash flow from operating activities - Answer- increase of $4000
14. An architect will receive $10,000 per year (at the end of the year) PMT for 10
years. The annual interest earned on the investment is 6%. What is the present value
of the architect's investment - Answer- 10,000 PMT (at the end of each year) 6 I/Y 10 N
CPT PV = -7360008705
15. An employee wants to retire 20 years from today and would like to have an annual
income of $300,000 per year for 10 years starting in exactly 20 years. The discount rate
is 6%. What is the present value, today - Answer- FUTURE 1000 PMT = 300,000 N =
10 I/Y = 6 CPT PV = 2,208,026.115 PRESENT FV = 2,208,026.115 N = 20 I/Y = 6 PV
=
688,472,9797
16. A person won $75,000 in a lottery and invests this money for 2 years and 3 months
at an interest rate of 6% simple interest. How much will the person have in principal
and interest at the end of the period - Answer- 10,125.000
17. A company shows the following financial data: Accounts receivable: $300 Inventory:
$700 Fixed assets: $900 Accounts payable: $500 Long-term debt: $1000 What is the
current ratio - Answer- (300+700)/500 = 2.0
18. What is an example of an estimate used in recording transactions - Answer-
Deciding the salvage value of a fixed asset when calculating depreciation
expense
19. Give an example of accounting difference - Answer- The firms use different
inventory methods
20. Which securities are issued by the U.S. federal government are taxable at the
federal level - Answer- Treasury bonds
21. When will annual percentage yield (APY) be greater than the annual percentage
rate (APR) - Answer- Compound interest more often than once a year
22. What is the intrinsic value of a stock - Answer- Present value
23. What is the current price of the bond, if the required rate of return on a bond is
the same as the coupon rate - Answer- Equal to the par value of the bond
24. Which security includes the right to vote for a board of directors - Answer- Common
Stock
This study source was downloaded by 100000899585464 from CourseHero.com on 06-12-2025 16:27:26 GMT -05:00
https://www.coursehero.com/file/250196020/2025-EXAM-127docx/
to pass exam
1. What does the Foreign Corrupt Practices Act forbid U.S. companies to do - Answer-
Prohibits U.S. firms and individuals from paying bribes to foreign officials to further
business deals.
2. What are two basic types of financial instruments - Answer- Stocks and Bonds
3. What are secondary markets - Answer- Secondary financial markets are where
securities are traded after the initial offering.
4. What do cash flows from operating activities report - Answer- Operating - day to day
operations Investing - Property, plant, equipment, long term items Financing - debt and
equity changes
5. What does the statement of cash flows report - Answer- Cash inflow and cash outflow
of business for period of time
6. Write the equation that links the income statement to the balance sheet - Answer-
New Re= Old RE + Net Income - dividends
7. Net income 2,000 Depreciation 500 Change in operating assets 400 Change in
PPE 1,000 Change on long term liabilities 600 Dividends paid 100 What is the firm's
cash flow from financing activities - Answer- Increase in debt 600 + (no change in
stock) 0 - (dividends paid) 100 = 500
8. Describe an income statement - Answer- An income statement is a financial
statement that shows you how profitable your business was over a given
reporting period. It shows your revenue, minus your expenses and losses
9. What item is included in the income statement and not included in the statement
of cash flows - Answer- Depreciation
10. A company sold goods in 2016 for $30,000 and collected the cash in 2017. In
2016, the company incurred and paid $20,000 in expenses related to the goods sold.
How much income should the company report in 2016 under the accrual basis of
accounting
- Answer- 30,000-20,000= $10,000
11. EBIT: $1,000,000 Depreciation: $30,000 Change in working capital($5,000) Net
capital expenditures: $10,000 Tax rate: 40% What is the company's free cash flow -
Answer- 1,000,000*(1-.40) + 30,000) - (-5,000) - 10,000 = 625,000
This study source was downloaded by 100000899585464 from CourseHero.com on 06-12-2025 16:27:26 GMT -05:00
https://www.coursehero.com/file/250196020/2025-EXAM-127docx/
, 12. Define Free Cash Flow - Answer- Represents the cash available for the company
to repay creditors or pay dividends and interest to investor
13. A company reported an increase in accounts payable of $4,000 during the recent
period. Half of this amount is expected to be paid next period. What is the impact on
the cash flow from operating activities - Answer- increase of $4000
14. An architect will receive $10,000 per year (at the end of the year) PMT for 10
years. The annual interest earned on the investment is 6%. What is the present value
of the architect's investment - Answer- 10,000 PMT (at the end of each year) 6 I/Y 10 N
CPT PV = -7360008705
15. An employee wants to retire 20 years from today and would like to have an annual
income of $300,000 per year for 10 years starting in exactly 20 years. The discount rate
is 6%. What is the present value, today - Answer- FUTURE 1000 PMT = 300,000 N =
10 I/Y = 6 CPT PV = 2,208,026.115 PRESENT FV = 2,208,026.115 N = 20 I/Y = 6 PV
=
688,472,9797
16. A person won $75,000 in a lottery and invests this money for 2 years and 3 months
at an interest rate of 6% simple interest. How much will the person have in principal
and interest at the end of the period - Answer- 10,125.000
17. A company shows the following financial data: Accounts receivable: $300 Inventory:
$700 Fixed assets: $900 Accounts payable: $500 Long-term debt: $1000 What is the
current ratio - Answer- (300+700)/500 = 2.0
18. What is an example of an estimate used in recording transactions - Answer-
Deciding the salvage value of a fixed asset when calculating depreciation
expense
19. Give an example of accounting difference - Answer- The firms use different
inventory methods
20. Which securities are issued by the U.S. federal government are taxable at the
federal level - Answer- Treasury bonds
21. When will annual percentage yield (APY) be greater than the annual percentage
rate (APR) - Answer- Compound interest more often than once a year
22. What is the intrinsic value of a stock - Answer- Present value
23. What is the current price of the bond, if the required rate of return on a bond is
the same as the coupon rate - Answer- Equal to the par value of the bond
24. Which security includes the right to vote for a board of directors - Answer- Common
Stock
This study source was downloaded by 100000899585464 from CourseHero.com on 06-12-2025 16:27:26 GMT -05:00
https://www.coursehero.com/file/250196020/2025-EXAM-127docx/
