Exam elaborations 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
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
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
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
