WGU C214 Financial Management Pre-
Assessment Exam Questions and Answers
1. How can a private firm appropriately maximize shareholder value?
Answer By making decisions that keep the control of the business with the owners
2. Why are American regulators focused on international investing in
a global marketplace?
Answer Because international investing in a global marketplace is the concern of
American investors
3. What is one of the two basic types of financial instruments?
Answer Bonds
4. If a company outsources the manufacturing of its products
to a foreign country, what are the likeliest
outcomes?
Answer Consumer prices will decrease and Domestic employment will decrease.
5. What is true about the content and structure of a balance sheet?
Answer It reports the assets, liabilities, and equity at a point in time.
6. A company reported an increase in accounts receivable of $5,000
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,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?
Answer The change will decrease cash flows from operations by $5,000.
7. Which statement accurately explains the recognition of revenues
and expens- es under accounting income
and income for tax purposes?
Answer Revenues and expenses may be recognized in one period for accounting income
purposes and in a different period for income tax purposes.
8. 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?
Answer $5,300 outflow
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, 9. What is the basic equation for a balance sheet?
Answer Assets = Liabilities + Equity
10. What do cash flows from investing activities generally relate to?
Answer A firm's purchase and sale of long-term assets
11. Which transaction is reflected in cash flow from operating
activities?
Answer Cash sales to customers
12. What does free cash flow represent?
Answer Cash available for distribution after funding required reinvestment
13. 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?
Answer The firms have different fiscal years.
14. A company's year-end balance sheet for 2013 shows
the following
Accounts receivable; $900
Inventory; $1200
Fixed assets; $1000
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Assessment Exam Questions and Answers
1. How can a private firm appropriately maximize shareholder value?
Answer By making decisions that keep the control of the business with the owners
2. Why are American regulators focused on international investing in
a global marketplace?
Answer Because international investing in a global marketplace is the concern of
American investors
3. What is one of the two basic types of financial instruments?
Answer Bonds
4. If a company outsources the manufacturing of its products
to a foreign country, what are the likeliest
outcomes?
Answer Consumer prices will decrease and Domestic employment will decrease.
5. What is true about the content and structure of a balance sheet?
Answer It reports the assets, liabilities, and equity at a point in time.
6. A company reported an increase in accounts receivable of $5,000
1/
17
,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?
Answer The change will decrease cash flows from operations by $5,000.
7. Which statement accurately explains the recognition of revenues
and expens- es under accounting income
and income for tax purposes?
Answer Revenues and expenses may be recognized in one period for accounting income
purposes and in a different period for income tax purposes.
8. 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?
Answer $5,300 outflow
2/
17
, 9. What is the basic equation for a balance sheet?
Answer Assets = Liabilities + Equity
10. What do cash flows from investing activities generally relate to?
Answer A firm's purchase and sale of long-term assets
11. Which transaction is reflected in cash flow from operating
activities?
Answer Cash sales to customers
12. What does free cash flow represent?
Answer Cash available for distribution after funding required reinvestment
13. 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?
Answer The firms have different fiscal years.
14. A company's year-end balance sheet for 2013 shows
the following
Accounts receivable; $900
Inventory; $1200
Fixed assets; $1000
3/
17
