WGU C214 Multiple Attempt Study Guide
What standards are used to help US investors understand and compare foreign
financial statements to domestic financial statements? - Answer International Financial
Reporting Standards
When a company is optimizing its resources and maintaining or improving productivity,
they are engaging in what hypothesis - Answer Efficient Market Hypothesis
What is the basic type of negotiable debt? - Answer Bonds
What is the characteristic of a stock sold in the secondary markets? - Answer Stocks
sold in the secondary markets are traded after the initial offering.
If a company is engaged in lobbying for tariffs and trade restrictions, if they are
successful, what are the two principal impacts? - Answer Protection for the lobbyist and
higher prices for the consumer pre reduced competition.
Describe what an income statement is in one sentence? - Answer It covers a period of
time and starts with sales, takes out expenses, and ends with net income.
What is the difference between taxable income and accounting income? - Answer
Accounting income is reported as net income on the income statement whereas
Taxable income is used to determine the amount of tax a firm must pay.
Net Income 15,000
Depreciation Exp 2,000
Change in Operating Assets 1,200
Change in PP&E 2,000
Change in long-term liab. 1,200
Dividends paid 1,500
What is the Cash Flow from Financing? - Answer CFF= Incr Stock + Incr Debt -
Dividends Paid
= 1200-1500
= -300
Net Income 121,000
Depreciation Expense 4,000
Accounts Receivable (30,000)
Change in net PP&E 15,000
Accounts Payable (5,000)
New Bank Loan 12,000
Dividends Paid 1,500
, What is the Cash Flow from Investing? - Answer CFI = Change in Net PPE +
Depreciation Expense
= 15,000 + 4,000
= 19,000
A grandmother sets up a trust for her grandson. She desires him to receive $20,000 per
year. Her investment advisor finds an investment vehicle that
will yield 7%. How much will the grandmother have to put into the investment? - Answer
20000/.07= 140*12 =1680.00
What is the number of payments of a semi-annual bond if the number of years
remaining are 12? - Answer There are 24 semi-annual payments remaining
bWhat is the expected rate of return for a stock that has a eta of 2.1. The market rate is
8.5% with a risk free rate of 2%. - Answer E[R]=Rf + B(Rm - Rf)
=2% + 2.1(8.5%-2.0%)
=.02 + 2.1(0.0850-.02)
=.01565 or 15.65%
A company has a trial balance that shows $13,000 in bonds payable. On which financial
statement should this be shown? - Answer This would be shown on the Balance Sheet
under Long Term Liabilities
Which is the principal account comprising Cash Flow from Investing - Answer The
principal account for CFI is PP& E
What is the cash effect on the Statement of Cash Flow when current liabilities decline? -
Answer Results in a decrease in cash
If two companies use different inventory valuation methods, what difference would that
be called in calculating net income? - Answer Accounting Difference
There are two competitors. The gross margin for Green Company is .45. The gross
margin for Red Company is .40 Which company has a more productive manufacturing
process? Why? - Answer Green company has a more productive manufacturing
process because the high gross margins are usually associated with and efficient
production process.
What is the current ratio given a balance sheet with the following account balances:
Cash 10,000
Accounts Receivable 252,000
PP&E 725,000
Accounts Payable 93,000
Bank Loan 425,000
Common Stock 1,000,000 - Answer Current Ratio = Current Assets/Current Liabilities
=10000 + 252000/93000
What standards are used to help US investors understand and compare foreign
financial statements to domestic financial statements? - Answer International Financial
Reporting Standards
When a company is optimizing its resources and maintaining or improving productivity,
they are engaging in what hypothesis - Answer Efficient Market Hypothesis
What is the basic type of negotiable debt? - Answer Bonds
What is the characteristic of a stock sold in the secondary markets? - Answer Stocks
sold in the secondary markets are traded after the initial offering.
If a company is engaged in lobbying for tariffs and trade restrictions, if they are
successful, what are the two principal impacts? - Answer Protection for the lobbyist and
higher prices for the consumer pre reduced competition.
Describe what an income statement is in one sentence? - Answer It covers a period of
time and starts with sales, takes out expenses, and ends with net income.
What is the difference between taxable income and accounting income? - Answer
Accounting income is reported as net income on the income statement whereas
Taxable income is used to determine the amount of tax a firm must pay.
Net Income 15,000
Depreciation Exp 2,000
Change in Operating Assets 1,200
Change in PP&E 2,000
Change in long-term liab. 1,200
Dividends paid 1,500
What is the Cash Flow from Financing? - Answer CFF= Incr Stock + Incr Debt -
Dividends Paid
= 1200-1500
= -300
Net Income 121,000
Depreciation Expense 4,000
Accounts Receivable (30,000)
Change in net PP&E 15,000
Accounts Payable (5,000)
New Bank Loan 12,000
Dividends Paid 1,500
, What is the Cash Flow from Investing? - Answer CFI = Change in Net PPE +
Depreciation Expense
= 15,000 + 4,000
= 19,000
A grandmother sets up a trust for her grandson. She desires him to receive $20,000 per
year. Her investment advisor finds an investment vehicle that
will yield 7%. How much will the grandmother have to put into the investment? - Answer
20000/.07= 140*12 =1680.00
What is the number of payments of a semi-annual bond if the number of years
remaining are 12? - Answer There are 24 semi-annual payments remaining
bWhat is the expected rate of return for a stock that has a eta of 2.1. The market rate is
8.5% with a risk free rate of 2%. - Answer E[R]=Rf + B(Rm - Rf)
=2% + 2.1(8.5%-2.0%)
=.02 + 2.1(0.0850-.02)
=.01565 or 15.65%
A company has a trial balance that shows $13,000 in bonds payable. On which financial
statement should this be shown? - Answer This would be shown on the Balance Sheet
under Long Term Liabilities
Which is the principal account comprising Cash Flow from Investing - Answer The
principal account for CFI is PP& E
What is the cash effect on the Statement of Cash Flow when current liabilities decline? -
Answer Results in a decrease in cash
If two companies use different inventory valuation methods, what difference would that
be called in calculating net income? - Answer Accounting Difference
There are two competitors. The gross margin for Green Company is .45. The gross
margin for Red Company is .40 Which company has a more productive manufacturing
process? Why? - Answer Green company has a more productive manufacturing
process because the high gross margins are usually associated with and efficient
production process.
What is the current ratio given a balance sheet with the following account balances:
Cash 10,000
Accounts Receivable 252,000
PP&E 725,000
Accounts Payable 93,000
Bank Loan 425,000
Common Stock 1,000,000 - Answer Current Ratio = Current Assets/Current Liabilities
=10000 + 252000/93000
