WGU C214 Multiple Attempt Study Guide
What standards are used to help US investors understand and compare foreign
financial statements to domestic financial statements? Correct Answer:
International Financial Reporting Standards
When a company is optimizing its resources and maintaining or improving
productivity, they are engaging in what hypothesis Correct Answer: Efficient
Market Hypothesis
What is the basic type of negotiable debt? Correct Answer: Bonds
What is the characteristic of a stock sold in the secondary markets? Correct
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? Correct Answer: Protection for the
lobbyist and higher prices for the consumer pre reduced competition.
Describe what an income statement is in one sentence? Correct 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? Correct
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? Correct 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? Correct 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?
Correct 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? Correct 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%. Correct 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? Correct Answer: This would be shown
on the Balance Sheet under Long Term Liabilities
Which is the principal account comprising Cash Flow from Investing Correct
Answer: The principal account for CFI is PP& E
What is the cash effect on the Statement of Cash Flow when current liabilities
decline? Correct 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? Correct Answer: Accounting Difference
What standards are used to help US investors understand and compare foreign
financial statements to domestic financial statements? Correct Answer:
International Financial Reporting Standards
When a company is optimizing its resources and maintaining or improving
productivity, they are engaging in what hypothesis Correct Answer: Efficient
Market Hypothesis
What is the basic type of negotiable debt? Correct Answer: Bonds
What is the characteristic of a stock sold in the secondary markets? Correct
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? Correct Answer: Protection for the
lobbyist and higher prices for the consumer pre reduced competition.
Describe what an income statement is in one sentence? Correct 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? Correct
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? Correct 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? Correct 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?
Correct 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? Correct 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%. Correct 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? Correct Answer: This would be shown
on the Balance Sheet under Long Term Liabilities
Which is the principal account comprising Cash Flow from Investing Correct
Answer: The principal account for CFI is PP& E
What is the cash effect on the Statement of Cash Flow when current liabilities
decline? Correct 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? Correct Answer: Accounting Difference
