WGU C214 OA Financial Management Retake Exam
1. What does the Foreign Corrupt Practices Act forbid U.S. companies
to do?
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?
Stocks and Bonds
3. What are secondary markets?
Secondary financial markets are where securities are traded after the initial
offering.
4. What do cash flows from operating activities report?
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?
Cash inflow and cash outflow of business for period of time
6. Write the equation that links the income statement to the balance sheet?
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? CFF
Increase in debt 600 + (no change in stock) 0 – (dividends paid) 100 = 500
8. Describe an income statement?
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.
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?
30,000-20,000= $10,000
11. 11.
EBIT: $1,000,000
Depreciation: $30,000
Changein working capital($5,000)
Net capital expenditures: $10,000
Tax rate: 40%
What is the company’s free cash flow?
1,000,000*(1-.40) + 30,000) – (-5,000) – 10,000 = 625,000
12. Define Free Cash Flow?
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?
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?
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?
, Future
PMT = 300,000
N = 10
I/Y = 6
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?
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?
(300+700)/500 = 2.0
18. What is an example of an estimate used in recording transactions?
Deciding the salvage value of a fixed asset when calculating depreciation expense
19. Give an example of accounting difference?
The firms use different inventory methods
20. Which securities are issued by the U.S. federal government are taxable at the
federal level?
Treasury bonds
21. When will annual percentage yield (APY) be greater than the annual percentage
rate (APR)?
1. What does the Foreign Corrupt Practices Act forbid U.S. companies
to do?
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?
Stocks and Bonds
3. What are secondary markets?
Secondary financial markets are where securities are traded after the initial
offering.
4. What do cash flows from operating activities report?
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?
Cash inflow and cash outflow of business for period of time
6. Write the equation that links the income statement to the balance sheet?
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? CFF
Increase in debt 600 + (no change in stock) 0 – (dividends paid) 100 = 500
8. Describe an income statement?
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.
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?
30,000-20,000= $10,000
11. 11.
EBIT: $1,000,000
Depreciation: $30,000
Changein working capital($5,000)
Net capital expenditures: $10,000
Tax rate: 40%
What is the company’s free cash flow?
1,000,000*(1-.40) + 30,000) – (-5,000) – 10,000 = 625,000
12. Define Free Cash Flow?
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?
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?
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?
, Future
PMT = 300,000
N = 10
I/Y = 6
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?
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?
(300+700)/500 = 2.0
18. What is an example of an estimate used in recording transactions?
Deciding the salvage value of a fixed asset when calculating depreciation expense
19. Give an example of accounting difference?
The firms use different inventory methods
20. Which securities are issued by the U.S. federal government are taxable at the
federal level?
Treasury bonds
21. When will annual percentage yield (APY) be greater than the annual percentage
rate (APR)?
