WGU C214 Pre-Assessment 2023|69
Questions and Answers| Graded A+
How can a private firm appropriately maximize shareholder value? - -By making
decisions that keep the control of the business with the owners
-Why are American regulators focused on international investing in a global
marketplace? - -Because international investing in a global marketplace is the concern
of
American investors
-What is one of the two basic types of financial instruments? - -Bonds
-If a company outsources the manufacturing of its products to a foreign country, what
are the likeliest
outcomes? - -Consumer prices will decrease and Domestic employment will decrease.
-What is true about the content and structure of a balance sheet? - -It reports the
assets, liabilities, and equity at a point in time.
-A company reported an increase in accounts receivable of $5,000 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? - -The change will decrease cash flows from operations by $5,000.
-Which statement accurately explains the recognition of revenues and expenses under
accounting income
and income for tax purposes? - -Revenues and expenses may be recognized in one
period for accounting income purposes and in a different period for income tax
purposes.
-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? - -$5,300 outflow
-What is the basic equation for a balance sheet? - -Assets = Liabilities + Equity
, -What do cash flows from investing activities generally relate to? - -A firm's purchase
and sale of long-term assets
-Which transaction is reflected in cash flow from operating activities? - -Cash sales to
customers
-What does free cash flow represent? - -Cash available for distribution after funding
required reinvestment
-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? - -The firms have different fiscal years.
-A company's year-end balance sheetfor 2013 shows the following:
Accounts receivable: $900
Inventory: $1200
Fixed assets: $1000
Accounts payable: $1300
Sales: $4000
Salaries expense: $275
What is their fixed asset turnover ratio? - -4.0
-A firm has a ROE (return on equity) of 0.27 and the industry average ROE is 0.24.
Which conclusion would an analyst draw when comparing the firm to the industry? - -
The firm is generating higher returns to owners than the industry.
-What must have taken place for a firm to recognize revenue, in order for the firm to
comply with the accrual accounting rules? - -The product must have been delivered.
-A teacher won $100,000 and invests this money for 5 years at an interest rate of 4%
(compounded
annually).
How much will the teacher have in principal and interest at the end of the 5 years? - -
$121,665
-An accountantis 40 years old with an anticipated retirement age of 70 years old. The
accountant plans to
save $6,000 per year at the end of the next 30 years to fund retirement. - -$336,510
-An investor deposits $2,000 per year (beginning today) for 10 years in a 4% interest
bearing account. The
last cash flow is received 1 year prior to the end ofthe tenth year.
What is the investor's future balance after 10 years? - -$24,973
Questions and Answers| Graded A+
How can a private firm appropriately maximize shareholder value? - -By making
decisions that keep the control of the business with the owners
-Why are American regulators focused on international investing in a global
marketplace? - -Because international investing in a global marketplace is the concern
of
American investors
-What is one of the two basic types of financial instruments? - -Bonds
-If a company outsources the manufacturing of its products to a foreign country, what
are the likeliest
outcomes? - -Consumer prices will decrease and Domestic employment will decrease.
-What is true about the content and structure of a balance sheet? - -It reports the
assets, liabilities, and equity at a point in time.
-A company reported an increase in accounts receivable of $5,000 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? - -The change will decrease cash flows from operations by $5,000.
-Which statement accurately explains the recognition of revenues and expenses under
accounting income
and income for tax purposes? - -Revenues and expenses may be recognized in one
period for accounting income purposes and in a different period for income tax
purposes.
-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? - -$5,300 outflow
-What is the basic equation for a balance sheet? - -Assets = Liabilities + Equity
, -What do cash flows from investing activities generally relate to? - -A firm's purchase
and sale of long-term assets
-Which transaction is reflected in cash flow from operating activities? - -Cash sales to
customers
-What does free cash flow represent? - -Cash available for distribution after funding
required reinvestment
-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? - -The firms have different fiscal years.
-A company's year-end balance sheetfor 2013 shows the following:
Accounts receivable: $900
Inventory: $1200
Fixed assets: $1000
Accounts payable: $1300
Sales: $4000
Salaries expense: $275
What is their fixed asset turnover ratio? - -4.0
-A firm has a ROE (return on equity) of 0.27 and the industry average ROE is 0.24.
Which conclusion would an analyst draw when comparing the firm to the industry? - -
The firm is generating higher returns to owners than the industry.
-What must have taken place for a firm to recognize revenue, in order for the firm to
comply with the accrual accounting rules? - -The product must have been delivered.
-A teacher won $100,000 and invests this money for 5 years at an interest rate of 4%
(compounded
annually).
How much will the teacher have in principal and interest at the end of the 5 years? - -
$121,665
-An accountantis 40 years old with an anticipated retirement age of 70 years old. The
accountant plans to
save $6,000 per year at the end of the next 30 years to fund retirement. - -$336,510
-An investor deposits $2,000 per year (beginning today) for 10 years in a 4% interest
bearing account. The
last cash flow is received 1 year prior to the end ofthe tenth year.
What is the investor's future balance after 10 years? - -$24,973
