C214 Financial Management Final Exam 2024 Latest
GRADED A+ WGU VERIFIED EXAM
Finance - ANSWER: Finance: the process of transferring money from
savers to borrowers through financial markets/institutions.
Difference Subject Areas in Finance - ANSWER: Investment (Savers)
Corporate Finance (Borrowers)
Financial Markets & Institutions (Intermediaries)
3 main forms of business organizations with bonus - ANSWER: There are three main
forms of business organizations:
1. Sole Proprietorship
2. Partnership
3. Corporations
Limited liability Companies (LLC) is hybrid between partnership and corporation.
Proprietorship and Partnership Adv and Dis - ANSWER: Advantages:
Easy to form
Few regulations
Lower tax
Disadvantages:
Unlimited liability
Limited life
Difficult to raise capital
Corporation Adv. and Disadvantage - ANSWER: Advantages:
1. Limited liability
2. Unlimited life
3. Easy to raise capital
Disadvantages:
1. Hard to form
2. More regulations
3. High tax
4. Agency problem
What is management's primary goal? - ANSWER: Maximize the wealth of
stakeholders in a socially responsible way so that the wealth is maximized long term
Getting Capital - ANSWER: IPO with underwriter and issuing secondary stock
difference in 3 financial statements - ANSWER: Income statement - summarizes a
firm's revenues and expenses over a given period of time.
Balance sheet - provides a snapshot of a firm's financial position at one point in time.
, Statement of cash flows - reports the impact of a firm's activities on cash flows over
a given period of time.
Difference between sales and expenses - ANSWER: Profit
What kind of income statements - ANSWER: Income Statement: usually you will find
annual and quarterly income statement for a public firm (Profit and Loss Statement)
What does accounting provide us with - ANSWER: historical health of company
Income Statement - ANSWER: Net Sales
- Cost of Goods Sold (COGS)
= Gross Profit
- Operating Expenses (exclude Depreciation)
- Depreciation Expenses
= Operating Profit (EBIT)
- Interest Expense
= Profit Before Taxes (EBT)
- Taxes
= Net Income
COGS equation - ANSWER: COGS= Starting Inventory + Materials Purchased- Ending
Inventory= COGS
EBIT v EBT - ANSWER: Before interest and taxes, before taxes
How are current assets listed? - ANSWER: How easily they can be turned into cash
Accrued expenses go to - ANSWER: zero at end of month
Common stock at capital - ANSWER: capital surplus
Balance Sheet Equation - ANSWER: Assets= Liability+ Equity
What kind of accounting do most firms use - ANSWER: accrual
Accrual Accounting - ANSWER: Accrual accounting recognizes revenues (expenses) as
earned (recognized) when sales (expenses) are transacted (incurred), regardless of
the actual date of payment.
net income does not equal - ANSWER: net cash flow
Cash inflow v outflow - ANSWER: Cash inflow =Decrease in Assets or Increase in
Liabilities or equity
Cash outflow =Increase in Assets or Decrease in Liabilities or equity
CF From Investing - ANSWER: Gross, not net
GRADED A+ WGU VERIFIED EXAM
Finance - ANSWER: Finance: the process of transferring money from
savers to borrowers through financial markets/institutions.
Difference Subject Areas in Finance - ANSWER: Investment (Savers)
Corporate Finance (Borrowers)
Financial Markets & Institutions (Intermediaries)
3 main forms of business organizations with bonus - ANSWER: There are three main
forms of business organizations:
1. Sole Proprietorship
2. Partnership
3. Corporations
Limited liability Companies (LLC) is hybrid between partnership and corporation.
Proprietorship and Partnership Adv and Dis - ANSWER: Advantages:
Easy to form
Few regulations
Lower tax
Disadvantages:
Unlimited liability
Limited life
Difficult to raise capital
Corporation Adv. and Disadvantage - ANSWER: Advantages:
1. Limited liability
2. Unlimited life
3. Easy to raise capital
Disadvantages:
1. Hard to form
2. More regulations
3. High tax
4. Agency problem
What is management's primary goal? - ANSWER: Maximize the wealth of
stakeholders in a socially responsible way so that the wealth is maximized long term
Getting Capital - ANSWER: IPO with underwriter and issuing secondary stock
difference in 3 financial statements - ANSWER: Income statement - summarizes a
firm's revenues and expenses over a given period of time.
Balance sheet - provides a snapshot of a firm's financial position at one point in time.
, Statement of cash flows - reports the impact of a firm's activities on cash flows over
a given period of time.
Difference between sales and expenses - ANSWER: Profit
What kind of income statements - ANSWER: Income Statement: usually you will find
annual and quarterly income statement for a public firm (Profit and Loss Statement)
What does accounting provide us with - ANSWER: historical health of company
Income Statement - ANSWER: Net Sales
- Cost of Goods Sold (COGS)
= Gross Profit
- Operating Expenses (exclude Depreciation)
- Depreciation Expenses
= Operating Profit (EBIT)
- Interest Expense
= Profit Before Taxes (EBT)
- Taxes
= Net Income
COGS equation - ANSWER: COGS= Starting Inventory + Materials Purchased- Ending
Inventory= COGS
EBIT v EBT - ANSWER: Before interest and taxes, before taxes
How are current assets listed? - ANSWER: How easily they can be turned into cash
Accrued expenses go to - ANSWER: zero at end of month
Common stock at capital - ANSWER: capital surplus
Balance Sheet Equation - ANSWER: Assets= Liability+ Equity
What kind of accounting do most firms use - ANSWER: accrual
Accrual Accounting - ANSWER: Accrual accounting recognizes revenues (expenses) as
earned (recognized) when sales (expenses) are transacted (incurred), regardless of
the actual date of payment.
net income does not equal - ANSWER: net cash flow
Cash inflow v outflow - ANSWER: Cash inflow =Decrease in Assets or Increase in
Liabilities or equity
Cash outflow =Increase in Assets or Decrease in Liabilities or equity
CF From Investing - ANSWER: Gross, not net
