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WGU C214 OA FINANCIAL MANAGEMENT EXAM ACTUAL
EXAM QUESTIONS AND DETAILED CORRECT ANSWERS
ALREADY GRADED A + 2024-2025 VERSION A, B, C & STUDY
GUIDE JUST RELEASED
WGU C214 OA FINANCIAL MANAGEMENT EXAM A
What does the Foreign Corrupt Practice Act forbid companies to do? - ANSWER-The Foreign Corrupt Practices Act 1977, as amended, 15 U.S.C. was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.
What are two basic types of financial instruments? - ANSWER-Stocks and bonds
What are secondary markets? - ANSWER-A secondary market is when you buy and sell stock in the stock exchange.
What do cash flows from operating activities report? - ANSWER-Cash flow from operating activities, cash generated from day to day business operations. CFO= Net Income = Depreciation Expense- (Change in Current Assets- Change in Current Liabilities)
What does the statement of cash flows report? - ANSWER-The statement of cash flows shows the change in cash balance over a period of time. The statement of cash flows describes how a balance increases or decreases. The 3 components CFO, CFF, CFI help describe changes in cash.
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2 Write the equation that links the income to the balance sheet? - ANSWER-Retained Earnings Equation. Ending Retained Earnings= Beginning Retained Earnings+ Net Income-Dividends Paid.
What is the firm's cash flow from financing activities? - ANSWER-Cash flow from financing activities shows you the cash that is generated from financing a business. CFF= Increase in LT Debt (bonds) + Increase in Stock - Dividends Paid.
Describe an income statement? - ANSWER-Revenues expenses and income (R.E.I)
What item is included in the income statement and not included in the statement of cash flows? - ANSWER-Depreciation Expense
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? - ANSWER-$30,000-
$20,000= $10,000
EBIT: $1,000,000
Depreciation: $30,000
Change in working capital: ($5,000)
Net capital expenditures: $10,000 2 / 4
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Tax rate: 40%
What is the company's free cash flow? - ANSWER-FCFF=EBIT * (1-Tax Rate)+ Depreciation- Cap Exp- Increase in NWC
1,000,000* (1-.40)+ 30,000-10,000- (5,000)
= 600,000+ 30,000-10,000+ 5,000
= $625,000
Define Free Cash Flow - ANSWER-FCFF= EBIT * (1-Tax Rate) + Depreciation -Cap Exp- Increase in NWC Free Cash Flow represents the cash a company accumulates after calculating outflows.
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? - ANSWER-Increases CFO by $4,000 because accounts payable has not been paid yet.
An architect will receive $10,000 per year (at the end of the year) for 10 years. The annual interest earned on the investment is 6%. What is the present value of the architect's
investment? - ANSWER-N: 10
I/Y: 6%
PV: 73,601 3 / 4
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PMT: 10,000
FV: 0
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 6%. What is the
present value, today? - ANSWER-STEP 1:
N: 10
I/Y: 6
COMPUTE PV: -2,208,026.115
PMT: 300,000
FV: 0
STEP 2:
N: 20
I/Y: 6
COMPUTE PV: -688,472.97
FV: 2,208,026.115
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? - ANSWER-2.25 years
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