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WGU C214 Practice Test
1.1. Trading on the NYSE is executed without a specialist (i.e. a market
maker).True/False ANS False
2.2. Stocks and bonds are two types of financial
instruments True/False ANS True
3.3. The matching principle in accrual accounting requires that
a.Revenues be recognized when the earnings process is complete and match- es expenses to revenues recognized.b.Expenses are matched to the year in which they are incurred c.Revenues are matched to the year in which they are booked d.Revenues should be large enough to match expenses ANS a. Revenues be rec- ognized when the earnings process is complete and matches expenses to revenues recognized. 1 / 4
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4.4. A high-quality customer just purchased $500,000 worth of product from
your company. The contract calls for immediate delivery of the product with a cash payment of $300,000 today and $200,000 to be paid 60 days. The expense associated with the product is $300,000, of which $100,000 has not been paid to your supplier. Under accrual based accounting system, you will most likely report a.revenues of $300,000 and expenses of $300,000.b.revenues of $300,000 and expenses of $200,000.c.revenues of $500,000 and expenses of $300,000.d.revenues of $500,000 and expenses of $200,000 ANS c. revenues of $500,000 and expenses of $300,000.
5.5. A firm reported retained earnings of $300 in 12/31/20x2. For
12/31/20x3, the firm reports retained earnings of $400 and pays dividends of $25. What was net income in 20x3?a.300 b.400 c.125 d.100 2 / 4
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ANS (c) Net income = 400-300+25 = 125
6.6. The basic equation for the balance sheet is
a.Equity = Assets - Liabilities b.Liabilities = Equity + Assets c.Assets = Liabilities - Equity d.Assets = Equity - Liabilities ANS a. Equity = Assets - Liabilities 3 / 4
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7.7. Intel reported the following for 2014
Net Income 100,000 Depreciation 20,000 Change in A/R 10,000 What is the cash flow from operating activities a.100,000 b.110,000 c.120,000 d.(130,000) ANS (b) CFO = 100,000+20,000-10,000 = 110,000
8.8. Intel reported the following for 2014
Equipment (1/1/14) 50,000 Equipment (12/31/14) 65,000 Net income 100,000 Depreciation 20,000 What is the cash flow from investing activities for 2014
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