WGU C214 Pre-Test Q & A
- What is included in the Income Statement and NOT in the Statement
of Cash Flows ANS Depreciation Expense
2. Computation of Net Income:
A co. sold products in 2014 for $120k and collected $100k cash and re- mainder in 2015. Co. incurred $70k expenses for 2014 and paid $100k which included $30k for expenses incurred in 2013. What is net income for 2014?-
: Computation of Net Income (R-E=NI)
$50,000
Net Income = $120k - $70k = $50k, or Revenues - Expenses Incurred = Net Income
3. Retained Earning Statement:
The beginning retrained earnings on 1/14/14 is $25k. The NI for 2014 is $50k and the dividend payout ratio is 25% of NI. What are retained earnings on
12/31/14 ANS Retained Earning Statement:
$62,500
Retained earnings on12/31/14 = $25k + $50k - (.25x$50k) = $62,500 1 / 4
4. Retained Earnings:
Firm reported RE of $300 in 12/31/12. For 12/31/13 firm reports RE of $400
and pays dividends of $25. What is NI in 2013 ANS Retained Earnings:
Answer $125 Logic is $300 from $400 is $100 plus the $25 dividend totals
out to $125. 300 + NI - 25 = 400: NI=125, so
300+125-25=400
5. Balance Sheet:
Basic equation for the Balance Sheet is ANS Balance
Sheet: Equity = Assets - Liabilities, or it can also be
seen as
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Assets = Liabilities + Equity
- Investment: Simple Interest:
An investment of $10k made today at 8% simple interest for 3 yrs and 9
mo. will yield in principle and interest of ANS Interest: Simple Interest
$13,000
Principal + Interest = $10,000 + (10k x .08x3.75) = $13k
7. Investment returns:
A stock will be worth $36 at EOY and will pay dividend of $2.25.How much should an investor pay for the stock if investor expects a 12%
rate of return ANS Investment returns:
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