WGU
C214
OA
Financial
Management
Retake
Exam
Latest
Questions
and
Answers
(2024
/
2025)
(Verified
Answers)
1.
What
does
the
Foreign
Corrupt
Practices
Act
forbid
U.S.
companies
to
do
-
ANSWER-Prohibits
U.S.
firms
and
individuals
from
paying
bribes
to
foreign
officials
to
further
business
deals.
2.
What
are
two
basic
types
of
financial
instruments
-
ANSWER-Stocks
and
Bonds
3.
What
are
secondary
markets
-
ANSWER-Secondary
financial
markets
are
where
securities
are
traded
after
the
initial
offering.
4.
What
do
cash
flows
from
operating
activities
report
-
ANSWER-Operating
-
day
to
day
operations
Investing
-
Property,
plant,
equipment,
long
term
items
Financing
-
debt
and
equity
changes
5.
What
does
the
statement
of
cash
flows
report
-
ANSWER-Cash
inflow
and
cash
outflow
of
business
for
period
of
time
6.
Write
the
equation
that
links
the
income
statement
to
the
balance
sheet
-
ANSWER-New
Re=
Old
RE
+
Net
Income
-
dividends
7.
Net
income
2,000
Depreciation
500
Change
in
operating
assets
400
Change
in
PPE
1,000
Change
on
long
term
liabilities
600
Dividends
paid
100
What
is
the
firm's
cash
flow
from
financing
activities
-
ANSWER-Increase
in
debt
600
+
(no
change
in
stock)
0
-
(dividends
paid)
100
=
500
8.
Describe
an
income
statement
-
ANSWER-An
income
statement
is
a
financial
statement
that
shows
you
how
profitable
your
business
was
over
a
given
reporting
period.
It
shows
your
revenue,
minus
your
expenses
and
losses
9.
What
item
is
included
in
the
income
statement
and
not
included
in
the
statement
of
cash
flows
-
ANSWER-Depreciation 10.
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
11.
EBIT:
$1,000,000
Depreciation:
$30,000
Change
in
working
capital($5,000)
Net
capital
expenditures:
$10,000
Tax
rate:
40%
What
is
the
company's
free
cash
flow
-
ANSWER-1,000,000*(1-.40)
+
30,000)
-
(-5,000)
-
10,000
=
625,000
12.
Define
Free
Cash
Flow
-
ANSWER-Represents
the
cash
available
for
the
company
to
repay
creditors
or
pay
dividends
and
interest
to
investor
13.
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-increase
of
$4000
14.
An
architect
will
receive
$10,000
per
year
(at
the
end
of
the
year)
PMT
for
10
years.
The
annual
interest
earned
on
the
investment
is
6%.
What
is
the
present
value
of
the
architect's
investment
-
ANSWER-10,000
PMT
(at
the
end
of
each
year)
6
I/Y
10
N
CPT
PV
=
-7360008705
15.
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
is
6%.
What
is
the
present
value,
today
-
ANSWER-FUTURE
1000
PMT
=
300,000
N
=
10
I/Y
=
6
CPT
PV
=
2,208,026.1 15
PRESENT
FV
=
2,208,026.1 15
N
=
20
I/Y
=
6
PV
=
688,472,9797
16.
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-10,125.000
17.
A
company
shows
the
following
financial
data:
Accounts
receivable:
$300
Inventory:
$700
Fixed
assets:
$900
Accounts
payable:
$500
Long-term
debt:
$1000
What
is
the
current
ratio
-
ANSWER-(300+700)/500
=
2.0
18.
What
is
an
example
of
an
estimate
used
in
recording
transactions
-
ANSWER-Deciding
the
salvage
value
of
a
fixed
asset
when
calculating
depreciation
expense
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