WGU C214 2023 Exam Questions With Complete Solutions

WGU C214 2023 Exam Questions With Complete Solutions The goal of the corporation is to: - CORRECT ANSWER maximize stock price What makes an efficient market? - CORRECT ANSWER Competitive market, liquidity, transparency What is the relationship between risk and required return? - CORRECT ANSWER As risk increases, required return increases. What are the 3 main financial statements? - CORRECT ANSWER Income statement, the Balance Sheet., and the statement of cash flows Which financial statement reflects a POINT in time (not a period in time) - CORRECT ANSWER Balance sheet What is Revenue? - CORRECT ANSWER Amount generated by sale of products and services What is Expenses - CORRECT ANSWER Amount incurred to manufacture products What is Income? - CORRECT ANSWER The difference between Revenue and Expenses What are Assets? - CORRECT ANSWER Items that are owned by the company Land, building, equipment, machinery, supplies, inventory What's the difference between a long term asset and a short term asset? - CORRECT ANSWER Short term assets are expected to be converted to cash within one year, long term assets are typically more valuable but less liquid (projected to keep for more than a year) What is Equity? - CORRECT ANSWER Amounts invested in the company by shareholders/investors. Happens when somebody buys stock in your company. What is reported on the Income Statement? - CORRECT ANSWER Revenues, Expenses and Income (Income statement is the FIRST statement a company has to prepare) What is reported on the Balance Sheet? - CORRECT ANSWER assets, liabilities, equity Assets = Liability + Equity What equation is the foundation for all of financial accounting? - CORRECT ANSWER Assets = Liability + Equity What are liabilities? - CORRECT ANSWER Amounts owed by the company to others. i.e. Accounts payable, salaries payable, income tax payable. If you see the word "payable" it's a liability. What are short term vs long term liabilities? - CORRECT ANSWER Short term liabilities are those debts that are paid off in one year such as accounts payable, salaries payable and short term loans. Long term liabilities are due in more than a year, such as long term loans, bonds, and lease agreements. LTL are used to finance major investments such as purchasing property, plant and equipment. What is the Revenue Recognition principle? - CORRECT ANSWER Revenue is recognized when product or service is delivered to the customer. *The moment you deliver the product or service, you have earned the revenue and have to report it in the income statement. You don't have to be paid by the customer to report the revenue.