Wgu c214 stuvia Study guides, Class notes & Summaries

Accrual Accounting - ANSWER-Accounting system based on recording accounts based on historical prices and the matching principle Matching Principle - ANSWER-Accrual accounting principle to match revenues and expenses in the same period Historical cost principle - ANSWER-Accrual accounting principle to recorded assets, liabilities, and equity at historical levels. When an asset is purchased or liability incurred, it is recorded at cost. Accumulated depreciation - ANSWER-The total amount o...

Characteristics of preferred stock includes - ANSWER--dividends in arrears -dividends are cumulative -higher payoff claim in a BK (has first dibs in a BK) -considered "hybrid" (part stock/part bond) -no fixed maturity date -no voting rights -can skip dividend payments -dividends don't change year-after-year -used in start ups (IPO) Preferred stock dividends - ANSWER-can go without payment and pay in arrears the following year Characteristics of common stock are - ANSWER--voting ...

How can a private firm appropriately maximize shareholder value? - ANSWER-By making decisions that keep the control of the business with the owners Why are American regulators focused on international investing in a global marketplace? - ANSWER-Because international investing in a global marketplace is the concern of American investors What is one of the two basic types of financial instruments? - ANSWER-Bonds and Stocks If a company outsources the manufacturing of its products to a fo...

Trading on the NYSE is executed without a specialist T or F - ANSWER-False What are 2 types of financial instruments - ANSWER-Stocks and BondsM When revenue is matched with cost of sales in an income statement it is called? - ANSWER-matching principle A high quality customer just purchased $500,000 worth of product from your company. The contract calls for immediate delivery of this product with a cash payment of $300,000 today and $200,000 in the next 60 days. The expense associated wi...

Discretionary Financing Needed Formula - Answer Discretionary Financing Needed (DFN) = Projected Total Asset - Projected Total Liabilities - Projected Equity Sustainable Growth Rate Formula - Answer Sustainable Growth Rate (SGR) = Return on Equity (ROE) X (1-Divided Payout Ratio) Cash Flow from Operating Activities (CFO) Formula - Answer Cash Flow from Operating Activities (CFO) = Net Income + Depreciation +/- Decreases/Increases in Current Assets +/- Increase/Decrease in Current Liabiliti...

Trading on the NYSE is executed without a specialist (i.e. a market maker). (T/F) - ANSWERSF Stocks and bonds are two types of financial instruments (T/F) - ANSWERSTrue The matching principle in accrual accounting requires that: a. Revenues be recognized when the earnings process is complete and matches 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...

Net Income = - ANSWER-Revenues - Expenses Revenues - Cost of Goods Sold (COGS) - ANSWER-Gross Profit Gross Profit - Operating Expenses - ANSWER-EBIT EBIT = - ANSWER-Sales - Costs - Depreciation EBIT = - ANSWER-Operating Profit or Operating Income EBIT - Interest Expense = - ANSWER-Earnings Before Taxes Earnings before Taxes - Tax Expense = - ANSWER-Net Income (NI) Retained Earnings - ANSWER-End RE = Beg RE + NI - Dividends END RE = - ANSWER-Beg RE + (Sales Revenue X Margi...

How can a private firm appropriately maximize shareholder value? - ANSWER-By making decisions that keep the control of the business with the owners Why are American regulators focused on international investing in a global marketplace? - ANSWER-Because international investing in a global marketplace is the concern of American investors What is one of the two basic types of financial instruments? - ANSWER-Bonds What are the likeliest outcomes if a company outsources the manufacturing of ...

How can a private firm appropriately maximize shareholder value? - ANSWER-By making decisions that keep the control of the business with the owners Why are American regulators focused on international investing in a global marketplace? - ANSWER-Because international investing in a global marketplace is the concern of American investors What is one of the two basic types of financial instruments? - ANSWER-Bonds If a company outsources the manufacturing of its products to a foreign count...

If accounts receivable increases, what is the impact on CFO? - ANSWER-CFO decreases Are actual taxes paid the same as how on the GAAP income statement? - ANSWER-No. Actual Taxes = IRS Rules Income Statement = GAAP Which decisions require using subjective estimates? - ANSWER-Economic life of a new asset. If there is a 30% change of a recession, what is the probability of expansion? - ANSWER-70% *The sum of probabilities must equal 100% How much interest is paid on a 6% bond ove...