Final Exam, Part 2 :Introduction to Financial Accounting (Business Foundations Specialization) Answers 2026

Question 1

Cash Flow from Operations
Cash collected = 100
Cash paid (suppliers + employees) = 60 + 30 = 90
Loss on sale of equipment is non-cash → ignored in CFO

👉 CFO = 100 − 90 = 10

✅ $10
❌ $20
❌ $15
❌ $5
❌ $25

Question 2

Net Income = EBITDA − Depreciation − Interest − Taxes
= 1000 − 200 − 100 − 50
= 650

✅ $650
❌ $750
❌ $1250
❌ $1000
❌ $950

Question 3

Cash from Financing Activities only:

• Mortgage issued = +150,000

• Equity issued = +100,000

• Other items are investing activities

Net Financing Cash Flow = 150,000 + 100,000 = 250,000

✅ $250,000
❌ $150,000
❌ $300,000
❌ $350,000
❌ $100,000

Question 4

Loss on sale = Book Value − Sale Price
400 = BV − 700
BV = 1,100

✅ $1,100
❌ $300
❌ $700
❌ $100
❌ $1,300

Question 5

Change in Accounts Payable = Ending − Beginning

4,000 = 10,000 − Beginning
Beginning = 6,000

✅ $6,000
❌ $0
❌ $4,000
❌ $10,000
❌ $14,000

Question 6

Depreciation increased by 50
Net Income decreases by 50 → from 500 to 450

CFO = Net Income + Depreciation
= 450 + 150 = 600

Original CFO was understated by 50
Correct CFO = 70 + 50 = 120

✅ $120
❌ $350
❌ $70
❌ $50
❌ $220

Question 7

Total Assets = 2,015

Liabilities + Equity must equal Assets
Known liabilities = 410 + 900 = 1,310
Equity (excluding RE) = 50 + 300 = 350

Retained Earnings =
2,015 − (1,310 + 350) = 355

✅ $355
❌ ($55)
❌ $960
❌ $550
❌ $3,675

Question 8

Operating Income should exclude:

• Interest Revenue

• Interest Expense

• Gain on Sale

Correct Operating Income:
Sales − COGS − SG&A
= 1600 − 800 − 400
= 400

✅ $400
❌ $450
❌ $600
❌ $550
❌ $350

🧾 Summary Table (Final & Correct)