WALL STREET PREP FINANCIAL
MODELING EXAM TEST BANK 2026
UPDATED QUESTIONS WITH ACCURATE
ANSWERS GRADED A+
⩥ Liabilities. Answer: represents the company's contractual obligations
and includes A/P, debt, accrued expenses
⩥ Shareholder's equity. Answer: is the residual
the value of the business available to the owners (shareholders) after
debts have been paid off
⩥ Income statement. Answer: illustrates the profitability of the company
over a specified period of time
broad sense: shows revenue-expenses
⩥ Balance sheet. Answer: snapshot of the company economic resources
and funding for those resources at a given point in time (A = L + SE)
⩥ Revenue. Answer: "top-line"
,represents the sale of goods and services
it is recorded when earned (even though cash might not have been
received at the time of transaction)
⩥ Expenses. Answer: netted against revenue to arrive at net income
COGS (directly associate with good production), SG&A (indirectly
associated with production), interest expense (expense related to paying
debt holders periodic payments), taxes, depreciation expense (non-cash
expense accounting for the use of PP&E, often imbedded within COGS
and SG&A)
⩥ Net income. Answer: "bottom-line"
revenue-expenses
the profitability available to common shareholder's after debt payments
have been made (interest expense)
⩥ EPS (earnings per share). Answer: portion of a company's profit
allocated to each outstanding share of common stock
, EPS = (net income - dividends on preferred stock)/weighted average
shares outstanding
⩥ Cash flow statement. Answer: While cash is not necessarily received
when a sale occurs, the income statement still records the sale. As a
result, the income statement captures all the economic transactions of the
business.
The cash flow statement is needed because the income statement uses
what is called accrual accounting. In accrual accounting, revenues are
recorded when earned regardless of when cash is received (revenue
includes sales using cash and made on credit A/R)
Since we also want to have a clear understanding of the cash position of
a company, we need the statement of cash flows to reconcile the income
statement to cash inflows and outflows.
"cash position of the company"
cash from operating activities, cash from investing activities, and cash
from financing activities
⩥ Cash from operating activities. Answer: mostly indirect method
MODELING EXAM TEST BANK 2026
UPDATED QUESTIONS WITH ACCURATE
ANSWERS GRADED A+
⩥ Liabilities. Answer: represents the company's contractual obligations
and includes A/P, debt, accrued expenses
⩥ Shareholder's equity. Answer: is the residual
the value of the business available to the owners (shareholders) after
debts have been paid off
⩥ Income statement. Answer: illustrates the profitability of the company
over a specified period of time
broad sense: shows revenue-expenses
⩥ Balance sheet. Answer: snapshot of the company economic resources
and funding for those resources at a given point in time (A = L + SE)
⩥ Revenue. Answer: "top-line"
,represents the sale of goods and services
it is recorded when earned (even though cash might not have been
received at the time of transaction)
⩥ Expenses. Answer: netted against revenue to arrive at net income
COGS (directly associate with good production), SG&A (indirectly
associated with production), interest expense (expense related to paying
debt holders periodic payments), taxes, depreciation expense (non-cash
expense accounting for the use of PP&E, often imbedded within COGS
and SG&A)
⩥ Net income. Answer: "bottom-line"
revenue-expenses
the profitability available to common shareholder's after debt payments
have been made (interest expense)
⩥ EPS (earnings per share). Answer: portion of a company's profit
allocated to each outstanding share of common stock
, EPS = (net income - dividends on preferred stock)/weighted average
shares outstanding
⩥ Cash flow statement. Answer: While cash is not necessarily received
when a sale occurs, the income statement still records the sale. As a
result, the income statement captures all the economic transactions of the
business.
The cash flow statement is needed because the income statement uses
what is called accrual accounting. In accrual accounting, revenues are
recorded when earned regardless of when cash is received (revenue
includes sales using cash and made on credit A/R)
Since we also want to have a clear understanding of the cash position of
a company, we need the statement of cash flows to reconcile the income
statement to cash inflows and outflows.
"cash position of the company"
cash from operating activities, cash from investing activities, and cash
from financing activities
⩥ Cash from operating activities. Answer: mostly indirect method
