ACCOUNTING CRASH COURSE EXAM WALL STREET PREP
Net Revenues - ✔✔ -Total dollar payment for goods and services that are credited to an income
statement over a particular time period
Cost of Goods Sold (COGS) - ✔✔ -represents a company's direct cost of manufacture or
procurement of. a good or service that the company sells to generate revenue.
Gross Profit - ✔✔ Revenues - Cost of Goods Sold (COGS)
Selling, General & Administrative (SG&A) - ✔✔ -Operating costs not directly associated with
the production or procurement of the product or service that the company sells to generate
revenue.
*tied up with the selling of the business*
Ex.) Payroll, wages, commissions, meal and travel expenses, advertising, and marketing
expenses.
Research & Development (R&D) - ✔✔ -A company's activities that are directed at developing
new products or procedures
-include compensation for employees, equipment, and facilities engaged in the R&D process.
, EBITDA - ✔✔ -Earnings before interest, taxes, depreciation & amortization: Gross Profit -
SG&A - R&D
-Popular measure of a company's financial performance
Depreciation & Amortization (D & A) - ✔✔ -The allocation of cost over a fixed asset's useful
life in order to match the timing of the cost of the asset with when it is expected to generate
revenue benefits
Other Operating Expenses / Income - ✔✔ -Any operating expenses not allocated to COGS,
SG&A, R&D, D&A
Revenue Recognition: Multiple Deliverables - ✔✔ -For sales of bundled products, companies
should assign individual values to each of the bundled components.
*Especially relevant in the software industry (bundled hardware)
Revenue Recognition: Long-term projects - ✔✔ -1.) *Percentage of Completion Method*:
Revenues are recognized on the basis of the percentage of total work completed during the
accounting period
-2.) *Completed Contract Method*:
Rarely used in U.S., allows revenue recognition only once the entire project has been completed.
Net Revenues - ✔✔ -Total dollar payment for goods and services that are credited to an income
statement over a particular time period
Cost of Goods Sold (COGS) - ✔✔ -represents a company's direct cost of manufacture or
procurement of. a good or service that the company sells to generate revenue.
Gross Profit - ✔✔ Revenues - Cost of Goods Sold (COGS)
Selling, General & Administrative (SG&A) - ✔✔ -Operating costs not directly associated with
the production or procurement of the product or service that the company sells to generate
revenue.
*tied up with the selling of the business*
Ex.) Payroll, wages, commissions, meal and travel expenses, advertising, and marketing
expenses.
Research & Development (R&D) - ✔✔ -A company's activities that are directed at developing
new products or procedures
-include compensation for employees, equipment, and facilities engaged in the R&D process.
, EBITDA - ✔✔ -Earnings before interest, taxes, depreciation & amortization: Gross Profit -
SG&A - R&D
-Popular measure of a company's financial performance
Depreciation & Amortization (D & A) - ✔✔ -The allocation of cost over a fixed asset's useful
life in order to match the timing of the cost of the asset with when it is expected to generate
revenue benefits
Other Operating Expenses / Income - ✔✔ -Any operating expenses not allocated to COGS,
SG&A, R&D, D&A
Revenue Recognition: Multiple Deliverables - ✔✔ -For sales of bundled products, companies
should assign individual values to each of the bundled components.
*Especially relevant in the software industry (bundled hardware)
Revenue Recognition: Long-term projects - ✔✔ -1.) *Percentage of Completion Method*:
Revenues are recognized on the basis of the percentage of total work completed during the
accounting period
-2.) *Completed Contract Method*:
Rarely used in U.S., allows revenue recognition only once the entire project has been completed.
