Adventis FMC Level 1 UPDATED Exam
Questions and CORRECT Answers
financial statement communicates what? - CORRECT ANSWER- ✔✔- financial condition
- results of operations
- various other activities of an organization
how board of directors use financial data... - CORRECT ANSWER- ✔✔- hold management
accountable - make board-level decisions about corporate strategy
how company management uses financial data... - CORRECT ANSWER- ✔✔- measure
performance
- make strategic, operating and financial decisions
how creditors use financial data... - CORRECT ANSWER- ✔✔- measure creditworthiness
- liquidity
- bankruptcy risk
how investors use financial data... - CORRECT ANSWER- ✔✔make decisions on
buying/selling equity investments
how acquirers use financial data... - CORRECT ANSWER- ✔✔- determine valuation
- make investment decisions
how regulators use financial data... - CORRECT ANSWER- ✔✔determine whether company
is operating according to regulations/law
what does the income statement present? - CORRECT ANSWER- ✔✔results of operations
over a period of time
, what is the purpose of the income statement? - CORRECT ANSWER- ✔✔to show whether
the company made or lost money during the period reported
what does the income statement indicate? - CORRECT ANSWER- ✔✔how revenues are
translated into net income through subtracting expenses
revenue (sales) - CORRECT ANSWER- ✔✔amount charged for the delivery of goods or
services
cost of sales (cogs) - CORRECT ANSWER- ✔✔- direct cost of producing revenue
- Ex: raw materials, direct wages, etc.
gross profit - CORRECT ANSWER- ✔✔- revenue - cogs
- indicates how efficiently labor and materials are used in the production process
operating expenses - CORRECT ANSWER- ✔✔- all other expenses required to run a
business
- Ex: management salaries, marketing, travel, etc.
operating income (EBIT) - CORRECT ANSWER- ✔✔- revenue - cogs - operating expenses
- indicates a company's earning power from ongoing operations
non-operating expenses - CORRECT ANSWER- ✔✔- expenses not related to regular
business of the company
- Ex: interest expense, restructuring expense, etc.
corporate taxes - CORRECT ANSWER- ✔✔local and federal income taxes the company
incurs
net income (net earnings) - CORRECT ANSWER- ✔✔- revenue - cogs - operating expenses
- non-operating expenses - taxes
- indicates increase in shareholders' value resulting from operations
Questions and CORRECT Answers
financial statement communicates what? - CORRECT ANSWER- ✔✔- financial condition
- results of operations
- various other activities of an organization
how board of directors use financial data... - CORRECT ANSWER- ✔✔- hold management
accountable - make board-level decisions about corporate strategy
how company management uses financial data... - CORRECT ANSWER- ✔✔- measure
performance
- make strategic, operating and financial decisions
how creditors use financial data... - CORRECT ANSWER- ✔✔- measure creditworthiness
- liquidity
- bankruptcy risk
how investors use financial data... - CORRECT ANSWER- ✔✔make decisions on
buying/selling equity investments
how acquirers use financial data... - CORRECT ANSWER- ✔✔- determine valuation
- make investment decisions
how regulators use financial data... - CORRECT ANSWER- ✔✔determine whether company
is operating according to regulations/law
what does the income statement present? - CORRECT ANSWER- ✔✔results of operations
over a period of time
, what is the purpose of the income statement? - CORRECT ANSWER- ✔✔to show whether
the company made or lost money during the period reported
what does the income statement indicate? - CORRECT ANSWER- ✔✔how revenues are
translated into net income through subtracting expenses
revenue (sales) - CORRECT ANSWER- ✔✔amount charged for the delivery of goods or
services
cost of sales (cogs) - CORRECT ANSWER- ✔✔- direct cost of producing revenue
- Ex: raw materials, direct wages, etc.
gross profit - CORRECT ANSWER- ✔✔- revenue - cogs
- indicates how efficiently labor and materials are used in the production process
operating expenses - CORRECT ANSWER- ✔✔- all other expenses required to run a
business
- Ex: management salaries, marketing, travel, etc.
operating income (EBIT) - CORRECT ANSWER- ✔✔- revenue - cogs - operating expenses
- indicates a company's earning power from ongoing operations
non-operating expenses - CORRECT ANSWER- ✔✔- expenses not related to regular
business of the company
- Ex: interest expense, restructuring expense, etc.
corporate taxes - CORRECT ANSWER- ✔✔local and federal income taxes the company
incurs
net income (net earnings) - CORRECT ANSWER- ✔✔- revenue - cogs - operating expenses
- non-operating expenses - taxes
- indicates increase in shareholders' value resulting from operations
