Breaking Into Wall Street" Accounting Exam
Questions and Answers 100% Pass
What does the Income Statement list? - ✔✔1. Revenue
2. Expenses
3. Taxes
What criteria must each item meet in order to be listed on the Income Statement? - ✔✔1. It must
correspond to the period only shown on the income statement. A 20 year asset would NOT appear on the
1 year income statement
2. It must affect the company's taxes
ex: interest paid on debt is tax deductible, so it would appear on the income statement
What are the 4 main sections on the income statement? - ✔✔1. Revenue and Cost of Goods Sold
2. Operating Expenses (not directly linked to product sales)
3. Other Income and Expenses
4. Taxes and Net Income
Revenue and Cost of Good Sold means..? - ✔✔Rev is the value of the products/services sold in a period.
COGS represents the expenses directly linked to the sale of the products/services
Operating Expenses - ✔✔Items that are not directly linked to the product sales
Ex: Employee salary, rent, marketing, research, etc
Page 1/17
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,Other Income and Expense - ✔✔This goes between Operating Income and
Pre-Tax Income. Interest shows up here, as well as items such as Gains
and Losses when Assets are sold, Impairment Charges, Write-Downs, and
Taxes and Net Income - ✔✔Net Income represents the company's "bottom
line" - how much in after-tax profits it has earned. Net Income = Revenue
- Expenses - Taxes.
What ALWAYS appears on the income statement? - ✔✔1. Revenue
2. COGS
3.Operating Expenses
4. Depreciation
5. Amoritization
6. Stock Based Compensation
7. Gains
8. Interest
9.Write Downs
What does the balance sheet show? - ✔✔The company's resources -
1.its Assets - and how it acquired those resources - 2.Liabilities & Equity - at a specific point in time.
The sheet must always remain in balance, both sides equaling each other
What does asset ALWAYS equal? - ✔✔Assets=liabilities+equity
Page 2/17
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, What is an asset? - ✔✔An item that will
result in, directly or indirectly,
additional cash in the future.
What is a liability - ✔✔An item that will
result in, directly or indirectly,
less cash in the future. Most
Liabilities are related to external
parties - payments owed to
suppliers, or borrowed money,
for example. Liabilities are used
to fund a business.
What is equity - ✔✔Line items are similar to
Liabilities (used to fund a
business), but they refer to the
company's own internal
operations rather than external
parties.
Key Assets - ✔✔1. Short term investment
2. Acc receiveable
3. Prepaid expense
Page 3/17
Crafted for Academic Insight by KatelynWhitman. All rights reserved © 2025
Questions and Answers 100% Pass
What does the Income Statement list? - ✔✔1. Revenue
2. Expenses
3. Taxes
What criteria must each item meet in order to be listed on the Income Statement? - ✔✔1. It must
correspond to the period only shown on the income statement. A 20 year asset would NOT appear on the
1 year income statement
2. It must affect the company's taxes
ex: interest paid on debt is tax deductible, so it would appear on the income statement
What are the 4 main sections on the income statement? - ✔✔1. Revenue and Cost of Goods Sold
2. Operating Expenses (not directly linked to product sales)
3. Other Income and Expenses
4. Taxes and Net Income
Revenue and Cost of Good Sold means..? - ✔✔Rev is the value of the products/services sold in a period.
COGS represents the expenses directly linked to the sale of the products/services
Operating Expenses - ✔✔Items that are not directly linked to the product sales
Ex: Employee salary, rent, marketing, research, etc
Page 1/17
Crafted for Academic Insight by KatelynWhitman. All rights reserved © 2025
,Other Income and Expense - ✔✔This goes between Operating Income and
Pre-Tax Income. Interest shows up here, as well as items such as Gains
and Losses when Assets are sold, Impairment Charges, Write-Downs, and
Taxes and Net Income - ✔✔Net Income represents the company's "bottom
line" - how much in after-tax profits it has earned. Net Income = Revenue
- Expenses - Taxes.
What ALWAYS appears on the income statement? - ✔✔1. Revenue
2. COGS
3.Operating Expenses
4. Depreciation
5. Amoritization
6. Stock Based Compensation
7. Gains
8. Interest
9.Write Downs
What does the balance sheet show? - ✔✔The company's resources -
1.its Assets - and how it acquired those resources - 2.Liabilities & Equity - at a specific point in time.
The sheet must always remain in balance, both sides equaling each other
What does asset ALWAYS equal? - ✔✔Assets=liabilities+equity
Page 2/17
Crafted for Academic Insight by KatelynWhitman. All rights reserved © 2025
, What is an asset? - ✔✔An item that will
result in, directly or indirectly,
additional cash in the future.
What is a liability - ✔✔An item that will
result in, directly or indirectly,
less cash in the future. Most
Liabilities are related to external
parties - payments owed to
suppliers, or borrowed money,
for example. Liabilities are used
to fund a business.
What is equity - ✔✔Line items are similar to
Liabilities (used to fund a
business), but they refer to the
company's own internal
operations rather than external
parties.
Key Assets - ✔✔1. Short term investment
2. Acc receiveable
3. Prepaid expense
Page 3/17
Crafted for Academic Insight by KatelynWhitman. All rights reserved © 2025
