ACCOUNTING CRASH COURSE WALL STREET 2025/2026
QUESTIONS WITH SOLUTIONS GRADED A+
✔✔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
✔✔Operating Profit (EBIT) - ✔✔-Earnings before interest & taxes: EBITDA - D&A
✔✔Interest Expense - ✔✔-the amount/payments the company has to pay on debt
owned/outstanding debt.
✔✔Interest Income - ✔✔-A company's income from its cash holdings and investments
(stocks, bonds, and savings accounts)
-Often presented on the Income Statement as Net Interest Expense.
✔✔Non-operating items - ✔✔-Items peripheral to core operations.
-Includes gains/losses on investments and revaluation of certain financial assets and
debt obligations.
✔✔Income Tax Expense - ✔✔-The tax liability a company reports on the income
statement
✔✔Net Income - ✔✔-EBIT - Net Interest Expense - Other Non-operating Income -
Taxes
✔✔Basic Earnings per share (EPS) - ✔✔-Net income / Basic Weighted Average Shares
Outstanding
✔✔Diluted EPS - ✔✔-Net income / Diluted Weighted Average share outstanding
✔✔Not all income is revenue - ✔✔-True
Ex.) Interest income earned from investments, or income received from a legal
settlement.
✔✔Receiving Cash is recognized as revenue - ✔✔-False, does not constitute revenue.
(Accrual Accounting)
✔✔Types of Intangible assets - ✔✔-Customer lists
, -Franchise, memberships
-Patents, and Technology
-Licenses
-Trademarks and *goodwill* are considered to have indefinite useful life so they are not
amortized
✔✔Internally-generated intangible assets - ✔✔-Expenses associated with internally
developing intangible assets like patents, customer lists, trademarks are expensed fully
as they are incurred (no amortization)
✔✔Stock based compensation expense - ✔✔-The value of a stock-based
compensation is recognized as an expense in the same expense category as the
employee's regular cash compensation.
✔✔Examples of Other operating expenses / incomes - ✔✔-Gains/losses on sale of fixed
assets
-Gains/losses from a legal settlement
-Restructuring expenses and severance costs
-Losses do to inventory spoilage (inventory write-down)
✔✔Everything below operating profit on the income statement is not directly related to
the operations of the business - ✔✔-True
✔✔Other non-operating income / expenses - ✔✔Companies might generate income
from non operating activities by:
-increases in value and gains on sale on certain financial investments
-Represents expenses that are not tied to the core operations of the business:
-Decreases in value and losses on sale on certain investments and debt.
✔✔Tax expense line in an income statement is not equal to the actual cash taxes paid
that year - ✔✔-True
✔✔Tax rules - ✔✔-the calculation of cash taxes are made using the relevant country's
tax code
✔✔Book rules - ✔✔-the tax expense on the income statement calculated using US
GAAP, IFRS, etc.
QUESTIONS WITH SOLUTIONS GRADED A+
✔✔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
✔✔Operating Profit (EBIT) - ✔✔-Earnings before interest & taxes: EBITDA - D&A
✔✔Interest Expense - ✔✔-the amount/payments the company has to pay on debt
owned/outstanding debt.
✔✔Interest Income - ✔✔-A company's income from its cash holdings and investments
(stocks, bonds, and savings accounts)
-Often presented on the Income Statement as Net Interest Expense.
✔✔Non-operating items - ✔✔-Items peripheral to core operations.
-Includes gains/losses on investments and revaluation of certain financial assets and
debt obligations.
✔✔Income Tax Expense - ✔✔-The tax liability a company reports on the income
statement
✔✔Net Income - ✔✔-EBIT - Net Interest Expense - Other Non-operating Income -
Taxes
✔✔Basic Earnings per share (EPS) - ✔✔-Net income / Basic Weighted Average Shares
Outstanding
✔✔Diluted EPS - ✔✔-Net income / Diluted Weighted Average share outstanding
✔✔Not all income is revenue - ✔✔-True
Ex.) Interest income earned from investments, or income received from a legal
settlement.
✔✔Receiving Cash is recognized as revenue - ✔✔-False, does not constitute revenue.
(Accrual Accounting)
✔✔Types of Intangible assets - ✔✔-Customer lists
, -Franchise, memberships
-Patents, and Technology
-Licenses
-Trademarks and *goodwill* are considered to have indefinite useful life so they are not
amortized
✔✔Internally-generated intangible assets - ✔✔-Expenses associated with internally
developing intangible assets like patents, customer lists, trademarks are expensed fully
as they are incurred (no amortization)
✔✔Stock based compensation expense - ✔✔-The value of a stock-based
compensation is recognized as an expense in the same expense category as the
employee's regular cash compensation.
✔✔Examples of Other operating expenses / incomes - ✔✔-Gains/losses on sale of fixed
assets
-Gains/losses from a legal settlement
-Restructuring expenses and severance costs
-Losses do to inventory spoilage (inventory write-down)
✔✔Everything below operating profit on the income statement is not directly related to
the operations of the business - ✔✔-True
✔✔Other non-operating income / expenses - ✔✔Companies might generate income
from non operating activities by:
-increases in value and gains on sale on certain financial investments
-Represents expenses that are not tied to the core operations of the business:
-Decreases in value and losses on sale on certain investments and debt.
✔✔Tax expense line in an income statement is not equal to the actual cash taxes paid
that year - ✔✔-True
✔✔Tax rules - ✔✔-the calculation of cash taxes are made using the relevant country's
tax code
✔✔Book rules - ✔✔-the tax expense on the income statement calculated using US
GAAP, IFRS, etc.
