WALL STREET PREP CERTIFICATION EXAM
QUESTIONS WITH ANSWERS GRADED A+
2026
◉ 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
QUESTIONS WITH ANSWERS GRADED A+
2026
◉ 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
