ADVENTIS FMC LEVEL 1 EXAM REVIEW
PRACTICE SOLUTION 2026 FULL SOLUTION
GRADED A+
⩥ how board of directors use financial data... Answer: - hold
management accountable - make board-level decisions about
corporate strategy
⩥ how company management uses financial data... Answer: -
measure performance
- make strategic, operating and financial decisions
⩥ how creditors use financial data... Answer: - measure
creditworthiness
- liquidity
- bankruptcy risk
⩥ how investors use financial data... Answer: make decisions on
buying/selling equity investments
⩥ how acquirers use financial data... Answer: - determine valuation
- make investment decisions
,⩥ how regulators use financial data... Answer: determine whether
company is operating according to regulations/law
⩥ what does the income statement present? Answer: results of
operations over a period of time
⩥ what is the purpose of the income statement? Answer: to show
whether the company made or lost money during the period reported
⩥ what does the income statement indicate? Answer: how revenues
are translated into net income through subtracting expenses
⩥ revenue (sales) Answer: amount charged for the delivery of goods
or services
⩥ cost of sales (cogs) Answer: - direct cost of producing revenue
- Ex: raw materials, direct wages, etc.
⩥ gross profit Answer: - revenue - cogs
- indicates how efficiently labor and materials are used in the
production process
⩥ operating expenses Answer: - all other expenses required to run a
business
- Ex: management salaries, marketing, travel, etc.
, ⩥ operating income (EBIT) Answer: - revenue - cogs - operating
expenses
- indicates a company's earning power from ongoing operations
⩥ non-operating expenses Answer: - expenses not related to regular
business of the company
- Ex: interest expense, restructuring expense, etc.
⩥ corporate taxes Answer: local and federal income taxes the
company incurs
⩥ net income (net earnings) Answer: - revenue - cogs - operating
expenses - non-operating expenses - taxes
- indicates increase in shareholders' value resulting from operations
⩥ what does the balance sheet show? Answer: an organization's
financial position at a particular point in time
⩥ what does the balance sheet disclose? Answer: - the resources an
organization controls (assets)
- the claims on those resources (liabilities and equity)
⩥ what is the basic accounting equation? Answer: assets = liabilities
+ equity
PRACTICE SOLUTION 2026 FULL SOLUTION
GRADED A+
⩥ how board of directors use financial data... Answer: - hold
management accountable - make board-level decisions about
corporate strategy
⩥ how company management uses financial data... Answer: -
measure performance
- make strategic, operating and financial decisions
⩥ how creditors use financial data... Answer: - measure
creditworthiness
- liquidity
- bankruptcy risk
⩥ how investors use financial data... Answer: make decisions on
buying/selling equity investments
⩥ how acquirers use financial data... Answer: - determine valuation
- make investment decisions
,⩥ how regulators use financial data... Answer: determine whether
company is operating according to regulations/law
⩥ what does the income statement present? Answer: results of
operations over a period of time
⩥ what is the purpose of the income statement? Answer: to show
whether the company made or lost money during the period reported
⩥ what does the income statement indicate? Answer: how revenues
are translated into net income through subtracting expenses
⩥ revenue (sales) Answer: amount charged for the delivery of goods
or services
⩥ cost of sales (cogs) Answer: - direct cost of producing revenue
- Ex: raw materials, direct wages, etc.
⩥ gross profit Answer: - revenue - cogs
- indicates how efficiently labor and materials are used in the
production process
⩥ operating expenses Answer: - all other expenses required to run a
business
- Ex: management salaries, marketing, travel, etc.
, ⩥ operating income (EBIT) Answer: - revenue - cogs - operating
expenses
- indicates a company's earning power from ongoing operations
⩥ non-operating expenses Answer: - expenses not related to regular
business of the company
- Ex: interest expense, restructuring expense, etc.
⩥ corporate taxes Answer: local and federal income taxes the
company incurs
⩥ net income (net earnings) Answer: - revenue - cogs - operating
expenses - non-operating expenses - taxes
- indicates increase in shareholders' value resulting from operations
⩥ what does the balance sheet show? Answer: an organization's
financial position at a particular point in time
⩥ what does the balance sheet disclose? Answer: - the resources an
organization controls (assets)
- the claims on those resources (liabilities and equity)
⩥ what is the basic accounting equation? Answer: assets = liabilities
+ equity
