2025/2026 Wall Street Prep EXAM
What is the primary purpose of US GAAP? - ANSWERS-What
is the primary purpose of US GAAP? In the US, the Securities
and Exchange Commission ("SEC") authorizes the Financial
Accounting Standards Board ("FASB") to determine the set of
accounting rules followed by publicly traded companies.
Under FASB, financial statements are required to be prepared in
accordance with US Generally Accepted Accounting Principles
("US GAAP").
Through the standardization of financial reporting and ensuring
all financials are presented on a fair, consistent basis - the
interests of investors and lenders are protected
What are the main sections of a 10-K? - ANSWERS-In a 10-K,
you'll find the three core financial statements, which are the
income statement, cash flow statement, and balance sheet.
There'll also be a statement of shareholders' equity, a statement
of comprehensive income, and supplementary data and
disclosures to accompany the financials.
,Business Overview, MD&A, FS, Notes
What is the difference between the 10-K and 10-Q? -
ANSWERS-10-K: A 10-K is the annual report required to be
filed with the SEC for any public company in the U.S. The report
is comprehensive and includes a full overview of the business
operations, commentary on recent performance by
management, risk factors, disclosures on changes in accounting
policies - and most importantly, the three core financial
statements with supplementary data.
10-Q: A 10-Q refers to the quarterly report required to be filed
with the SEC. Compared to the 10-K, this report is far more
condensed in length and depth, with the focus being on the
quarterly financials with brief sections for MD&A and
supplementary disclosures.
Additional Differences: A few more differences are 10-Ks are
required to be audited by an independent accounting firm, but
10-Qs are only reviewed by CPAs and left unaudited. 10-Ks
must also be filed ~60-90 days after the fiscal year ends,
,whereas 10-Qs must be submitted ~40-45 days after the quarter
ends.
Walk me through the three financial statements. - ANSWERS-
Income Statement ("IS"): The income statement shows a
company's profitability over a specified period, typically quarterly
and annually. The beginning line item is revenue and upon
deducting various costs and expenses, the ending line item is
net income.
2. Balance Sheet ("BS"): The balance sheet is a snapshot of a
company's resources (assets) and sources of funding (liabilities
and shareholders' equity) at a specific point in time, such as the
end of a quarter or fiscal year.
3. Cash Flow Statement ("CFS"): Under the indirect approach,
the starting line item is net income, which will be adjusted for
non-cash items such as D&A and changes in working capital to
arrive at cash from operations. Cash from investing and
financing activities are then added to cash from operations to
arrive at the net change in cash, which represents the actual
cash inflows/(outflows) in a given period.
, Walk me through the income statement. - ANSWERS-The
income statement shows a company's accrual-based profitability
over a specified time period and facilitates the analysis of its
historical growth and operational performance.
Net Rev - COGS = GROSS PROFIT
-SG&A, - R&D- D&A = EBIT
-INT EXP
Pre-tax EBIT
-Tax EXP
=NI
Walk me through the balance sheet. - ANSWERS-The balance
sheet shows a company's assets, liabilities, and equity sections
at a specific point in time. The fundamental accounting equation
is: Assets = Liabilities + Shareholders' Equity.
The assets belonging to a company must have been funded
somehow, so assets will always be equal to the sum of liabilities
and equity.
What is the primary purpose of US GAAP? - ANSWERS-What
is the primary purpose of US GAAP? In the US, the Securities
and Exchange Commission ("SEC") authorizes the Financial
Accounting Standards Board ("FASB") to determine the set of
accounting rules followed by publicly traded companies.
Under FASB, financial statements are required to be prepared in
accordance with US Generally Accepted Accounting Principles
("US GAAP").
Through the standardization of financial reporting and ensuring
all financials are presented on a fair, consistent basis - the
interests of investors and lenders are protected
What are the main sections of a 10-K? - ANSWERS-In a 10-K,
you'll find the three core financial statements, which are the
income statement, cash flow statement, and balance sheet.
There'll also be a statement of shareholders' equity, a statement
of comprehensive income, and supplementary data and
disclosures to accompany the financials.
,Business Overview, MD&A, FS, Notes
What is the difference between the 10-K and 10-Q? -
ANSWERS-10-K: A 10-K is the annual report required to be
filed with the SEC for any public company in the U.S. The report
is comprehensive and includes a full overview of the business
operations, commentary on recent performance by
management, risk factors, disclosures on changes in accounting
policies - and most importantly, the three core financial
statements with supplementary data.
10-Q: A 10-Q refers to the quarterly report required to be filed
with the SEC. Compared to the 10-K, this report is far more
condensed in length and depth, with the focus being on the
quarterly financials with brief sections for MD&A and
supplementary disclosures.
Additional Differences: A few more differences are 10-Ks are
required to be audited by an independent accounting firm, but
10-Qs are only reviewed by CPAs and left unaudited. 10-Ks
must also be filed ~60-90 days after the fiscal year ends,
,whereas 10-Qs must be submitted ~40-45 days after the quarter
ends.
Walk me through the three financial statements. - ANSWERS-
Income Statement ("IS"): The income statement shows a
company's profitability over a specified period, typically quarterly
and annually. The beginning line item is revenue and upon
deducting various costs and expenses, the ending line item is
net income.
2. Balance Sheet ("BS"): The balance sheet is a snapshot of a
company's resources (assets) and sources of funding (liabilities
and shareholders' equity) at a specific point in time, such as the
end of a quarter or fiscal year.
3. Cash Flow Statement ("CFS"): Under the indirect approach,
the starting line item is net income, which will be adjusted for
non-cash items such as D&A and changes in working capital to
arrive at cash from operations. Cash from investing and
financing activities are then added to cash from operations to
arrive at the net change in cash, which represents the actual
cash inflows/(outflows) in a given period.
, Walk me through the income statement. - ANSWERS-The
income statement shows a company's accrual-based profitability
over a specified time period and facilitates the analysis of its
historical growth and operational performance.
Net Rev - COGS = GROSS PROFIT
-SG&A, - R&D- D&A = EBIT
-INT EXP
Pre-tax EBIT
-Tax EXP
=NI
Walk me through the balance sheet. - ANSWERS-The balance
sheet shows a company's assets, liabilities, and equity sections
at a specific point in time. The fundamental accounting equation
is: Assets = Liabilities + Shareholders' Equity.
The assets belonging to a company must have been funded
somehow, so assets will always be equal to the sum of liabilities
and equity.
