WSP Accounting Crash Course (| ACTUAL EXAM
QUESTIONS WITH ANSWERS VERIFIED 100%
CORRECT
four financial statements
1. income statement
2. balance sheet
3. shareholder equity
4. cash flows
does GAAP require reporting of intangible assets (trademarks, patents)?
yes
a publicly traded co. must file how many 10Qs and 10Ks annually?
3 10Qs
1 10K
income statement def.
financial report that depicts operating performance of a co. over a period
-revenue - expenses = profits
-AKA consolidated statement of earnings, P&L, statement of revenues and expenses
-tells growth prospects, cost structure, profitability
-can see drivers of net earnings
"top line" refers to
revenues
COGS def.
,direct cost of manufacture/procurement of good/service that co. sells to generate
revenue
gross profit =
rev - COGS
SG&A includes
operating expenses not included in COGS
-marketing
-store lease
-executive salaries
-IT
-legal
EBIT is AKA
operating profit
"bottom line" refers to
net income
EBIT - net. interest expense - other non operating income - taxes
EPS =
net income/# of shares
Diluted EPS =
net income/diluted # of shares
% of completion method for long term projects
, revenues recognized as a % of work completed in period
-more common than completed contract method (entire project completed)
accrual accounting
revenues recorded when exchange occurs, expenses recognized when associated
revenue is exchanged (not necessarily when cash is exchanged)
-involves subjectivity, allocates revenues and expenses to different periods (rev can be
recorded in different period than when cash spent)
cash accounting
not allowed under GAAP
-objectively recognizes revenues when cash is received and records costs when cash
paid out
-accrual accounting is subjective
COGS examples
-inventory
-raw materials
-factory labor/salaries
-shipping/delivery
-depreciation of machinery used to produce
for depreciation
the expense is always matched with revenues
R&D
co. activities directed at developing new products/procedures
depreciation vs. amortization
QUESTIONS WITH ANSWERS VERIFIED 100%
CORRECT
four financial statements
1. income statement
2. balance sheet
3. shareholder equity
4. cash flows
does GAAP require reporting of intangible assets (trademarks, patents)?
yes
a publicly traded co. must file how many 10Qs and 10Ks annually?
3 10Qs
1 10K
income statement def.
financial report that depicts operating performance of a co. over a period
-revenue - expenses = profits
-AKA consolidated statement of earnings, P&L, statement of revenues and expenses
-tells growth prospects, cost structure, profitability
-can see drivers of net earnings
"top line" refers to
revenues
COGS def.
,direct cost of manufacture/procurement of good/service that co. sells to generate
revenue
gross profit =
rev - COGS
SG&A includes
operating expenses not included in COGS
-marketing
-store lease
-executive salaries
-IT
-legal
EBIT is AKA
operating profit
"bottom line" refers to
net income
EBIT - net. interest expense - other non operating income - taxes
EPS =
net income/# of shares
Diluted EPS =
net income/diluted # of shares
% of completion method for long term projects
, revenues recognized as a % of work completed in period
-more common than completed contract method (entire project completed)
accrual accounting
revenues recorded when exchange occurs, expenses recognized when associated
revenue is exchanged (not necessarily when cash is exchanged)
-involves subjectivity, allocates revenues and expenses to different periods (rev can be
recorded in different period than when cash spent)
cash accounting
not allowed under GAAP
-objectively recognizes revenues when cash is received and records costs when cash
paid out
-accrual accounting is subjective
COGS examples
-inventory
-raw materials
-factory labor/salaries
-shipping/delivery
-depreciation of machinery used to produce
for depreciation
the expense is always matched with revenues
R&D
co. activities directed at developing new products/procedures
depreciation vs. amortization
