Wall Street Prep Exam 2023 with complete solution

Assets - CORRECT ANS resources a company uses to operate its business includes cash, A/R, PP&E Liabilities - CORRECT ANS represents the company's contractual obligations and includes A/P, debt, accrued expenses Shareholder's equity - CORRECT ANS is the residual the value of the business available to the owners (shareholders) after debts have been paid off Income statement - CORRECT ANS illustrates the profitability of the company over a specified period of time broad sense: shows revenue-expenses Balance sheet - CORRECT ANS snapshot of the company economic resources and funding for those resources at a given point in time (A = L + SE) Revenue - CORRECT ANS "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 - CORRECT ANS 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 - CORRECT ANS "bottom-line" revenue-expenses the profitability available to common shareholder's after debt payments have been made (interest expense) EPS (earnings per share) - CORRECT ANS 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 - CORRECT ANS 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) Wall Street Pr