WALL STREET PREP LATEST 2026 TEST PAPER EXAM
QUESTIONS AND ANSWERS MARKED A+
✔✔Useful Life of Fixed Assets (examples) - ✔✔Plants and buildings 15-40 yrs
Machinery & Equipment 3-20 yrs
Furniture & Fixtures 5-10 yrs
Computer Software & Hardware 3-5 yrs
✔✔Is land depreciated? - ✔✔no
✔✔Depreciation is included within ____________ depending on whether the asset
being depreciated is directly tied with manufacture or procurement or selling or
marketing - ✔✔COGS or SG&A
✔✔Depreciation and amortization are a ________ expense - ✔✔non-cash
✔✔Straight Line Depreciation - ✔✔Annual depreciation expense = (original cost-
salvage value)/useful life
✔✔Accelerated Depreciation Methods - ✔✔-calculates a greater amount of depreciation
in early years
-declining balance, sum of years digits, units of production
✔✔Amortization Expense - ✔✔Allocation of the cost of intangible assets over the
number of years that these assets are expected to help generate revenue for the
company
✔✔Types of Intangible assets - ✔✔Customer lists
Franchise, membership, licenses
Patents and technology
✔✔Trademarks and good will are __________ because they are considered to have
indefinite useful life - ✔✔not amoritzed
✔✔Expenses associated with developing intangible assets are_____________as they
are incurred - ✔✔fully expensd
✔✔Stock based compensation expense - ✔✔Expense of employee's salaries are
embedded within the expense categories based on the employee's job function
-same with stock based compensation
✔✔Other operating expenses/income - ✔✔Gains/losses on sales of fixed assets
Gains/losses from legal statements
Restructuring expenses and severance costs
, Inventory write down
✔✔Non-operating income and expenses - ✔✔-Everything below operating profit
-Interest Expense
-Interest Income
-Usually represnted as Net Income Expense
✔✔Other non-operating income/expensea - ✔✔-income: increases in value and gains
on sale on certain financial instruments
-expenses: decreases in value and losses on sale on certain investments and debt
✔✔Tax expense does not equal actual cash taxes paid - ✔✔Because of the ability of
companies to defer certain taxes, tax expense companies recognize on their income
statement does not equal acutal cash taxes paid that period
✔✔Net Income - ✔✔Measure of profitability on income statement income after all
expenses have been paid out
✔✔Shares Outstanding = - ✔✔Shares issued - Treasury Stock
✔✔Treasury stock - ✔✔stock that has beein issued then repurchased
✔✔Basic shares outstanding - ✔✔includes only actual shareholders
✔✔Diluted shares outstanding - ✔✔include impact of potentially dilutive security holders
that expand the share base (stock option holders and preferred stock holders) that can
convert to common stock or holders of convertible debt
✔✔Earnings per share - ✔✔-Dividing net income by shares outstanding;
-measures how much of the total current period profits belong to each shareholder
✔✔Weighted average presentation - ✔✔weighted average of amount of shares
outstanding during the period of the income statement
✔✔Diluted EPS will almost always be _______than basic EPS - ✔✔smaller
✔✔What CFO's do with net income/profit? - ✔✔1. Make distributions to shareholders
via dividends
2. Keep profits and reinvest in the business
3. Pay down any existing debt obligations or other liabilities
4. Sit on it and grow a pile of cash
✔✔EBIT - ✔✔earnings before interest and taxes
QUESTIONS AND ANSWERS MARKED A+
✔✔Useful Life of Fixed Assets (examples) - ✔✔Plants and buildings 15-40 yrs
Machinery & Equipment 3-20 yrs
Furniture & Fixtures 5-10 yrs
Computer Software & Hardware 3-5 yrs
✔✔Is land depreciated? - ✔✔no
✔✔Depreciation is included within ____________ depending on whether the asset
being depreciated is directly tied with manufacture or procurement or selling or
marketing - ✔✔COGS or SG&A
✔✔Depreciation and amortization are a ________ expense - ✔✔non-cash
✔✔Straight Line Depreciation - ✔✔Annual depreciation expense = (original cost-
salvage value)/useful life
✔✔Accelerated Depreciation Methods - ✔✔-calculates a greater amount of depreciation
in early years
-declining balance, sum of years digits, units of production
✔✔Amortization Expense - ✔✔Allocation of the cost of intangible assets over the
number of years that these assets are expected to help generate revenue for the
company
✔✔Types of Intangible assets - ✔✔Customer lists
Franchise, membership, licenses
Patents and technology
✔✔Trademarks and good will are __________ because they are considered to have
indefinite useful life - ✔✔not amoritzed
✔✔Expenses associated with developing intangible assets are_____________as they
are incurred - ✔✔fully expensd
✔✔Stock based compensation expense - ✔✔Expense of employee's salaries are
embedded within the expense categories based on the employee's job function
-same with stock based compensation
✔✔Other operating expenses/income - ✔✔Gains/losses on sales of fixed assets
Gains/losses from legal statements
Restructuring expenses and severance costs
, Inventory write down
✔✔Non-operating income and expenses - ✔✔-Everything below operating profit
-Interest Expense
-Interest Income
-Usually represnted as Net Income Expense
✔✔Other non-operating income/expensea - ✔✔-income: increases in value and gains
on sale on certain financial instruments
-expenses: decreases in value and losses on sale on certain investments and debt
✔✔Tax expense does not equal actual cash taxes paid - ✔✔Because of the ability of
companies to defer certain taxes, tax expense companies recognize on their income
statement does not equal acutal cash taxes paid that period
✔✔Net Income - ✔✔Measure of profitability on income statement income after all
expenses have been paid out
✔✔Shares Outstanding = - ✔✔Shares issued - Treasury Stock
✔✔Treasury stock - ✔✔stock that has beein issued then repurchased
✔✔Basic shares outstanding - ✔✔includes only actual shareholders
✔✔Diluted shares outstanding - ✔✔include impact of potentially dilutive security holders
that expand the share base (stock option holders and preferred stock holders) that can
convert to common stock or holders of convertible debt
✔✔Earnings per share - ✔✔-Dividing net income by shares outstanding;
-measures how much of the total current period profits belong to each shareholder
✔✔Weighted average presentation - ✔✔weighted average of amount of shares
outstanding during the period of the income statement
✔✔Diluted EPS will almost always be _______than basic EPS - ✔✔smaller
✔✔What CFO's do with net income/profit? - ✔✔1. Make distributions to shareholders
via dividends
2. Keep profits and reinvest in the business
3. Pay down any existing debt obligations or other liabilities
4. Sit on it and grow a pile of cash
✔✔EBIT - ✔✔earnings before interest and taxes
