Wall Street Prep (2024 / 2025) Actual Questions and Verified Answers, 100% Guarantee Pass
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Wall Street Prep
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Wall Street Prep
Wall Street Prep (2024 / 2025) Actual Questions and Verified Answers, 100% Guarantee Pass Assets: resources a company uses to operate its business
includes cash, A/R, PP&E
2. Liabilities: represents the company's contractual obligations and includes A/P,
debt, accrued expenses
3. Shareholder's ...
Wall Street Prep.pdf file:///C:/Users/HP/Desktop/New%20folder%20(2)/Wall%20Street%2
Wall Street Prep
1. Assets: resources a company uses to operate its business
includes cash, A/R, PP&E
2. Liabilities: represents the company's contractual obligations and includes A/P,
debt, accrued expenses
3. Shareholder's equity: is the residual
the value of the business available to the owners (shareholders) after debts have
been paid off
4. Income statement: illustrates the profitability of the company over a specified
period of time
broad sense: shows revenue-expenses
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5. Balance sheet: snapshot of the company economic resources and funding for
those resources at a given point in time (A = L + SE)
6. Revenue: "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)
7. Expenses: 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 useof
PP&E, often imbedded within COGS and SG&A)
8. Net income: "bottom-line"
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revenue-expenses
the profitability available to common shareholder's after debt payments have been
made (interest expense)
9. EPS (earnings per share): portion of a company's profit allocated to each out-
standing share of common stock
EPS = (net income - dividends on preferred stock)/weighted average shares out-
standing
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10. Cash flow statement: While cash is not necessarily received when a sale occurs,
the income statement still records the sale.As a result, the income statementcaptures 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)
Since we also want to have a clear understanding of the cash position of a company,we
need the statement of cash flows to reconcile the income statement to cash inflows
and outflows.
"cash position of the company"
cash from operating activities, cash from investing activities, and cash from financing
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