FINANCIAL STATEMENT MODELING – MOCK EXAM
100 COMPLETE QUESTIONS AND ANSWERS |
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1. What are the three core financial statements used in financial modeling?
A. Income Statement, Balance Sheet, Cash Flow Statement
B. Income Statement, Statement of Retained Earnings, Trial Balance
C. Balance Sheet, Cash Flow Statement, Trial Balance
D. Income Statement, Balance Sheet, Statement of Equity
Answer: A
These three statements are fully integrated in financial models and reflect
profitability, financial position, and cash movement.
2. In a three-statement model, which statement typically drives changes in
retained earnings?
A. Balance Sheet
B. Cash Flow Statement
C. Income Statement
D. Statement of Equity
Answer: C
Net income from the income statement flows into retained earnings on the
balance sheet.
3. Revenue growth assumptions in a financial model primarily affect which
statement first?
A. Balance Sheet
B. Cash Flow Statement
C. Income Statement
, D. Statement of Comprehensive Income
Answer: C
Revenue is a top-line income statement item and drives downstream
impacts.
4. Cost of Goods Sold (COGS) is most commonly modeled as a percentage of:
A. Total assets
B. Revenue
C. Operating expenses
D. Gross profit
Answer: B
COGS is typically expressed as a percentage of revenue in forecasting
models.
5. Gross profit is calculated as:
A. Revenue minus operating expenses
B. Revenue minus COGS
C. Operating income minus taxes
D. Revenue minus depreciation
Answer: B
Gross profit reflects profitability after direct production costs.
6. Operating income is also known as:
A. EBITDA
B. Net income
C. EBIT
D. Gross margin
Answer: C
EBIT represents earnings before interest and taxes.
7. Which item is excluded from EBITDA?
A. Depreciation
B. Revenue
C. Operating expenses
D. Gross profit
, Answer: A
EBITDA excludes depreciation and amortization.
8. Depreciation is added back on the cash flow statement because it is:
A. A financing activity
B. A non-cash expense
C. A capital expenditure
D. A tax payment
Answer: B
Depreciation reduces accounting profit but does not use cash.
9. Capital expenditures appear in which section of the cash flow statement?
A. Operating activities
B. Investing activities
C. Financing activities
D. Supplemental disclosures
Answer: B
CapEx represents investment in long-term assets.
10.An increase in accounts receivable results in:
A. A cash inflow
B. No cash impact
C. A cash outflow
D. Increased net income
Answer: C
More receivables mean cash has not yet been collected.
11.An increase in accounts payable causes:
A. A cash inflow
B. A cash outflow
C. Reduced liabilities
D. Lower operating cash flow
Answer: A
Delaying payments preserves cash.
100 COMPLETE QUESTIONS AND ANSWERS |
CONTENT WELL ORGANIZED 2026/2027 LATEST
UPDATE | 100 % RATED AND VERIFIED SOLUTIONS
| GET AN A+ NEW VERSION!!!
1. What are the three core financial statements used in financial modeling?
A. Income Statement, Balance Sheet, Cash Flow Statement
B. Income Statement, Statement of Retained Earnings, Trial Balance
C. Balance Sheet, Cash Flow Statement, Trial Balance
D. Income Statement, Balance Sheet, Statement of Equity
Answer: A
These three statements are fully integrated in financial models and reflect
profitability, financial position, and cash movement.
2. In a three-statement model, which statement typically drives changes in
retained earnings?
A. Balance Sheet
B. Cash Flow Statement
C. Income Statement
D. Statement of Equity
Answer: C
Net income from the income statement flows into retained earnings on the
balance sheet.
3. Revenue growth assumptions in a financial model primarily affect which
statement first?
A. Balance Sheet
B. Cash Flow Statement
C. Income Statement
, D. Statement of Comprehensive Income
Answer: C
Revenue is a top-line income statement item and drives downstream
impacts.
4. Cost of Goods Sold (COGS) is most commonly modeled as a percentage of:
A. Total assets
B. Revenue
C. Operating expenses
D. Gross profit
Answer: B
COGS is typically expressed as a percentage of revenue in forecasting
models.
5. Gross profit is calculated as:
A. Revenue minus operating expenses
B. Revenue minus COGS
C. Operating income minus taxes
D. Revenue minus depreciation
Answer: B
Gross profit reflects profitability after direct production costs.
6. Operating income is also known as:
A. EBITDA
B. Net income
C. EBIT
D. Gross margin
Answer: C
EBIT represents earnings before interest and taxes.
7. Which item is excluded from EBITDA?
A. Depreciation
B. Revenue
C. Operating expenses
D. Gross profit
, Answer: A
EBITDA excludes depreciation and amortization.
8. Depreciation is added back on the cash flow statement because it is:
A. A financing activity
B. A non-cash expense
C. A capital expenditure
D. A tax payment
Answer: B
Depreciation reduces accounting profit but does not use cash.
9. Capital expenditures appear in which section of the cash flow statement?
A. Operating activities
B. Investing activities
C. Financing activities
D. Supplemental disclosures
Answer: B
CapEx represents investment in long-term assets.
10.An increase in accounts receivable results in:
A. A cash inflow
B. No cash impact
C. A cash outflow
D. Increased net income
Answer: C
More receivables mean cash has not yet been collected.
11.An increase in accounts payable causes:
A. A cash inflow
B. A cash outflow
C. Reduced liabilities
D. Lower operating cash flow
Answer: A
Delaying payments preserves cash.
