Accounting Crash Course Retake Exam — Wall Street Prep VERIFIED 2026

EXAM INSTRUCTIONS • This exam tests accounting concepts covered in the Wall Street Prep Accounting Crash Course. • All 50 questions are multiple choice — select the single best answer. • Assume US GAAP accounting standards unless a question specifies otherwise. • Scenario questions repeat the data for each question for convenience. • All dollar amounts are in millions unless stated otherwise. • Tax rate is 40% unless specified. • Passing score is 75% (38 correct out of 50). Section Section 1 Topic Accrual Accounting & Revenue Recognition Qs Q1–Q10 Section 2 Section 3 Section 4 Section 5 Income Statement & Profitability Balance Sheet & Working Capital Cash Flow Statement Journal Entries & Advanced Topics Q11–Q20 Q21–Q30 Q31–Q40 Q41–Q50 SECTION 1 — Accrual Accounting & Revenue Recognition Question 1: Assume US GAAP to answer this question. • In 2017, $2 million in wages were earned and no cash wages were paid. • In 2018, $8 million in wages were earned and $9 million in cash wages were paid. • Cash wages were used to first pay wages earned in 2017 with the remainder used to pay wages earned in 2018. • Any earned but unpaid wages will be paid during the first quarter of 2019. Using only the information provided, which of the following statements is most accurate? A. Liabilities decreased by $1.0 million in 2018. B. Liabilities increased by $6.0 million in 2018. VERIFIED EXAM MATERIAL | © Wall Street Prep | Page Accounting Crash Course Wall Street Prep Exam VERIFIED C. Assets decreased by $7.0 million in 2018. D. Retained earnings decreased by $10.0 million in 2018. E. Retained earnings decreased by $9.0 million in 2018. Correct: A — In 2017: $2M wages earned but unpaid → Wages Payable (liability) +$2M; Retained Earnings –$2M. In 2018: $8M wages earned; $9M cash paid ($2M clears 2017 payable + $7M for 2018). Wages Payable: +$8M new – $9M paid = net –$1M. So liabilities DECREASED by $1.0M in 2018. RE decreased by $8M (2018 wages expense), not $9M (cash paid is not the expense). Question 2: A company reported gross profit of $22 million in 2018. In addition, it recorded the following activities: • Sales and marketing expenses were $6 million. • Interest expense was $1 million. • Sold equipment for $13 million that had a net book value of $9 million. • $3 million in preferred stock issuance. • Company's tax rate is 40%. Calculate the company's net income. A. $9.0 million B. $9.6 million C. $11.4 million D. $12.6 million E. $15.0 million Correct: C — Gross Profit $22M – S&M $6M = EBIT before gain. Equipment gain = $13M – $9M = $4M (included in operating/other income). EBIT = $22M – $6M + $4M = $20M. EBT = $20M – $1M interest = $19M. Net Income = $19M × (1–40%) = $11.4M. Note: Preferred stock issuance is a financing activity, NOT an income statement item — excluded. VERIFIED EXAM MATERIAL | © Wall Street Prep | Page Accounting Crash Course Wall Street Prep Exam VERIFIED Question 3: The next two questions use the following data from TGX Global, a heavy equipment manufacturer (this information will be repeated on the next question): • TGX Global sells excavators, with an average sale price of $750,000 per excavator. • TGX received new orders for 100 excavators in 2018. • TGX produced & delivered 130 excavators in 2018: 70 of these delivered excavators were ordered in 2017 and the rest (60 excavators) were part of the 100 ordered in 2018. • TGX received payment for 120 excavators. • Of those payments, 50 were for excavators delivered in 2017 (but not yet paid for), and 70 were for excavators delivered in 2018. Using only the information provided, what is TGX Global's 2018 revenue? A. $52.5 million B. $75.0 million C. $90.0 million D. $97.5 million E. $105.0 million Correct: D — Revenue recognized = excavators delivered in 2018 = 130 × $750,000 = $97.5M. Under accrual/ASC 606, revenue is recognized when performance obligation is satisfied (delivery), not when ordered or when cash is received.