1
EPC 4E EXAM LATEST VERSION -2025/2026- 100+ QUESTIONS
AND VERIFIED ANSWERS ALL THE BEST
Statement of Cash Flows
A statement of cash flows reports on cash flows for operating, investing, and
financing activities over a period of time.
Statement of Stockholders' Equity
An increase in common stock would be reflected in the statement of stockholders'
equity.
SEC Filings
Publicly traded companies must provide to the Securities Exchange Commission
annual audited financial statements (10-K reports) and quarterly audited financial
statements (10-Q reports).
Balance Sheet
A balance sheet shows a company's position at a point in time, whereas an
income statement, statement of stockholders' equity, and statement of cash flows
show its position over a period of time.
Accounting Equation
Assets must always equal liabilities plus equity.
Business Activities
The four main business activities that financial accounting addresses.
Users of Financial Statement Information
Shareholders demand financial information primarily to assess profitability and
risk whereas bankers demand information primarily to assess cash flows to repay
loan interest and principal.
, 2
Publicly Available Financial Reports
Publicly traded companies are required to provide quarterly financial reports
directly to the public.
Income Statement
The income statement reports net income which is defined as the company's
profit after all expenses and dividends have been paid.
Return on Assets (ROA)
Return on Assets (ROA) measures the profit the company makes on each dollar of
total assets it uses.
Return on Assets Formula
Return on Assets (ROA) = (Net Income / Sales) × Asset Turnover.
Asset Turnover
Asset turnover is an efficiency metric that indicates how effectively a company
uses its assets to generate revenue.
Financial Accounting and Business Analysis
Financial statements are influenced by five important forces that determine a
company's competitive intensity: (A) industry competition, (B) buyer power, (C)
supplier power, (D) product substitutes, and (E) threat of entry.
Audit Report
A "clean" audit report asserts that management has prepared all necessary
financial statements and the auditor has expressed its opinion that they are
prepared in conformity with GAAP.
Shareholders
Individuals or entities that own shares in a company.
Employees
Individuals who work for a company.
, 3
Competitors
Other companies in the same industry vying for the same customers.
Taxing agencies
Government entities responsible for collecting taxes.
Regulation FD
A rule adopted by the SEC to curb selective disclosure of information by public
companies.
Statement of Assets and Liabilities
A financial statement that provides a detailed account of a company's assets and
liabilities.
Net cash flow
The amount of cash generated or used by a company during a specific period.
Net income
The total revenue minus total expenses for a given period.
Dividends
Payments made to shareholders from a company's earnings.
Retained earnings
The cumulative amount of net income retained in the company rather than
distributed as dividends.
Total assets
The total value of everything a company owns.
Total liabilities
The total amount of debts and obligations a company owes.
Total shareholders' equity
EPC 4E EXAM LATEST VERSION -2025/2026- 100+ QUESTIONS
AND VERIFIED ANSWERS ALL THE BEST
Statement of Cash Flows
A statement of cash flows reports on cash flows for operating, investing, and
financing activities over a period of time.
Statement of Stockholders' Equity
An increase in common stock would be reflected in the statement of stockholders'
equity.
SEC Filings
Publicly traded companies must provide to the Securities Exchange Commission
annual audited financial statements (10-K reports) and quarterly audited financial
statements (10-Q reports).
Balance Sheet
A balance sheet shows a company's position at a point in time, whereas an
income statement, statement of stockholders' equity, and statement of cash flows
show its position over a period of time.
Accounting Equation
Assets must always equal liabilities plus equity.
Business Activities
The four main business activities that financial accounting addresses.
Users of Financial Statement Information
Shareholders demand financial information primarily to assess profitability and
risk whereas bankers demand information primarily to assess cash flows to repay
loan interest and principal.
, 2
Publicly Available Financial Reports
Publicly traded companies are required to provide quarterly financial reports
directly to the public.
Income Statement
The income statement reports net income which is defined as the company's
profit after all expenses and dividends have been paid.
Return on Assets (ROA)
Return on Assets (ROA) measures the profit the company makes on each dollar of
total assets it uses.
Return on Assets Formula
Return on Assets (ROA) = (Net Income / Sales) × Asset Turnover.
Asset Turnover
Asset turnover is an efficiency metric that indicates how effectively a company
uses its assets to generate revenue.
Financial Accounting and Business Analysis
Financial statements are influenced by five important forces that determine a
company's competitive intensity: (A) industry competition, (B) buyer power, (C)
supplier power, (D) product substitutes, and (E) threat of entry.
Audit Report
A "clean" audit report asserts that management has prepared all necessary
financial statements and the auditor has expressed its opinion that they are
prepared in conformity with GAAP.
Shareholders
Individuals or entities that own shares in a company.
Employees
Individuals who work for a company.
, 3
Competitors
Other companies in the same industry vying for the same customers.
Taxing agencies
Government entities responsible for collecting taxes.
Regulation FD
A rule adopted by the SEC to curb selective disclosure of information by public
companies.
Statement of Assets and Liabilities
A financial statement that provides a detailed account of a company's assets and
liabilities.
Net cash flow
The amount of cash generated or used by a company during a specific period.
Net income
The total revenue minus total expenses for a given period.
Dividends
Payments made to shareholders from a company's earnings.
Retained earnings
The cumulative amount of net income retained in the company rather than
distributed as dividends.
Total assets
The total value of everything a company owns.
Total liabilities
The total amount of debts and obligations a company owes.
Total shareholders' equity
