Wall Street Prep: Advanced
Accounting COMPREHENSIVE
QUESTIONS AND VERIFIED
ANSWERS (DETAILED &
ELABORATED) ACTUAL EXAM
2025 TEST 100% SOLVED 2025!!
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Terms in this set (35)
, The impact on EPS is that the share
count increases, which decreases
EPS. But there can be an impact on
net income, assuming the share
issuances generate cash because
there would be higher interest
income, which increases net
income and EPS. However, most
companies' returns on excess cash
How would
are low, so this doesn't offset the
raising capital
negative dilutive impact on EPS
through share
from the increased share count.
issuances affect
earnings per
Alternatively, share issuances
share (EPS)?
might affect EPS in an acquisition
where stock is the form of
consideration. The amount of net
income the acquired company
generates will be added to the
acquirer's existing net income,
which could have a net positive
(accretive) or negative (dilutive)
impact on EPS.
, The impact on EPS following a
share repurchase is a reduced
share count, which increases EPS.
However, there would be an
impact on net income, assuming
the share repurchase was funded
How would a using excess cash. The interest
share income that would have otherwise
repurchase been generated on that cash is no
impact earnings longer available, causing net
per share income and EPS to decrease.
(EPS)?
But the impact would be minor
since the returns on excess cash
are low, and would not offset the
positive impact the repurchase had
on EPS from the reduced share
count.
, Effective tax rate: % corporations
What is the must by in taxes
difference Effective tax rate = Taxes paid /
between the earnings before tax
effective and
marginal tax Marginal tax rate: % on the last
rates? dollar of a company's taxable
income.
Effective and marginal tax rates
differ because the effective tax
rate calculation uses pre-tax
income from the accrual-based
Why is the income statement. Since there's a
effective and difference between the taxable
marginal tax income on the income statement
rate often and taxable income shown on the
different? tax filing, the tax rates will nearly
always be different. Thus, the "Tax
Provision" line item on the income
statement rarely matches the
actual cash taxes paid to the IRS.
Accounting COMPREHENSIVE
QUESTIONS AND VERIFIED
ANSWERS (DETAILED &
ELABORATED) ACTUAL EXAM
2025 TEST 100% SOLVED 2025!!
Save
Terms in this set (35)
, The impact on EPS is that the share
count increases, which decreases
EPS. But there can be an impact on
net income, assuming the share
issuances generate cash because
there would be higher interest
income, which increases net
income and EPS. However, most
companies' returns on excess cash
How would
are low, so this doesn't offset the
raising capital
negative dilutive impact on EPS
through share
from the increased share count.
issuances affect
earnings per
Alternatively, share issuances
share (EPS)?
might affect EPS in an acquisition
where stock is the form of
consideration. The amount of net
income the acquired company
generates will be added to the
acquirer's existing net income,
which could have a net positive
(accretive) or negative (dilutive)
impact on EPS.
, The impact on EPS following a
share repurchase is a reduced
share count, which increases EPS.
However, there would be an
impact on net income, assuming
the share repurchase was funded
How would a using excess cash. The interest
share income that would have otherwise
repurchase been generated on that cash is no
impact earnings longer available, causing net
per share income and EPS to decrease.
(EPS)?
But the impact would be minor
since the returns on excess cash
are low, and would not offset the
positive impact the repurchase had
on EPS from the reduced share
count.
, Effective tax rate: % corporations
What is the must by in taxes
difference Effective tax rate = Taxes paid /
between the earnings before tax
effective and
marginal tax Marginal tax rate: % on the last
rates? dollar of a company's taxable
income.
Effective and marginal tax rates
differ because the effective tax
rate calculation uses pre-tax
income from the accrual-based
Why is the income statement. Since there's a
effective and difference between the taxable
marginal tax income on the income statement
rate often and taxable income shown on the
different? tax filing, the tax rates will nearly
always be different. Thus, the "Tax
Provision" line item on the income
statement rarely matches the
actual cash taxes paid to the IRS.
