Accounting interview questions
18 questions. The accounting questions asked in investment banking and private equity interviews. Each page takes one spoken answer from weak to strong and shows the numbers behind it.
- How do the three financial statements link together?
- Depreciation goes up by $10. Walk me through the three statements.
- A company raises $100 of debt to buy equipment. Walk me through the three statements at the time of purchase.
- What is working capital, and why does it matter for cash flow?
- What is EBITDA, and why do bankers use it?
- A company buys $10 of inventory with cash. Walk me through the three statements.
- A customer pays $100 upfront for a year of service. What happens on the three statements on day one, and after the year?
- A company writes down an asset by $100. Walk me through the three statements.
- A company makes a $100 sale on credit. What happens on the three statements?
- A company records $10 of stock-based compensation. Walk me through the three statements.
- What is PIK interest, and how does $10 of it flow through the three statements?
- If you could look at only one financial statement to judge a company, which would you choose and why?
- How can a company be profitable and still run out of cash?
- What is goodwill, and how is it created?
- When does a company capitalize a cost instead of expensing it, and why does it matter?
- What is the difference between LIFO and FIFO, and how does the choice change the financial statements?
- What is a deferred tax liability, and where does it come from?
- What is the difference between an operating lease and a finance lease?
What these questions test
- Whether you can carry one change through the income statement, the cash flow statement and the balance sheet, in that order, and finish with a balance sheet that balances.
- Whether you know which items are cash and which are not, and why net income and cash flow differ.
- Whether you state your tax rate and your assumptions before you start, instead of halfway through.
Three statement accounting questions: 12 worked answersFree technical questionsAll interview questions
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