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Accounting Questions
The three financial statements, how they link, and why every IB interview starts here.
All topics
Accounting
Enterprise Value vs Equity Value
Valuation Methodologies
Discounted Cash Flow
Mergers & Acquisitions
Leveraged Buyouts
Markets & Why Banking
Brain Teasers & Mental Math
Fit & Behavioural
all
easy
medium
hard
40 questions
easy
Walk me through the three financial statements.
easy
What is the difference between a flow statement and a stock statement?
easy
What is the difference between an expense and a cash outflow?
easy
Why does the balance sheet balance?
easy
What is the difference between COGS and operating expenses?
easy
What is goodwill and when is it created?
easy
What is working capital and why does it matter?
easy
What are the three sections of the cash flow statement?
easy
What's the difference between accrual accounting and cash accounting?
easy
How do you calculate net income?
easy
How does net income flow into retained earnings?
easy
What is deferred revenue?
medium
If depreciation goes up by $10 and the tax rate is 40%, walk me through the three statements.
medium
Which of the three financial statements would you pick if you could only have one, and why?
medium
If inventory goes up by $100 using cash, walk me through the three statements.
medium
If accounts receivable goes up by $10 and the tax rate is 40%, walk me through the three statements.
medium
If accounts payable goes up by $10, walk me through the three statements.
medium
A customer prepays $100 for a service you haven't delivered. Walk me through the three statements.
medium
A company pays a $20 cash dividend. Walk me through the three statements.
medium
A company accrues $10 of wages that will be paid next period. Tax rate is 40%. Walk me through the three statements.
medium
A company writes down $30 of inventory. Tax rate is 40%. Walk me through the three statements.
medium
A company issues $50 of stock-based compensation. Tax rate is 40%. Walk me through the three statements.
medium
A company records a $40 goodwill impairment. Assume it's non-tax-deductible. Walk me through the three statements.
medium
A customer pays $50 of outstanding AR. Walk me through the three statements.
medium
A company sells equipment with a $60 book value for $80 cash. Tax rate is 40%. Walk me through the three statements.
medium
Why is depreciation added back on the cash flow statement?
medium
Give me an example of a company with positive net income but negative cash flow from operations.
medium
What is the cash conversion cycle?
medium
What's the difference between accounts payable and accrued expenses?
medium
What is a deferred tax liability and how does it arise?
medium
What is a deferred tax asset and how does it arise?
medium
What is a valuation allowance on a DTA?
medium
Why is an increase in inventory a use of cash?
hard
A company buys a $100 machine with $50 cash and $50 debt. Walk me through the three statements on day one.
hard
A company buys $100 of inventory on credit, then sells it for $150 cash. Tax rate is 40%. Walk me through the three statements for both transactions combined.
hard
Company A acquires Company B for $150 cash. Company B's net identifiable assets are worth $100 at fair value. Walk me through Company A's balance sheet on day one.
hard
A company has $200 of NOLs and earns $100 of pre-tax income in the current year. Tax rate is 40%. Walk me through the impact on the three statements this year.
hard
Company A acquires 70% of Company B for $70 cash. Company B's net assets are worth $100. Walk me through the consolidation on day one.
hard
A company takes out $200 of debt at 10% interest and immediately spends $200 on PP&E with a 10-year useful life. Walk me through year one impact on the three statements. Tax rate 40%.
hard
A company writes down PP&E by $100 (non-cash). It then borrows $50 to pay a $50 dividend in the same period. Tax rate 40%, write-down tax-deductible. Walk me through the three statements combined.
