Walk through the 3 financial statements when PP&E sells for $150mm when book value is $100mm. Assume a 20% tax rate.

A $50mm pre-tax gain increases net income by $40mm after $10mm taxes; on the CFS, the gain is reclassed from CFO to CFI (+$150mm proceeds), raising cash $140mm; PP&E falls $100mm, so assets and equity each rise $40mm.

You decide to start a lemonade stand and raise $500 of debt at a 10% interest rate. The lemonade stand has a 5-year useful life. Walk me through the impact on the three financial statements.

At inception, PP&E and debt each rise by $500 with no income statement impact; each subsequent year, $100 depreciation and $50 interest reduce net income by $90 (after 40% tax), while cash rises $10 as the non-cash depreciation is added back.

Define calendarization.

Calendarization is the process of converting a company's fiscal-year financial data into calendar-year equivalents by weighting overlapping fiscal periods proportionally, enabling apples-to-apples comparisons across peers with different fiscal year-ends.

Which one has the most impact on free cash flow: revenue up 10, depreciation down 10, or capex down 10?

CapEx down 10 has the greatest impact, boosting FCF by a full 10, since it flows dollar-for-dollar with no tax friction, whereas revenue up 10 only adds 6 after tax and depreciation down 10 actually hurts FCF by 4.

What happens to valuation when we move from straight-line depreciation to an accelerated depreciation schedule?

Valuation increases because accelerated depreciation front-loads tax shields into earlier periods, and due to the time value of money, receiving the same total tax benefit sooner results in a higher present value of free cash flows.

Why do you subtract the change in Working Capital when calculating Free Cash Flow to the Firm (FCFF)?

Because NOPAT is an accrual measure, and an increase in net working capital means cash was tied up in operations (e.g., uncollected receivables or inventory buildup) that the income statement doesn't reflect, so you subtract it to convert accrual profits into actual cash.

What is NOI? Is depreciation included in NOI?

NOI (Net Operating Income) is a property's total revenue minus operating expenses, measuring its cash-generating ability from operations; depreciation is not included because it is a non-cash accounting charge, not an actual operating expense.

Given items such as an inventory write-down, a dividend payment, and buying back debt, explain how each impacts all three financial statements simultaneously.

An inventory write-down reduces net income, lowers inventory and retained earnings on the balance sheet, and is added back as a non-cash charge in CFO; a dividend bypasses the income statement, reduces cash and retained earnings, and appears in CFF; a debt buyback at par also bypasses the income statement, reduces cash and debt on the balance sheet, and appears in CFF.

If accounts payable days goes from 60 to 90, how does that affect your valuation in a DCF?

Increasing AP days from 60 to 90 reduces net working capital, creating a one-time boost to free cash flow in the transition year, which increases the present value of cash flows and raises your DCF valuation.

What is the impact of $50 of depreciation expense at a 20% tax rate?

Depreciation of $50 at a 20% tax rate reduces net income by $40 but increases cash by $10, since the $50 non-cash charge is added back on the cash flow statement, netting a $10 tax shield.

What happens to the financial statements when the market value of debt of a company falls?

Under standard accounting, nothing happens to any of the three financial statements because debt is carried at amortized cost, not market value; the decline only appears in footnote disclosures unless the company elected the fair value option.

Given a coffee shop chain's income statement and balance sheet, what observations would you make? Consider historical trends, potential for a dividend recapitalization, and acquisitions, and comment on the forecast.

Analyze revenue growth (organic vs. acquisitions), margin trends driven by commodity/labor costs, balance sheet leverage capacity for a dividend recap at 4-5x EBITDA, goodwill indicating past acquisitions, and whether the forecast's growth and margin assumptions are operationally supported.

Walk through the 3 financial statements when PP&E sells for $150mm when book value is $100mm. Assume a 20% tax rate.

A $50mm pre-tax gain increases net income by $40mm after $10mm taxes; on the CFS, the gain is reclassed from CFO to CFI (+$150mm proceeds), raising cash $140mm; PP&E falls $100mm, so assets and equity each rise $40mm.

You decide to start a lemonade stand and raise $500 of debt at a 10% interest rate. The lemonade stand has a 5-year useful life. Walk me through the impact on the three financial statements.

At inception, PP&E and debt each rise by $500 with no income statement impact; each subsequent year, $100 depreciation and $50 interest reduce net income by $90 (after 40% tax), while cash rises $10 as the non-cash depreciation is added back.

Define calendarization.

Calendarization is the process of converting a company's fiscal-year financial data into calendar-year equivalents by weighting overlapping fiscal periods proportionally, enabling apples-to-apples comparisons across peers with different fiscal year-ends.

Which one has the most impact on free cash flow: revenue up 10, depreciation down 10, or capex down 10?

CapEx down 10 has the greatest impact, boosting FCF by a full 10, since it flows dollar-for-dollar with no tax friction, whereas revenue up 10 only adds 6 after tax and depreciation down 10 actually hurts FCF by 4.

What happens to valuation when we move from straight-line depreciation to an accelerated depreciation schedule?

Valuation increases because accelerated depreciation front-loads tax shields into earlier periods, and due to the time value of money, receiving the same total tax benefit sooner results in a higher present value of free cash flows.

Why do you subtract the change in Working Capital when calculating Free Cash Flow to the Firm (FCFF)?

Because NOPAT is an accrual measure, and an increase in net working capital means cash was tied up in operations (e.g., uncollected receivables or inventory buildup) that the income statement doesn't reflect, so you subtract it to convert accrual profits into actual cash.

What is NOI? Is depreciation included in NOI?

NOI (Net Operating Income) is a property's total revenue minus operating expenses, measuring its cash-generating ability from operations; depreciation is not included because it is a non-cash accounting charge, not an actual operating expense.

Given items such as an inventory write-down, a dividend payment, and buying back debt, explain how each impacts all three financial statements simultaneously.

An inventory write-down reduces net income, lowers inventory and retained earnings on the balance sheet, and is added back as a non-cash charge in CFO; a dividend bypasses the income statement, reduces cash and retained earnings, and appears in CFF; a debt buyback at par also bypasses the income statement, reduces cash and debt on the balance sheet, and appears in CFF.

If accounts payable days goes from 60 to 90, how does that affect your valuation in a DCF?

Increasing AP days from 60 to 90 reduces net working capital, creating a one-time boost to free cash flow in the transition year, which increases the present value of cash flows and raises your DCF valuation.

What is the impact of $50 of depreciation expense at a 20% tax rate?

Depreciation of $50 at a 20% tax rate reduces net income by $40 but increases cash by $10, since the $50 non-cash charge is added back on the cash flow statement, netting a $10 tax shield.

What happens to the financial statements when the market value of debt of a company falls?

Under standard accounting, nothing happens to any of the three financial statements because debt is carried at amortized cost, not market value; the decline only appears in footnote disclosures unless the company elected the fair value option.

Given a coffee shop chain's income statement and balance sheet, what observations would you make? Consider historical trends, potential for a dividend recapitalization, and acquisitions, and comment on the forecast.

Analyze revenue growth (organic vs. acquisitions), margin trends driven by commodity/labor costs, balance sheet leverage capacity for a dividend recap at 4-5x EBITDA, goodwill indicating past acquisitions, and whether the forecast's growth and margin assumptions are operationally supported.

Question Bank

Accounting Interview Questions

Q: How many accounting questions does OFFERGOBLIN have?

OFFERGOBLIN's full question bank contains over 3,500 verified Wall Street interview questions, with accounting forming one of the largest technical categories. Each question is tagged with the bank, round, and topic so candidates can drill the exact subset they need.

Q: What accounting topics show up most in IB interviews?

The three financial statements and how they link, working capital and its impact on cash flow, EBITDA versus net income, depreciation and amortization mechanics, deferred taxes, and the accounting equation. Bulge bracket first rounds lean on the basics. Elite boutiques and superdays go deeper into edge cases.

Q: How should I practice accounting for IB interviews?

Use OFFERGOBLIN's GOBLINMODE adaptive engine to drill accounting under the same conditions as a live interview — see the question, answer it out loud, reveal the structured answer, mark Know or Don't Know, advance to the next card. The engine resurfaces what you got wrong with 20× the weight of mastered material.

The accounting questions OFFERGOBLIN has seen at bulge brackets, elite boutiques, and middle-market banks. Three financial statements, working capital, EBITDA bridges, and accounting equation traps.

Accounting is the entry checkpoint for every investment banking interview. If a candidate cannot link the three statements, walk through how depreciation flows, or explain working capital, the interviewer stops and the round is over.

The questions in OFFERGOBLIN's accounting category cover the full surface area: balance sheet construction, income statement build, cash flow statement mechanics, EBITDA vs net income, working capital, deferred taxes, revenue recognition, and the accounting equation. Each question is tagged by bank, round, and difficulty, and answers are rendered in OFFERGOBLIN's six-section structured format — Direct Response, Intuition, Watch, Objective, Mechanics, Script.

Sample Accounting Interview Questions

A short sample from the full bank. Tap an answer to reveal it.

Bank of America/ Superday/ Energy
Walk through the 3 financial statements when PP&E sells for $150mm when book value is $100mm. Assume a 20% tax rate.
A $50mm pre-tax gain increases net income by $40mm after $10mm taxes; on the CFS, the gain is reclassed from CFO to CFI (+$150mm proceeds), raising cash $140mm; PP&E falls $100mm, so assets and equity each rise $40mm.
Work full answer in app
Bank of America/ 1st Round/ Technology
You decide to start a lemonade stand and raise $500 of debt at a 10% interest rate. The lemonade stand has a 5-year useful life. Walk me through the impact on the three financial statements.
At inception, PP&E and debt each rise by $500 with no income statement impact; each subsequent year, $100 depreciation and $50 interest reduce net income by $90 (after 40% tax), while cash rises $10 as the non-cash depreciation is added back.
Work full answer in app
Citi/ 1st Round
Define calendarization.
Calendarization is the process of converting a company's fiscal-year financial data into calendar-year equivalents by weighting overlapping fiscal periods proportionally, enabling apples-to-apples comparisons across peers with different fiscal year-ends.
Work full answer in app
Evercore/ Superday/ Technology
Which one has the most impact on free cash flow: revenue up 10, depreciation down 10, or capex down 10?
CapEx down 10 has the greatest impact, boosting FCF by a full 10, since it flows dollar-for-dollar with no tax friction, whereas revenue up 10 only adds 6 after tax and depreciation down 10 actually hurts FCF by 4.
Work full answer in app
Credit Suisse
What happens to valuation when we move from straight-line depreciation to an accelerated depreciation schedule?
Valuation increases because accelerated depreciation front-loads tax shields into earlier periods, and due to the time value of money, receiving the same total tax benefit sooner results in a higher present value of free cash flows.
Work full answer in app
Morgan Stanley
Why do you subtract the change in Working Capital when calculating Free Cash Flow to the Firm (FCFF)?
Because NOPAT is an accrual measure, and an increase in net working capital means cash was tied up in operations (e.g., uncollected receivables or inventory buildup) that the income statement doesn't reflect, so you subtract it to convert accrual profits into actual cash.
Work full answer in app
Bank of America/ 1st Round/ REGL
What is NOI? Is depreciation included in NOI?
NOI (Net Operating Income) is a property's total revenue minus operating expenses, measuring its cash-generating ability from operations; depreciation is not included because it is a non-cash accounting charge, not an actual operating expense.
Work full answer in app
Citi/ 1st Round
Given items such as an inventory write-down, a dividend payment, and buying back debt, explain how each impacts all three financial statements simultaneously.
An inventory write-down reduces net income, lowers inventory and retained earnings on the balance sheet, and is added back as a non-cash charge in CFO; a dividend bypasses the income statement, reduces cash and retained earnings, and appears in CFF; a debt buyback at par also bypasses the income statement, reduces cash and debt on the balance sheet, and appears in CFF.
Work full answer in app
Goldman Sachs
If accounts payable days goes from 60 to 90, how does that affect your valuation in a DCF?
Increasing AP days from 60 to 90 reduces net working capital, creating a one-time boost to free cash flow in the transition year, which increases the present value of cash flows and raises your DCF valuation.
Work full answer in app
Bank of America/ Superday/ Technology
What is the impact of $50 of depreciation expense at a 20% tax rate?
Depreciation of $50 at a 20% tax rate reduces net income by $40 but increases cash by $10, since the $50 non-cash charge is added back on the cash flow statement, netting a $10 tax shield.
Work full answer in app
Goldman Sachs
What happens to the financial statements when the market value of debt of a company falls?
Under standard accounting, nothing happens to any of the three financial statements because debt is carried at amortized cost, not market value; the decline only appears in footnote disclosures unless the company elected the fair value option.
Work full answer in app
Barclays/ Superday/ Generalist
Given a coffee shop chain's income statement and balance sheet, what observations would you make? Consider historical trends, potential for a dividend recapitalization, and acquisitions, and comment on the forecast.
Analyze revenue growth (organic vs. acquisitions), margin trends driven by commodity/labor costs, balance sheet leverage capacity for a dividend recap at 4-5x EBITDA, goodwill indicating past acquisitions, and whether the forecast's growth and margin assumptions are operationally supported.
Work full answer in app

Frequently Asked Questions

How many accounting questions does OFFERGOBLIN have?

What accounting topics show up most in IB interviews?

How should I practice accounting for IB interviews?

Sample Accounting Interview Questions

Frequently Asked Questions

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