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

Net income increases $40mm, cash increases $140mm, and total assets and shareholders' equity each increase $40mm. The gain is $50mm: the $150mm sale price less the $100mm book value, which is what the asset is carried at on the balance sheet after accumulated depreciation. At a 20% tax rate that gain adds $40mm to net income and sends $10mm out the door as tax. Cash picks up the full $150mm of proceeds less that $10mm. The balance sheet still balances, because cash is up $140mm while the PP&E line comes off at its $100mm book value.

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 the income statement doesn't move: you borrow $500 and spend it on the stand, so on the balance sheet PP&E (property, plant and equipment, the long-lived physical assets) goes up $500 and debt goes up $500. In Year 1, $100 of depreciation and $50 of interest cut pre-tax income by $150. After a 25% tax rate that is $112.50. Assuming the loss saves taxes now, cash falls only $12.50, because depreciation is a non-cash expense and gets 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 7.50 after tax and depreciation down 10 actually hurts FCF by 2.50.

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

Valuation rises, assuming the accelerated schedule applies for tax and the company pays taxes. Total depreciation over the asset's life stays the same. Accelerated depreciation moves more of it into the early years, so the tax savings arrive sooner, and cash received sooner is worth more in present value. Reported net income is lower in the early years, but cash flow is higher, and a DCF values cash flow, not net income.

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.

The inventory write-down is an expense on the income statement. It lowers net income and gets added back in cash flow from operations, because no cash leaves. On the balance sheet it lowers inventory, lowers retained earnings by the after-tax amount and raises cash by the tax saving. The dividend payment and the debt buyback at face value both skip the income statement. Each one shows up only as a cash outflow in cash flow from financing, with a matching drop on the balance sheet: retained earnings fall for the dividend, and debt falls for the buyback.

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

Valuation rises. When accounts payable (AP) days move from 60 to 90, the company pays its suppliers 30 days later. The AP balance steps up and releases cash once, in the year the change happens. That one-time lift to unlevered free cash flow (the cash the business makes before any payments to lenders or shareholders) increases the present value. Once days hold at 90, the extra cash does not repeat each year.

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 the standard treatment, nothing changes on any of the three financial statements. Debt is carried at amortized cost: the amount borrowed, adjusted over time for any issuance discount or premium. The price the bonds trade at does not enter that number. The fall in market value matters for valuation. It creates no gain, no change in interest expense and no cash movement until the company actually buys the debt back.

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.

Net income increases $40mm, cash increases $140mm, and total assets and shareholders' equity each increase $40mm. The gain is $50mm: the $150mm sale price less the $100mm book value, which is what the asset is carried at on the balance sheet after accumulated depreciation. At a 20% tax rate that gain adds $40mm to net income and sends $10mm out the door as tax. Cash picks up the full $150mm of proceeds less that $10mm. The balance sheet still balances, because cash is up $140mm while the PP&E line comes off at its $100mm book value.

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 the income statement doesn't move: you borrow $500 and spend it on the stand, so on the balance sheet PP&E (property, plant and equipment, the long-lived physical assets) goes up $500 and debt goes up $500. In Year 1, $100 of depreciation and $50 of interest cut pre-tax income by $150. After a 25% tax rate that is $112.50. Assuming the loss saves taxes now, cash falls only $12.50, because depreciation is a non-cash expense and gets 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 7.50 after tax and depreciation down 10 actually hurts FCF by 2.50.

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

Valuation rises, assuming the accelerated schedule applies for tax and the company pays taxes. Total depreciation over the asset's life stays the same. Accelerated depreciation moves more of it into the early years, so the tax savings arrive sooner, and cash received sooner is worth more in present value. Reported net income is lower in the early years, but cash flow is higher, and a DCF values cash flow, not net income.

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.

The inventory write-down is an expense on the income statement. It lowers net income and gets added back in cash flow from operations, because no cash leaves. On the balance sheet it lowers inventory, lowers retained earnings by the after-tax amount and raises cash by the tax saving. The dividend payment and the debt buyback at face value both skip the income statement. Each one shows up only as a cash outflow in cash flow from financing, with a matching drop on the balance sheet: retained earnings fall for the dividend, and debt falls for the buyback.

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

Valuation rises. When accounts payable (AP) days move from 60 to 90, the company pays its suppliers 30 days later. The AP balance steps up and releases cash once, in the year the change happens. That one-time lift to unlevered free cash flow (the cash the business makes before any payments to lenders or shareholders) increases the present value. Once days hold at 90, the extra cash does not repeat each year.

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 the standard treatment, nothing changes on any of the three financial statements. Debt is carried at amortized cost: the amount borrowed, adjusted over time for any issuance discount or premium. The price the bonds trade at does not enter that number. The fall in market value matters for valuation. It creates no gain, no change in interest expense and no cash movement until the company actually buys the debt back.

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.
Net income increases $40mm, cash increases $140mm, and total assets and shareholders' equity each increase $40mm. The gain is $50mm: the $150mm sale price less the $100mm book value, which is what the asset is carried at on the balance sheet after accumulated depreciation. At a 20% tax rate that gain adds $40mm to net income and sends $10mm out the door as tax. Cash picks up the full $150mm of proceeds less that $10mm. The balance sheet still balances, because cash is up $140mm while the PP&E line comes off at its $100mm book value.
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 the income statement doesn't move: you borrow $500 and spend it on the stand, so on the balance sheet PP&E (property, plant and equipment, the long-lived physical assets) goes up $500 and debt goes up $500. In Year 1, $100 of depreciation and $50 of interest cut pre-tax income by $150. After a 25% tax rate that is $112.50. Assuming the loss saves taxes now, cash falls only $12.50, because depreciation is a non-cash expense and gets 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 7.50 after tax and depreciation down 10 actually hurts FCF by 2.50.
Work full answer in app
Credit Suisse
What happens to valuation when we move from straight-line depreciation to an accelerated depreciation schedule?
Valuation rises, assuming the accelerated schedule applies for tax and the company pays taxes. Total depreciation over the asset's life stays the same. Accelerated depreciation moves more of it into the early years, so the tax savings arrive sooner, and cash received sooner is worth more in present value. Reported net income is lower in the early years, but cash flow is higher, and a DCF values cash flow, not net income.
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.
The inventory write-down is an expense on the income statement. It lowers net income and gets added back in cash flow from operations, because no cash leaves. On the balance sheet it lowers inventory, lowers retained earnings by the after-tax amount and raises cash by the tax saving. The dividend payment and the debt buyback at face value both skip the income statement. Each one shows up only as a cash outflow in cash flow from financing, with a matching drop on the balance sheet: retained earnings fall for the dividend, and debt falls for the buyback.
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?
Valuation rises. When accounts payable (AP) days move from 60 to 90, the company pays its suppliers 30 days later. The AP balance steps up and releases cash once, in the year the change happens. That one-time lift to unlevered free cash flow (the cash the business makes before any payments to lenders or shareholders) increases the present value. Once days hold at 90, the extra cash does not repeat each year.
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 the standard treatment, nothing changes on any of the three financial statements. Debt is carried at amortized cost: the amount borrowed, adjusted over time for any issuance discount or premium. The price the bonds trade at does not enter that number. The fall in market value matters for valuation. It creates no gain, no change in interest expense and no cash movement until the company actually buys the debt back.
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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