Guide

Accounting

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

The three financial statements and how they connect are by far the most tested area. Interviewers expect you to walk through the income statement, balance sheet, and cash flow statement, then explain how a change in one flows through the others.

Q: How well do I need to know the three financial statements?

You need to know them cold. Be prepared to build a simple three-statement model from scratch, explain every major line item, and trace how transactions like depreciation, debt issuance, or inventory changes flow across all three statements.

Q: Will I be asked about EBITDA in banking interviews?

Yes. EBITDA is central to valuation and credit analysis. You should know how to calculate it from both the income statement and cash flow statement, understand its limitations, and explain why bankers prefer it over net income for comparing companies.

Q: How should I prepare for accounting questions if I have a non-finance background?

Start with the income statement, then learn the balance sheet and cash flow statement. Focus on understanding the linkages between statements rather than memorizing definitions. Practice walking through transactions and their multi-statement impact.

Q: Do interviewers ask about deferred taxes?

Deferred tax questions appear at top banks and are considered a differentiator. Understand the difference between book and tax treatment, how deferred tax assets and liabilities arise, and their balance sheet and cash flow implications.

Q: What is the most common accounting interview question?

Walk me through how the three financial statements are linked. This single question tests your understanding of accrual accounting, cash versus non-cash items, and the fundamental architecture of financial reporting. Have a crisp 60-second answer ready.

Q: Are working capital questions common in IB interviews?

Yes. Interviewers frequently ask how changes in working capital affect cash flow, what drives increases or decreases in accounts receivable and inventory, and why working capital matters for valuation and deal modeling.

16 articles

Financial statements, EBITDA, working capital, and the accounting fundamentals every banker needs cold.

Article	Time
DTA & DTL Deferred tax assets and liabilities explained: the DTA and DTL logic that actually gets tested in IB interviews, minus the accounting noise.	4 min
How To Analyze A Company In 5 Minutes The ordered read bankers run on a 10-K, and the sixty-second verdict you say out loud when an MD asks whether it is a good business.	8 min
Balance Sheet Master the balance sheet: assets, liabilities, equity, and the accounting equation. Essential for IB interviews and valuation.	7 min
Assets & Liabilities Assets and liabilities under US GAAP: what a company owns versus what it owes, and how the accounting equation keeps the balance sheet in balance.	8 min
D&A Master D&A: how depreciation and amortization work, their formulas, impact on cash flow, and why they matter in valuation and M&A.	4 min
Margins Master the margin ladder: gross, operating, and net margins straight off the income statement, plus EBITDA margin, the comparison rung bankers add.	6 min
Income Statement Master the income statement: revenue, expenses, and the path to net income. Essential for IB interviews and valuation.	5 min
Cash Flow Statement Master the cash flow statement: operating, investing, and financing activities explained for investment banking interviews.	6 min
Overview The 3 financial statements explained: what the income statement, balance sheet, and cash flow statement each tell you, and how they link in an IB interview.	9 min
Net Income Net income explained: the bottom line after all expenses, and why it diverges from cash. Formula, components, and the check against cash from operations.	3 min
Working Capital Working capital measures short-term liquidity. Learn how to calculate it, interpret it, and explain why it matters in DCF and M&A.	4 min
EBIT EBIT measures operating profit before financing costs and taxes. Learn the formula, components, and why bankers use it for valuation.	3 min
Revenue Revenue defined: the starting point of every financial statement. Learn what counts, how it's recognized, and why it matters in finance.	4 min
Cash & Equivalents Learn what cash means in finance, what counts as cash and cash equivalents, and why it matters for valuation and financial analysis.	4 min
Profitable But Negative Cash Flow A real Bank of America Superday question, fully worked: the three reasons profit and cash split, the reverse-trap follow-up, and Netflix's 2019 numbers.	6 min
EBITDA EBITDA explained: formula, calculation, and why bankers use it. Learn the earnings metric that drives deal valuations.	3 min

Common questions

What accounting topics come up most in IB interviews?

How well do I need to know the three financial statements?

Will I be asked about EBITDA in banking interviews?

How should I prepare for accounting questions if I have a non-finance background?

Do interviewers ask about deferred taxes?

What is the most common accounting interview question?

Are working capital questions common in IB interviews?