Accounting Fundamentals

Accounting Fundamentals

Quick Reference – Accounting Interview Questions

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Abbreviations / Legend

IS / BS Changes

Cash Flow Statement Changes

Revenue

Deferred Income Taxes

GP: Gross Profit

OI: Operating Income

PTI: Pre-Tax Income

NI: Net Income

IS: Revenue, GP, OI, PTI, NI

CFS: NI, CFO, NCIC

BS: Cash, SE

WD: Write-Down

WC: Working Capital

CFO: Cash Flow from Operations

IS: GP, OI, PTI, NI

CFS: NI, WC, CFO, NCIC

BS: Cash, Inventory, SE

CapEx: Capital Expenditures

CFI: Cash Flow from Investing

CFF: Cash Flow from Financing

NCIC: Net Change in Cash

AR: Accounts Receivable

AP: Accounts Payable

PP&E: Plants, Property &

Equipment

DTA: Deferred Tax Asset

DTL: Deferred Tax Liability

SE: Shareholders’ Equity

When you get these questions in

interviews, always start with

Income Statement changes, then

move to the Cash Flow Statement,

then finish with the Balance Sheet

to make sure both sides balance.

Change the items listed next to

“BS:” in each box to make the

Balance Sheet balance.

The same line items change (but

with opposite signs) for the inverse

of each change listed here as well

(e.g. Purchase Shares rather than

Issue New Shares).

COGS

Operating Expenses

IS: OI, PTI, NI

CFS: NI, CFO, NCIC

BS: Cash, SE

Depreciation

IS: OI, PTI, NI

CFS: NI, Depreciation, CFO, NCIC

BS: Cash, PP&E, SE

Asset/Liability Write-Down

IS: PTI, NI

CFS: NI, WD, CFO, NCIC

BS: Cash, Asset/Liability, SE

AR (See Note) or Inventory

IS: No Changes

CFS: WC, CFO, NCIC

BS: Cash, AR or Inventory

AP (See Note) or Deferred Rev.

IS: No Changes

CFS: WC, CFO, NCIC

BS: Cash, AP or Deferred Revenue

Accrued Expenses

IS: OI, PTI, NI

CFS: NI, WC, CFO, NCIC

BS: Cash, Accrued Expenses, SE

IS: No Changes

CFS: Def. Taxes, CFO, NCIC

BS: Cash, DTA or DTL (not both)

Capital Expenditures

IS: No Changes

CFS: CapEx, CFI, NCIC

BS: Cash, PP&E

Buy Investments

IS: No Changes

CFS:...