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Common Finance Interview Questions (and Answers)

questionsWith the start of a new academic year, we know that finance interviews are again at the forefront of many of your minds. Over the next few months, we’ll be publishing most frequently asked technical finance interview questions and answers across a variety of topics – accounting (in this issue), valuation, corporate finance – to get you prepared.

Before we get to accounting questions, here are some interview best practices to keep in mind when getting ready for the big day.

  1. Be prepared for technical questions. Many students erroneously believe that if they are not finance/business majors, then technical questions do not apply to them. On the contrary, interviewers want to be assured that students going into the field are committed to the work they’ll be doing for the next few years, especially as many finance firms will devote considerable resources to mentor and develop their new employees.
  2. One recruiter we’ve spoken to said “while we do not expect liberal arts majors to have a deep mastery of highly technical concepts, we do expect them to understand the basic accounting and finance concepts as they relate to investment banking. Someone who can’t answer basic questions like ‘walk me through a DCF’ has not sufficiently prepared for the interview, in my opinion”.
  3. Another added, “Once a knowledge gap is identified, it’s typically very difficult to reverse the direction of the interview.”
  4. Keep each of your answers limited to 2 minutes. Longer answers may lose an interviewer, while giving them additional ammunition to go after you with more complicated question on the same topic.
  5. It’s ok to say “I don’t know” a few times during the interview. If interviewers think that you’re making up answers, they’ll continue probing you further, which will lead to more creative answers, which will lead to more complicated questions and a slow realization by you that interviewer knows that you don’t really know. This will be followed by uncomfortable silence. And no job offer.

Now, on to Accounting Questions

Accounting is the language of business, so don’t underestimate the importance of accounting questions. Some are easy, some are more challenging, but of all of them allow interviewers to gauge your knowledge level without the need to ask more complex valuation/finance questions.Below we have selected most common accounting questions you should expect to see during the recruiting process.

Q: Why do capital expenditures increase assets (PP&E), while other cash outflows, like paying salary, taxes, etc., do not create any asset, and instead instantly create an expense on the income statement that reduces equity via retained earnings?

A: Capital expenditures are capitalized because of the timing of their estimated benefits – the lemonade stand will benefit the firm for many years. The employees’ work, on the other hand, benefits the period in which the wages are generated only and should be expensed then. This is what differentiates an asset from an expense.

Q: Walk me through a cash flow statement.

A. Start with net income, go line by line through major adjustments (depreciation, changes in working capital and deferred taxes) to arrive at cash flows from operating activities.

  • Mention capital expenditures, asset sales, purchase of intangible assets, and purchase/sale of investment securities to arrive at cash flow from investing activities.
  • Mention repurchase/issuance of debt and equity and paying out dividends to arrive at cash flow from financing activities.
  • Adding cash flows from operations, cash flows from investments, and cash flows from financing gets you to total change of cash.
  • Beginning-of-period cash balance plus change in cash allows you to arrive at end-of-period cash balance.
Q: What is working capital?

A: Working capital is defined as current assets minus current liabilities; it tells the financial statement user how much cash is tied up in the business through items such as receivables and inventories and also how much cash is going to be needed to pay off short term obligations in the next 12 months.

Q: Is it possible for a company to show positive cash flows but be in grave trouble?

A: Absolutely. Two examples involve unsustainable improvements in working capital (a company is selling off inventory and delaying payables), and another example involves lack of revenues going the pipeline

Q: How is it possible for a company to show positive net income but go bankrupt?

A: Two examples include deterioration of working capital (i.e. increasing accounts receivable, lowering accounts payable), and financial shenanigans.

Q: I buy a piece of equipment, walk me through the impact on the 3 financial statements.

A: Initially, there is no impact (income statement); cash goes down, while PP&E goes up (balance sheet), and the purchase of PP&E is a cash outflow (cash flow statement)

Over the life of the asset: depreciation reduces net income (income statement); PP&E goes down by depreciation, while retained earnings go down (balance sheet); and depreciation is added back (because it is a non-cash expense that reduced net income) in the cash from operations section (cash flow statement).

Q: Why are increases in accounts receivable a cash reduction on the cash flow  statement?

A: Since our cash flow statement starts with net income, an increase in accounts receivable is an adjustment to net income to reflect the fact that the company never actually received those funds.

Q: How is the income statement linked to the balance sheet?

A:  Net income flows into retained earnings.

Q: What is goodwill?

A: Goodwill is an asset that captures excess of the purchase price over fair market value of an acquired business. Let’s walk through the following example: Acquirer buys Target for $500m in cash. Target has 1 asset: PPE with book value of $100, debt of $50m, and equity of $50m = book value (A-L) of $50m.

  • Acquirer records cash decline of $500 to finance acquisition
  • Acquirer’s PP&E increases by $100m
  • Acquirer’s debt increases by $50m
  •  Acquirer records goodwill of $450m
Q: What is a deferred tax liability and why might one be created?

A: Deferred tax liability is a tax expense amount reported on a company’s income statement that is not actually paid to the IRS in that time period, but is expected to be paid in the future. It arises because when a company actually pays less in taxes to the IRS than they show as an expense on their income statement in a reporting period.

Differences in depreciation expense between book reporting (GAAP) and IRS reporting can lead to differences in income between the two, which ultimately leads to differences in tax expense reported in the financial statements and taxes payable to the IRS.

Q: What is a deferred tax asset and why might one be created?

A: Deferred tax asset arises when a company actually pays more in taxes to the IRS than they show as an expense on their income statement in a reporting period.

  • Differences in revenue recognition, expense recognition (such as warranty expense), and net operating losses (NOLs) can create deferred tax assets.

I hope you enjoyed this article.  Please feel free to write me with any comments or recommendations at

Best regards,


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Written by Arkady Libman

Arkady co-authored many of Wall Street Prep’s training materials and has conducted corporate training for many of Wall Street Prep’s clients, including Enogex, Rosetta Resources, Hess Corporation, Silicon Valley Bank, RBC Capital Markets, Stifel Nicolaus, and FBR Capital Markets. In addition, Arkady conducts training programs at top business schools across the world, including Wharton, MIT Sloan, Wharton, Tuck, INSEAD, London Business School, and University of Michigan. Prior to joining Wall Street Prep, Arkady was an Associate within the Energy & Natural Resources of the Equity Research Group at FBR Capital Markets. Prior to joining FBRC in October 2001, Arkady was an Investment Banking Analyst within J.P. Morgan Chase’s Global Oil & Gas Group.

Leave a Comment

  1. July 6, 2017

    Zulaikha Madina Zahari

    Thank you. This helped me so much.

    • July 7, 2017
      user headshot

      Haseeb Chowdhry


  2. June 17, 2017

    Akinwunmi zainab


    pls sir wats d link to join if i want to get basic accounting questions nd your update

    • June 20, 2017
      user headshot

      Haseeb Chowdhry


      We periodically update our coursework and will provide you with email notifications. Pertaining to accounting questions that would be common, I would refer to going through the “Accounting Crash Course.”

  3. June 5, 2017


    thanks for your question and answers, it has help me improve my project issues about financial system assignment

  4. June 1, 2017


    Are you sure these are the most common questions?

    • June 1, 2017
      user headshot

      Haseeb Chowdhry

      From our discussions with investment banks and prospective candidates, we’ve made a concerted effort to cover the most common questions asked. Thanks!

  5. April 15, 2017


    thank u

  6. April 13, 2017


    Hello Sir I have a doubt in goodwill calculation, like goodwill it is reputation of company, then also we will treat it asset and keep in balance sheet with measuring in amount so how you calculate in amount.
    can i get explanation.

    • April 17, 2017
      user headshot

      Haseeb Chowdhry


      Goodwill arises when a company pays above the fair market value of the net assets of a target company in an M&A situation. It is an asset that counts for how much the acquirer “overpaid” for the target. I hope this helps – thanks!

  7. April 8, 2017

    Romya Ranjan Dash

    Precise and informative points for job seekers.

  8. March 23, 2017


    Thanks, hope it’s useful for my interviews

  9. March 21, 2017


    Precise and clear answers.

  10. February 23, 2017


    Very Informative and well written.

    Thank You

  11. February 15, 2017


    “well explained answers in short way”

  12. February 15, 2017



  13. February 15, 2017


    Thanx sir and my help in english speeking in job intarview

  14. February 11, 2017

    mounuddin ansari

    it’s really precise and understandable ans.
    thank u sir

    • February 11, 2017
      user headshot

      Haseeb Chowdhry

      Thank you!

  15. February 8, 2017


    Thank you sir.

  16. January 25, 2017


    Very Informative and well written. Thank You!

  17. January 20, 2017

    mamta sharma

    thnk u sir for the efforts u had made for the interseted readers with proper explaination of the important topics

    • January 20, 2017
      user headshot

      Haseeb Chowdhry


  18. January 19, 2017

    Vijay Gowda

    All are use full questions & Answers. Thank u

    • January 19, 2017
      user headshot

      Haseeb Chowdhry


  19. January 18, 2017


    Like Rohit Sharma I am also in need of many more such Q&A to help me in my upcoming interviews.
    I don’t know how to contact IBD for mock interviews. So in the interim your prompt help in providing many more such Q&A will be helpful.

    • January 18, 2017
      user headshot

      Haseeb Chowdhry

      Stay tuned for more content online, but I encourage you to also visit for additional interview content.

  20. December 28, 2016


    Short & simple & more helpful.
    Thank you.

    • December 29, 2016
      user headshot

      Haseeb Chowdhry


  21. December 4, 2016

    Rohit Sharma

    Can you please provide me bunch of questions that usually ask at the time of interview.

    • December 5, 2016
      user headshot

      Haseeb Chowdhry

      Rohit – I would reach out to peers who are currently working in IBD and conduct mock interviews with them – that’s the best approach!

  22. November 23, 2016

    Ambarin Anwar

    Very informative article. Its going to be of very great help in my preparations for upcoming interviews.

    • November 27, 2016
      user headshot

      Haseeb Chowdhry

      No problem – thanks!

  23. November 3, 2016

    deewakar jha

    Dear sir,

    I am pursuing my MBA in finance and currently in second year and the placements are on the doorstep. I request you to keep publishing these kind of articles along with I think, if you will write on how to answer the questions related to the resume, which really drives the interview.

    Awaiting your positive response.

    Thanks for your support.

    Deewakar Jha

    • November 4, 2016
      user headshot

      Haseeb Chowdhry

      Deewakar – there are a lot of good resources to focus on MBA interview prep – please check them out – we are focused on IBD training specifically so we can’t promise we’ll write content in line with MBA interview prep. Hope this helps!

  24. August 15, 2016


    I had been searchIng for basics to prepare myself for interview. I’m glad your article helped me .

    • August 23, 2016

      tajamul hussain

      i am going to appear in junior executive finance interview, what are the possible questions which they may ask me?????????

      • August 23, 2016
        user headshot

        Shannan Wilson

        Check out our IB Interview Prep Pack Plus for help with your interview. It includes 200+ of the most common technical questions with sample answers and 30 sample behavioral interview questions!

  25. August 14, 2016


    Short and Sweet. Very helpful.

  26. August 9, 2016

    Abdeleah Alqahtani

    Thank you very much for those informative answers.

  27. August 3, 2016

    adefioye emmanuel olushola

    Good evening,I finished my ond in banking and finance 2007,I have been into music since then till now I play lead guitar and little on keyboard,I have forgotten everything on d course I study for 3years and I was called for and interview and I don’t even know what to study please help me.what can I do please I need your help,you can flash me or send me a text on this number so I can call you back 08141685743,08055535826

    • August 4, 2016
      user headshot

      Shannan Wilson

      Hi Adefioye,
      We offer the Wall Street Prep IB Interview Prep Pack Plus which includes 200+ of the most common technical questions with sample answers and 30 sample behavioral interview questions. We also offer IB Interview Prep Pack Plus
      & The Premium Package which Everything in the IB Interview Prep Pack Plus, Complete financial modeling training program and Certification in Financial and Valuation Modeling. I hope this helps!

  28. August 1, 2016

    Byju Subhash

    This was really helpful. Thanks a lot!

  29. July 13, 2016


    this is very good.
    it is very simple and clear.
    thank you

  30. June 19, 2016


    I really appreciate your answers!! Its very useful!! Thank u!

  31. January 24, 2016



    Can you provide me resource or database, which contains similar types of questions. Liked these set of questions.


    • February 9, 2016
      user headshot

      Shannan Wilson

      Hi Kamal,
      We offer the Wall Street Prep IB Interview Prep Pack Plus which includes 200+ of the most common technical questions with sample answers and 30 sample behavioral interview questions. We also offer IB Interview Prep Pack Plus
      & The Premium Package which Everything in the IB Interview Prep Pack Plus, Complete financial modeling training program and Certification in Financial and Valuation Modeling. I hope this helps!

  32. January 3, 2016

    kanthi shanmugamnathan

    yes, i enjoyed this article….hope it ll b useful for my interviews……
    thank you.

    • January 4, 2016
      user headshot

      Haseeb Chowdhry

      Glad you liked it!

  33. December 30, 2015

    pradeep shah

    this question is really very helpful but sir please include some case study type question and please add some term and financial word because if interviewer ask some financial word and we all read but on that we forget or not prepare financial term. if you add next time this type of question . That is very helpful to us.

    • December 30, 2015
      user headshot

      Haseeb Chowdhry

      These are all great suggestions – thanks!

  34. December 1, 2015

    Ssaurabh vashistt

    Very helpful thing……Thanks for this and must say that plz add more questions in it so that we can grab the knowledge……… or plz share the site or any link where we can grab the knowledge of finance.

    • December 1, 2015
      user headshot

      Haseeb Chowdhry

      Will do – thanks!

  35. November 28, 2015

    devaraj .j

    very smart answers thank you it is useful for my life

    • November 29, 2015
      user headshot

      Haseeb Chowdhry

      Thanks so much!

  36. October 23, 2015



    Thank you so much for sharing the knowledge

    • November 10, 2015


      It helps me a lot thank you

      • November 10, 2015
        user headshot

        Haseeb Chowdhry


  37. October 20, 2015


    Very helpful.. Hoping for more posts like this!

    • October 20, 2015
      user headshot

      Haseeb Chowdhry

      Thanks Khoshali!

  38. October 18, 2015

    Asif Hossain

    Thank you!

  39. October 13, 2015


    Dear Sir/Madam

    Please send some short tips for Basic Of Accounts Interview


    • October 13, 2015
      user headshot

      Haseeb Chowdhry

      Mustaq – I think most of our basic accounting questions are covered within our basic finance questions – thanks!

  40. October 11, 2015

    Yesha Patel

    Very useful set of questions and answers. Would be great if you kindly forward many more on my personal mail Id as I am preparing for my placements.

    • October 11, 2015
      user headshot

      Haseeb Chowdhry

      I think we have you on a list that keeps you aware of the upcoming webinars we have – thanks!

  41. October 7, 2015

    Katie Roszik

    That was a great article with lots of useful information I really enjoyed reading it, thanks so much

    • October 7, 2015
      user headshot

      Haseeb Chowdhry


  42. September 30, 2015


    This is very helpful..thank u

  43. August 19, 2015

    prashanth dev

    Very much useful questions really to say ..was help full kindly add some more questions like this so that it can be helpful for many who really refer this path ..

    • August 19, 2015
      user headshot

      Haseeb Chowdhry

      Prasanth – keep on checking out our website for updates – thanks!

  44. August 9, 2015

    Surya Tej Singh

    Excellent cleared many of my doubts.thank u

  45. August 8, 2015


    It is very helpful thank you for your effort

  46. July 30, 2015


    thanks. this was very educative.

  47. July 25, 2015

    shiavm divedi

    very important knowledge. thank you sir………

  48. July 7, 2015

    santosh kumar

    It is very helpful for the people and keep doing it.

    • July 7, 2015
      user headshot

      Haseeb Chowdhry


      • July 10, 2015



        • July 10, 2015
          user headshot

          Haseeb Chowdhry

          Awesome thanks!

  49. June 29, 2015


    These questions are really good. They are essential things to know in financial reporting. Thanks for helping, would practice repeatedly.

    • June 29, 2015
      user headshot

      Haseeb Chowdhry


      • November 4, 2016

        vinoth Kumar.g

        Very useful questions thank you

        • November 4, 2016
          user headshot

          Haseeb Chowdhry

          No problem! Thanks!

  50. June 10, 2015

    Suzy Anna

    It is very very useful continue with the spirit.
    And thank

  51. May 27, 2015


    I’ve read this article over before several of my interviews and it was extremely helpful.

    Thank you!

  52. May 16, 2015

    Md. robiul Islam

    Many Many Thanks !

  53. May 13, 2015


    It’s really Good.. i enjoyed it… Thanks..

  54. April 26, 2015


    nice job, thanks

  55. April 21, 2015

    Johannes Aphane

    This is great. thanks

  56. April 18, 2015


    Thank you verymuch these basic financial qustions are very hellped me good jo ….

  57. April 15, 2015


    This article is very useful specifically for people who are looking for hard core accounting job. Request you to please provide some interview Q/A and tips for MBA Finance people who are looking job other than hard core accounting job. Thanks.

    • April 15, 2015
      user headshot

      Haseeb Chowdhry


      Look at the link I provided on 4/6 – thanks!

  58. April 12, 2015

    jyoti kshirsagar

    Wow….thankuu so muchhhh….i ws so helpful

  59. April 12, 2015


    Your article given more information and my suggestion is you can add little more information

    • April 12, 2015
      user headshot

      Haseeb Chowdhry

      Thanks Priya – stay tuned for new and exciting content!

  60. April 6, 2015


    That was a very helpful quick recap of the accounting section.
    But where are questions from Valuation and corporate finance?

  61. April 4, 2015


    it’s like refreshing the entire degree subj………… use full for us…….

  62. March 31, 2015

    Muhammad Aslam

    Massive information.thanks ……….

  63. March 16, 2015


    Financial question and answer is very much useful for me……

  64. March 16, 2015


    very fantastic article was very informative

  65. March 1, 2015


    Thanks it’s very helpful. Generally when we go for interview we usually receive a set a pratical Q and then asked to solve. Can u pls help us with such Q.

    • March 1, 2015
      user headshot

      Haseeb Chowdhry


      Try creating question ‘scenarios’ for yourself. Let’s say you have an Apple tree. How can you value that Apple tree? Stuff as simple as that will get you started and will get you to a point where you can explain a DCF very simply to a person. Thanks.


  66. February 20, 2015


    Very nice and useful collection of questions related to accounts and finance. Thanku

  67. February 12, 2015

    Sultan Ahmed Khan


  68. February 11, 2015


    Thank you so much for your valuable guidence…!

    • February 11, 2015
      user headshot

      Haseeb Chowdhry

      Not a problem – enjoy!

      • February 18, 2015


        hai its very useful.. can you plz more adding question for experience ppl.

        • February 18, 2015
          user headshot

          Haseeb Chowdhry

          Keep on the lookout for newer material – thanks!

  69. January 27, 2015


    This was awesome, perfect prep!

    Thanks so much.

    • January 27, 2015
      user headshot

      Haseeb Chowdhry

      Great to hear! Thanks!

  70. January 23, 2015

    Sunit Kumar jha

    Very valuable information for me.plz more adding question.

    Thank You

    • January 23, 2015
      user headshot

      Haseeb Chowdhry

      Not a problem – we will keep them coming!

  71. January 20, 2015



    Those are very useful and helpful answers.

    • January 21, 2015
      user headshot

      Haseeb Chowdhry

      Great to hear – thanks!

      • December 25, 2015

        reddy shekar reddy

        i want what type of question ask to the companys in the genral

        • December 29, 2015
          user headshot

          Haseeb Chowdhry

          You should ask questions about the types of work you’ll be doing in the role, the types of projects expected of you to complete, how your managers want to work with you. You also want to get an idea of the culture of the firm – is it collegiate, is there more of an emphasis on face time, etc. You want to get a feel for the firm and people b/c you will spend considerable time there – hope this helps!

  72. January 19, 2015


    The above questions are really use full.

    • January 19, 2015
      user headshot

      Haseeb Chowdhry


  73. January 15, 2015


    it’s very use full information if it is possible could u send to my mail id

    • January 15, 2015
      user headshot

      Haseeb Chowdhry


      Keep on looking for updates here – take care!


  74. December 19, 2014


    Was very helpful. Please keep adding more questions to this. 🙂

  75. December 14, 2014


    Very very very useful information. Thank you

  76. November 7, 2014


    the article is very helpful & useful. thank you. keep it up


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