Don't flame me, I searched the site, no one ever gave specific questions. Now I've covered what I consider to be "easy" accounting questions: what happens when you change a/r or a/p, cogs, accrued liabilities, deferred revs, LIFO/FIFO.
But I know harder questions can be conceived. Anyone have any examples? Do you think they could bring up pensions or anything like that? Specific examples would be appreciated.
EDIT: I'm a moron and can't read
i think you could see something like "if you are analyzing an airline and they decided to capitalize their leases instead of account for them as operating leases, how would this affect the operating cash flow" or something like that. Usually in interviews they like throwing you situations like that rather than "how do you account for accrued liabilities"
Depends on the industry you're looking at. I've valued a couple of insurance companies and the analysis of reserve requirements and changes in working capital always trip me up since your WC today is supposed to cover future needs. I don't know how that is a problem but it is a hard issue to deal with.
Today I worked on a distributor that had an interesting issue. We had a company that was acquired that had an inventory account for reserves and a write-off for obsolescence. After the acquisition, they found some inventory that was written off. What are the corrections that need to be made?
One hard one that always trips students I TA for up is:
If two companies post identical operating results, but one uses LIFO and one uses FIFO for its calculation of inventory. If the company using FIFO switches to using LIFO in an inflationary environment, who will report a higher net income going forward?
Answer: The one that has always used LIFO. If prices are going up, then when the one that HAD been using the highest prices is now using its lowest prices, resulting in a much larger Gross Margin, and as a result a far larger tax bill than the one that had always used FIFO.
Um what? Confused by what you mean. If they're both using LIFO now, shouldn't it be the same going forward?
Company A uses FIFO. Company B uses LIFO. Company A switches from FIFO to LIFO. This is where the change arises.
Y
Y
gross
More complex accounting interview questions.. Help asap (Originally Posted: 09/15/2010)
superday with BB this week. I know the vault/M&I/WSO guides like the back of my hand. Problem is, I heard this particular office asks more complex accounting questions. Please send some my way. Thx in advance.
Also, if you have tough corp finance q's that'd be great too.
1
Why don't you google it or look at your FSA textbook?
ok, all of them make sense. im just wondering, how would interest capitalization affect all 3 fin statements?
Obviously higher asset base Higher net income in the initial reporting period (lower interest expense), lower net income in subsequent periods (higher depreciation expense). Overall CF should be the same but the mix between CFO and CFI will differ.
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