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Accounting Technical Answer Guide
- 228 worked answers
- 35 frameworks
263 source prompts in the workbook
View workbook details →Firm-labeled questions, recorded rounds and worked answers. Collected from 2020 onward. Pick your bank and practice out loud.
Independent practice. Not affiliated with the firms.
Free, no signup. Questions are labeled by firm and collected from 2020 onward. The worked answers are our own. Independent practice, not affiliated with the firms.
$100 million of R&D - compare the statements when it is expensed versus capitalized, assuming a 25% tax rate.
Say your answer out loud first, then check it.
Treat this as a simplified comparison, not a choice every accounting rule allows. Assume the $100M is paid in cash, capitalization is permitted, and a 25% cash tax benefit follows the book expense. For the capitalized case, use five-year straight-line amortization starting in year one.
Expense $100M. Pre-tax income falls $100M, cash taxes fall $25M, and net income falls $75M. CFO and cash fall $75M; retained earnings fall $75M.
Amortize $20M. Net income falls $15M after tax. Add back $20M of amortization: CFO rises $5M. CFI falls $100M, so total cash falls $95M.
The balance sheet adds an $80M net intangible asset and loses $95M cash. Net assets and retained earnings both fall $15M. Compared with expensing, CFO is $80M higher, but cash is $20M lower under these tax assumptions.
Interview check: tax treatment can differ from book treatment. If the cash deduction is the same in both cases, the total cash outflow is the same; do not assume a book-accounting change creates cash.
65 prompts in the firm bank, with worked answers and frameworks you keep and edit in Excel. Answer mix: 40 worked answers, 25 frameworks.
$100 revenue, 20% EBITDA margin, costs 50/50 fixed vs. variable; volume increases 10%. Find EBITDA.
Say your answer out loud first, then check it.
Separate fixed and variable costs before applying volume growth.
$100 revenue at a 20% EBITDA margin means $20 EBITDA and $80 of costs.
A 50/50 split means $40 fixed and $40 variable costs.
Revenue becomes $110. Variable costs become $44; fixed costs stay $40. EBITDA is $26, up 30%.
57 prompts in the firm bank, with worked answers and frameworks you keep and edit in Excel. Answer mix: 38 worked answers, 13 frameworks, 6 dated research items.
7x EV/EBITDA, $100M EBITDA, $100M cash, $300M debt and 100M shares outstanding. What is the share price?
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Interview check: move from EV to equity value by subtracting debt and adding cash.
331 prompts in the firm bank, with worked answers and frameworks you keep and edit in Excel. Answer mix: 230 worked answers, 81 frameworks, 20 dated research items.
Interest expense is 10% on $100 of debt, and the tax rate is 40%. Walk through the three statements.
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Assume the $10 interest is paid in cash, there are enough taxable profits to use the tax shield now, and there are no other changes.
$10 of interest expense lowers pre-tax income by $10. At a 40% tax rate, taxes fall by $4, so net income falls by $6.
Start with net income down $6. Interest was paid in cash, so there is no add-back. Cash falls by $6.
Cash falls by $6 on the asset side and retained earnings falls by $6 on the equity side. The balance sheet balances under those assumptions.
Interview check: $10 × (1 - 40%) = $6 after tax.
74 prompts in the firm bank, with worked answers and frameworks you keep and edit in Excel. Answer mix: 53 worked answers, 17 frameworks, 4 dated research items.
Which has a bigger effect on valuation: a 1% change in the perpetuity growth rate or a 1% change in WACC?
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Both move the terminal-value spread. WACC also changes discount factors; growth changes the terminal cash flow. Compare the full DCF.
In the Gordon growth formula, TV = FCF × (1 + g) / (WACC - g). A one-percentage-point move in either WACC or g changes the spread by the same absolute amount when moved in opposite directions. Growth also changes the (1 + g) term.
WACC discounts each forecast cash flow and the terminal value. Growth does not change those discount factors, but it changes the terminal cash flow and value.
There is no fixed winner. WACC also changes how you discount the forecast, but growth changes the terminal cash flow as well as the WACC - g spread in this formula. Ask for the base rates, forecast period, cash-flow mix, and direction of the change; run both sensitivities before choosing.
Interview check: mention the terminal spread, terminal cash flow, and present-value discounting. Compare sensitivities instead of memorizing a winner.
This is my illustrative calculation, not another interview prompt. Assume $100 of unlevered cash flow at each year-end for five years. Year six grows from year five. Base WACC is 10% and terminal growth is 3%.
EV = sum of $100 / (1 + WACC)t for years 1-5, plus [$100 × (1 + g) / (WACC - g)] / (1 + WACC)5.
+16.40% vs. base
+12.58% vs. base
WACC has the larger effect in this setup. That result belongs to these cash flows and rates, not every DCF. Change one input at a time and keep the rest fixed. A one-percentage-point change from 10% to 9% is not a 1% relative change.
61 prompts in the firm bank, with worked answers and frameworks you keep and edit in Excel. Answer mix: 55 worked answers, 1 framework, 4 behavioral prompts, 1 dated research item.
EV is $200M. Year-one EV/revenue and EV/EBITDA are 5x and 10x. Year two is 10x and 25x. What changed?
Say your answer out loud first, then check it.
Use the same $200M EV for both forecast years.
Revenue = $200M / 5 = $40M.
EBITDA = $200M / 10 = $20M.
EBITDA margin = 50%.
Revenue = $200M / 10 = $20M.
EBITDA = $200M / 25 = $8M.
EBITDA margin = 40%.
Revenue falls 50%. EBITDA falls 60%. Margin falls 10 percentage points.
Higher forward multiples here mean weaker forecast results, not growth. Without the same EV assumption, the multiples alone do not establish those growth rates.
141 prompts in the firm bank, with worked answers and frameworks you keep and edit in Excel. Answer mix: 122 worked answers, 19 frameworks.
Sell an asset with a $160 book value for $220 at a 20% tax rate.
Say your answer out loud first, then check it.
The $60 gain raises taxes by $12 and net income by $48.
Start with net income up $48, subtract the $60 gain from CFO, and record $220 of sale proceeds in CFI. Cash rises $208.
Cash rises $208 and PP&E falls $160, so assets rise $48. Retained earnings rises $48.
Check: $220 proceeds less $12 tax equals a $208 cash increase.
90 prompts in the firm bank, with worked answers and frameworks you keep and edit in Excel. Answer mix: 65 worked answers, 21 frameworks, 4 dated research items.
Using 3, 5, 7 and 9 each exactly once and any basic operations, get to 30.
Say your answer out loud first, then check it.
Group the numbers so every value is used exactly once.
9 - 7 = 2.
5 × 3 = 15.
2 × 15 = 30, so (9 - 7) × 5 × 3 = 30.
64 prompts in the firm bank, with worked answers and frameworks you keep and edit in Excel. Answer mix: 42 worked answers, 17 frameworks, 5 dated research items.
What is 29^2? What is the square root of 9,801?
Say your answer out loud first, then check it.
Work from round numbers rather than multiplying longhand.
(30 - 1)² = 900 - 60 + 1 = 841.
99² = (100 - 1)² = 10,000 - 200 + 1 = 9,801.
29² = 841 and √9,801 = 99.
66 prompts in the firm bank, with worked answers and frameworks you keep and edit in Excel. Answer mix: 40 worked answers, 17 frameworks, 9 dated research items.
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263 source prompts in the workbook
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View workbook details →Questions collected from 2020 onward. Choose a firm, check the exact answer mix, then keep your editable workbook. Recorded labels stay attached; missing context stays Unspecified.
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762 source prompts in the workbook
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