Accounting Essentials

Core purpose and structure of the income statement, balance sheet, and cash flow statement; key line items (revenue, COGS, opex, EBITDA, D&A, interest, taxes; cash, AR/AP, inventory, PP&E, debt, equity); basic sign conventions; what each statement is telling you and which metrics interviewers focus on.

How the 3 statements connect mechanically: net income to retained earnings, non-cash add-backs, working capital changes, capex flows to PP&E, debt balances to interest; how cash is the plug; how operating, investing, and financing cash flows reconcile; typical interview walk-throughs of linkages.

Accrual vs cash accounting intuition; timing differences and why they matter; common accrual concepts used in interviews (deferred revenue, accrued expenses, prepaid expenses); earnings quality and what drives real profitability vs accounting profit; basic recognition logic without deep GAAP rules.

Working capital components (AR, inventory, AP, accrued liabilities) and how changes impact cash flow; cash conversion cycle intuition; seasonality and growth effects; how WC affects valuation and leverage; common interview scenarios (e.g., AR increases, what happens?) and quick, clean answers.

Depreciation/amortization mechanics and why they are non-cash; capex vs expense; PP&E roll-forward intuition; intangible amortization; impairment basics; stock-based comp and other non-cash adjustments; how these flow through IS/BS/CF and the typical what happens if interview questions.