Module I· Interview Essentials AccountingBasic
Question
Classic question: walk me through the three financial statements.
Answer
Answer
The income statement shows profitability over a period: revenue minus expenses gives net income.
The balance sheet shows what the company owns and owes at a point in time: assets = liabilities + equity.
The cash flow statement shows cash generated and used over a period, split into operating, investing, and financing cash flow.
Linkage
Net income starts the indirect cash flow statement and flows into retained earnings. The ending cash balance from the cash flow statement appears on the balance sheet.
Interview tip
Keep it structured and under 60 seconds.