Accounting Terms
Why Accounting matters in interviews
Without a strong grasp of accounting, you can't make heads or tails of financial statements — or the businesses behind them. The most commonly asked technical questions are accounting questions. Be careful not to blindly memorize every one and instead try to identify the underpinnings of accounting as a concept so you can remain agile in interviews.
A
- Accounts PayableAccountingAccounts Payable is a liability on the Balance Sheet that represents amounts owed to suppliers or vendors for goods and services that have been received but not paid for yet.
- Accounts ReceivableAccountingAccounts Receivable is a Balance Sheet item that represents bills sent to customers for services already rendered. This is different than Deferred Revenue.
- Accrual & Cash-Based AccountingAccountingAccrual Accounting records revenues and expenses when they are earned or incurred, regardless of when cash is received or paid.
- Accrued CompensationAccountingAccrued Compensation is a Balance Sheet item that refers to employee costs that a company owes to its employees but has not paid yet.
- Accrued ExpensesAccountingAccrued Expenses is a liability on the Balance Sheet and refers to expenses that a company has incurred during a specific accounting period but has not yet paid as of the balance sheet dates.
- Asset Write-DownsAccountingAsset write-downs occur when a company reduces the book value of an asset on its balance sheet because its current market value or recoverable amount is lower than its carrying value.
D
- Deferred RevenueAccountingDeferred Revenue is a Balance Sheet liability that refers to revenue that has been paid for but cannot be recognized yet because the services have not been rendered yet.
- Depreciation & Amortization (D&A)AccountingDepreciation and Amortization are accounting methods used to allocate the cost of tangible and intangible assets over their useful lives.
- Disaster ExpensesAccountingDisaster expenses on an income statement are costs incurred due to natural or man-made disasters, such as hurricanes, earthquakes, floods, fires, or accidents.
P
- PP&E (Plant, Property & Equipment)AccountingPP&E is a Balance Sheet item that represents tangible assets that a company uses in its operations and are expected to provide economic benefits for over a year.
- Prepaid ExpensesAccountingPrepaid expenses are an asset on the balance sheet. They represent expenses that have been paid for but not yet accrued.