From the course: Job Interview Tips for Accountants

How to approach this question

From the course: Job Interview Tips for Accountants

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How to approach this question

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- This comes across as a basic accounting question but is meant to see how well you understand balance sheets, income statements and cashflow statements. The interviewer is looking for three things from your response, balance, technical acumen and a clear explanation. So start your answer with the foundation. Your answer should show that you know which financial statement the question is referring to, that you clearly understand how they work together and that there's often a fourth type of statement that may be worth considering, you know, the statement of shareholders' equity. Then you want to explain capital investments. Share that this purchase would increase the overall value of the company through its balance sheet. But clarify that the value would highly depend on the price of the equipment. Explain the related effects that this transaction would have on profitability through the income and cashflow statements. Finally, make sure you apply your real-life experience. Detail any challenges you faced sharing an actual experience you had. Interviewers want to hear more than just theory. They want to hear how you handle a situation. And if you've never done anything like this before, then share a practical scenario. This offers more depth than simply going through the accounting mechanics of a transaction. When it comes to answering asset purchase or investment questions and how this would impact financial statements, the key is to demonstrate depth to your financial and accounting skills.

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