Seeking Guidance to Strengthen Understanding of Accounting Concepts

Question

Hello

I'm currently facing challenges with quantitative problems, particularly in understanding various accounting concepts such as the NPV formula, depreciation methods, breakeven analysis, and more. While I've learned the formulas using the Darden Casebook, I've realized there's much more nuance in real-world applications. For example, yesterday I was asked to calculate depreciation but wasn't aware whether it followed a straight-line method or another approach.

Could you please provide guidance on how I can deepen my understanding of these concepts and their practical applications?

Thank you.

Answer 1

You don't need a granular understanding of accounting concepts to pass consulting interviews (assuming that's your target).

Actually, I put together all the terms you need to know in this article (based on all the interviews my candidates have had recently):

Expert Guide: The Must-Know Consulting Terms for Interviews

I would be very, very surprised if you get a question that doesn't relate to the ones in this list.

And if you do, don't hesitate to ask the interviewer for the formula. You are not tested for your knowledge (unless you are applying for an expert role), but for your skills.

Best,
Cristian

Answer 2

Here's what you need to do in order to be prepared:

Keep doing cases. If there's a relevant concept, it will show up in a practice case. If you do a good ammount of cases, you'll get them all covered. To be honest, “practice” cases have many more “accounting” concepts than real cases. I don't know of anyone who asks for an NPV calculation, for example (but understanding the “time value of money” and risk-reward concept is tested occasionally).
If during the interview they ask for something you don't know… just ask what the concept is, and do your calculations based on that.

P.S. I am a Darden alumn, and because of that I know particularly well the Darden MBA Case Book… it does a good job covering the concepts you may need to know.

Answer 3

Hi there,

I would be happy to share my thoughts on your situation:

First of all, in order to succeed in strategy consulting interviews, you really do not need to know the depths of accounting.
Moreover, however, I would highly advise you to be proficient in the majority of concepts listed in PrepLounge's Case Interview Basics in section “Useful Business Analysis Tools”.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

You can find the salary report of consulting firms in Germany here!

Answer 4

Hi,

The consulting interview is NOT a test of your content knowledge, and a good interviewer will design a case that tests your ability to think, not to regurgitate a known formula.

Especially if you are an undergraduate - there is zero expectations for you to know something like NPV.

Please focus instead on the core skills and abilities - of which accounting is not included.

I speak from experience as I was a History major :)

For more perspective on why you don't need accounting knowledge, you can check out my article:

Breaking Into Consulting with a Liberal Arts Background

Answer 5

Hi there,

Well, if you already understand that depreciation could either be straight-line or an alternate method, you're doing in right!

In general, as long as you have the following down, you should be ok:

ROI
Margin
Markup
% Change
NPV (annuity + perpetuity)
Breakeven (many scenarios)

Google is your friend, and practice with casebooks + peers!

Answer 6

AI and ChatGPT are definitely game-changers for consulting prep! They’re great for structuring case frameworks, gener... (read entire answer)

AI and ChatGPT are definitely game-changers for consulting prep! They’re great for structuring case frameworks, generating potential interview questions, and even simulating cas... (read entire answer)