⏱ Reading Time: 2 Minutes 50 Seconds

Happy Saturday, future bankers!

Hope everyone is doing well! Today we’re covering how to account for cash that is collected but isn’t recorded as revenue, a time that you had to quickly complete a task, and the former WeWork CEO’s bid to buy back the company.

🚀 Let’s get into it.

🔢 Technical Question

If a company collects cash, but it is not recorded as revenue, how is it accounted for?

If a company collects cash but it is not recorded as revenue, it is typically accounted for as a liability on the company’s balance sheet. This is because the company has an obligation to provide goods or services in the future.

This situation often occurs when the company receives prepayments or deposits from customers for goods or services that have not yet been delivered or performed. These are referred to as “deferred revenues” or “unearned revenues”.

The company will recognize this cash as revenue only when the goods or services have been delivered or performed, which is in line with the accrual accounting principle of revenue recognition. Until then, it remains a liability on the balance sheet.

So, in summary, cash collected but not recorded as revenue is accounted for as a liability (specifically, deferred or unearned revenue) on the company’s balance sheet. It is recognized as revenue only when the company fulfills its obligation to the customer.

🗣 Behavioral Question

Tell me about a time that you had to quickly complete a task.

Certainly, here are some principles to follow when answering:

1. Use the STAR Method: The STAR method stands for Situation, Task, Action, and Result.

2. Be Specific: Provide a specific instance from your past experience where you had to complete a task quickly. Avoid generalities or hypothetical scenarios. The more specific you are, the more credible your answer will be.

3. Highlight Relevant Skills: Use this opportunity to highlight skills that are relevant to the role you’re interviewing for. In the context of investment banking, this could include time management, ability to work under pressure, problem-solving, and proficiency in relevant tools and technologies.

4. Discuss the Outcome: Be sure to discuss the outcome of the situation. Did you complete the task on time? What was the feedback you received? What did you learn from the experience? This helps to show that you are result-oriented.

5. Keep it Concise: While it’s important to provide a detailed response, avoid unnecessary details. Keep your response concise and to the point.

Remember, the goal is to demonstrate your ability to work effectively under pressure and deliver results. So, choose an example that allows you to showcase these qualities effectively.

🗞 Industry News

🏢 Former WeWork CEO Looks to Buy Back the Company

Adam Neumann, the original founder of WeWork, has made an unexpected bid to buy back the company from bankruptcy, with an initial offer exceeding $500 million. This figure could potentially rise to $900 million. However, the details of Neumann’s financing are still unclear, with Third Point, initially reported as a backer, denying involvement. This uncertainty, along with Neumann’s history with the company, might make WeWork hesitant about the offer.

The bid comes after Neumann showed renewed interest in reclaiming the company he was removed from five years ago. After facing several challenges, WeWork filed for bankruptcy in 2023 and has been working with advisors to restructure the business. The company regularly receives third-party interest, and all approaches are reviewed to ensure they align with the company’s long-term interests. Neumann’s bid, first reported by The Wall Street Journal, could complicate WeWork’s bankruptcy proceedings as the company is looking to reject several leases to escape long-term commitments in less profitable markets.

Read more about this story below.

Thanks for tuning in today! Best of luck to everyone working through recruiting right now. If you sign an offer, reply to this email and let us know about it! Like seriously, do it—we’d love to hear about it!