Top 27 Accounting Interview Questions and Answers

Top 27 Accounting Interview Questions and Answers

Interview questions for accounting are questions an employer, hiring manager, or interviewer might ask to recruit someone for a job as an entry-level or chartered accountant or for any other position in the accounting industry.

Interviews in the accounting industry are becoming more difficult and challenging because of the high level of competition. An employer will ask questions about the potential employee’s skills and knowledge in order to assess their abilities.

What kind of questions interviewee asks during an interview to put stress on the candidate?

These are the twenty-seven questions and answers for accounting interviews that an employer can ask to help them find accounting jobs.

We’ve provided not just the accountant interview questions and answers for freshers, but we’ve covered all major groups of interviewees in this guide.

Accounting Interview Questions and Answers for junior accountant

If you’re a fresher, then you’re part of the most nervous group of the interviewee chartered accountants. We’ve made the situation light for you by providing Accounting Interview Questions and Answers for freshers.

Question #1 – What are Accounting Standards?

All businesses must follow certain standards when maintaining their books of account. This is to ensure that financial statements are meaningful, comparable, and compliant with all applicable statutes.

One should use these rules as a guideline for ensuring that it produces different financial statements on the same lines. The financial statements are easy to compare across sectors and companies if the users know the assumptions.

Question #2 – How critical is documentation in accounting?

The accounting department of any company should be able to present a fair and accurate view to shareholders and management. The accounting department is the lighthouse for the company.

Documentation is essential in accounting. It is important to have the right documentation in order to maintain an audit trail and justify any changes. It will be a great way to impress the interviewer by having a complete list of the most important/vital documents in the industry you are applying for an accounting job.

Question #3 – What is a FIXED ASSET REGISTER?

A fixed asset register (or document/register) is a list or document that lists all fixed assets within an organization. It contains historical data and also includes information about assets that an organization has sold or written.

The FAR should include the following information: date of acquisition, cost of acquisition, current depreciation, accrued depreciation up to date, depreciation for the current time, selling price (in the case of multiple business locations, this field is vital), asset number (each asset should have a unique asset number to facilitate tracking).

This is particularly useful for assets with multiple units, such as laptops.

Question #4 – What’s your reason behind choosing Accounting as your career?

In an interview, employers will always ask why you chose a career. If you don’t like your job or don’t have any motivation to do so, employers will be curious about your ability to work hard, stay motivated, and persevere through difficult days/weeks. Be prepared to explain why you chose accounting as a career and perhaps a few things that you like about it.

Accounting Interview Questions and Answers for Financial Analysis

Question #5 – Suggest improving a company’s working capital flow

My belief is that stock-in-hand could be the key to increasing the company’s working capital. We have control over the stock, which is the most important component of working capital. Although we can pressure our debtors into paying us immediately, we don’t have any direct control over them as they are legal entities.

They are ultimately the ones who provide us with business. It is possible to delay the payment of suppliers, but this can cause problems in business relationships and reduce the industry’s goodwill. Delaying payments can cause suppliers to stop supplying goods in the future.

All this being said, I believe inventory management can help improve the company’s working capital. Stock turnover should be high, and excess stocking should not be allowed.

Question #6 – Explain the difference between available cash/bank balance and working capital

Working capital is what a business needs to get its day-to-day finances. The cash and bank balance make the portion of an organization’s total working capital. The working capital of an organization is more than just cash and bank balances. The current assets and liabilities are also the part of working capital.

Let me give you a worthy example. Let’s say that $ 5000 is due from a debtor by 1-Apr-17, and $ 4000 is payable to a creditor the same day. Your organization doesn’t have enough cash or bank accounts to pay the debtor.

It is possible to get the funds back from the creditor and then pay it to the debtor. The company’s daily fund requirements can be managed this way by maintaining adequate working capital. This does not mean that the cash or bank balances need to be emptied.

Working capital is calculated as Current Assets minus Current Liabilities. This formula seems simple, but it involves debt management, inventory management, and planning payments according to the network capital inflow.

Question #7 – Since you described MS Excel to be your future your best friend, give us a few instances in which Excel will bring ease to your life

  • The ERP can generate a variety of reports. One may need reports in a particular formats and, therefore, not possible in the ERP. Excel is a great tool for this. It can sort, filter, delete redundant data, and then present the data in a customized format.
  • You may need excel to link multiple data sets. One can also pull the different reports from the ERP using the VLOOKUP IN Excel / HLOOKUP function. You can combine them into one report.
  • Excel is the best tool for performing various reconciliations. One can not do these reconciliations in an ERP. If I have to reconcile the vendor’s ledger, I will export it from the ERP in Excel. The vendor will then get an identical Excel. You should do all reconciliations only in Excel.
  • Most of the organizations use Excel to create their financial statements. This is because they must adhere to the statutory format, which cannot be extracted from the ERP. Excel is again a great tool in this situation.

During the interview, it will be helpful to know basic Excels. You must be familiar with the following formulae: sum, sum-product, and countif. Take a look at these.

Question #8 – In case you’re given financial statements of three separate competitors and asked to ascertain which of these is in the best financial position. What are the two core parameters that you’ll use to judge?

These are the parameters I’d like to verify:

  1. a) The correlation between revenue and profit of an organization – A company that has a higher revenue does not necessarily do well.

For example, let’s say Company A has a revenue of $ 1000 but has suffered heavy losses. While Company B’s revenue is $ 400, it is still earning a profit of approximately 7%. It is obvious that Company B is more profitable and efficient.

This company’s management is on the right track. The more profit the company makes, the greater the dividend it pays to its shareholders. It also has a better ability to repay the interest and debt.

  1. b) Debt/equity ratio – A balance must be achieved between equity and debt. High interest rates are only possible if debt is all that exists. Only equity is when the company isn’t leveraging the market opportunities for lower interest rates.

Tip: If necessary, you can also mention liquidity. Calculating the working capital for each company is a good way to do this. It is important that the working capital does not exceed the required minimum, as this could lead to the company’s inability to access funds.

Personality based interview questions and answers for accountant

Question #9 – Tell me something about yourself

Interviewers will not ask this question to find out about your past. Interviewers already have your resume, which contains information about your educational and work experiences. These things should not be repeated, e.g.,

I graduated with 85%, or I completed my Masters in Accounting at XYZ College. This is not what an interviewer wants to hear. It’s a great opportunity to share your achievements and work experience.

This is key to getting an accounting interview. Begin with your greatest achievement. Next, tell them why it is that you love what they do. Finally, tell them how your job makes you the best.

Question #10 – What are the challenges faced by an Accountant?

An accountant must coordinate with many teams, including customer support, marketing, procurement and treasury, taxation, business development, and taxation. I’d say that the availability of details/documents/data from these teams on a regular basis is a top challenge faced by any accountant. Undoubtedly, accounting is a complex business.

Without proper documentation, an accountant won’t be able to post entries to the accounting system. Management does not appreciate delays in accounting. These accounting records are used to create updated reports/MIS.

This answer should be connected to any question about the candidate’s key strengths or weaknesses. The candidate may also mention that people management is one of his/her key strengths. If given a chance, he/she can handle this type of challenge well and will ensure that data availability does not become a problem.

Question #11 – If you attain the position of the CFO of this company, what will be your recommended changes to recommend to the company’s Board of Directors?

This is a difficult question that must be answered with care. This is a tricky question because most organizations accept change only when it leads them to the path of success. It is a huge responsibility to be the CFO.

Talking about changes in an organization you do not work for can make you appear arrogant. However, refusing to change can make you prone to being bent, which is another bad trait for a CFO. The answer is as follows:

As the CFO of the company, my first task is to get to know the business and its revenue model. I will also need to learn about the processes and how they are implemented.

It is important to understand these details before making any suggestions for changes. After spending enough time with the system, I will be able to make suggestions based on industry best practices, shareholder expectations, and responses from competitors.

Question #12 – If you get this job, what will your routine day of 8 hours be like?

I think the accounting ERP that you use and Microsoft Excel will become my best friends. I’ll be spending as much time at work with these applications.

  1. I will have these core activities as a part of a routine day:
  2. Extracting/maintaining/updating different reports which the management requires (some of these reports are a list of payable amounts for the next three working days, debtors’ aging report, fund position at the end of the day, etc.)
  3. Posting journal entries to the ERP
  4. Reconciliation and scrutiny of various ledgers
  5. Coordination with other teams to obtain documents/data/details
  6. Check which invoices and supporting documents I need to include in the invoice.

Technical accounting interview questions and answers

Now, coming out of the basic accounting interview questions, let’s peep into the technical part.

Question #13 – Why is Closing Stock not Shown in Trial Balance?

All goods bought in the beginning and during the accounting period do not sell until the end, called closing stock. Closing stock is part of purchases, and the trial balance already includes purchases. Therefore, if you list the closing stock as a separate item, it will double up and cause an error. Ex. : Purchases for a period of 60,000.

Closing stock (remainder of purchases) = 10,000. If you put these items separately in the trial balance, the effect will double, and the trial balance will be out. The top accounting and finance interviewers often ask this question during technical rounds.

Question #14 – Why is it easier for someone to perpetrate fraud using a journal entry than with a ledger?

This scenario should be possible for accounting professionals, especially those who have worked as full-charge bookkeepers or managed ledgers for longer than two years. Candidates with more formal training in auditing or fraud analysis are likely to be able to explain the situation and provide examples.

Question #15 – What is your experience with developing business metrics?

Although the question is not specific, One can evaluate candidates for entry-level positions in financial analysis or business. One can also use this question to assess mid-career professionals interested in budget and staff oversight roles.

Some additionally yet useful interview questions for accountant

Question #16 – What’s your role in the month-end close operation?

Leveraging tangible experience at your recent firm, outline your responsibility and roles specifically related to the month-end closing operation to describe your full range of capabilities. Concentrate on being more on being honest rather than just describing the positive things about you.

Question #17: Describe an instance when you made an accounting mistake and how you dealt with it.

Highlight an instance where this occurred at your former firm, including the lessons learned and how you resolved it. Don’t try to act too heroic while explaining your excellence. Just be sober.

Question #18 – When any company is using double-entry accounting, which elements of a specific ledger must be equal?

The debit (dr), and credit (cr), should all be equal in a ledger. They should also reflect the balance of books.

Question #19 – Provide an outline of an accounting document you have prepared previously

Demonstrate your knowledge in the maintenance of accounting practices, procedures and principles to ensure high-quality financial statements and reporting.

Question #20 – What is a Debit Note and Credit Note?

This question is common in interviews for accounting roles such as Accounts Payable or Accounts Receivable.

Credit Note – A seller sends a credit card note to his buyer when he receives the goods (returned goods) from the buyer. This is an indication that the money for the goods has been returned.

Debit note – A debit note is sent to the seller when a buyer returns goods. It informs the seller about the quantity and amount being returned and requests the return of the money.

Question #21 – How are you planning and prioritizing your day?

Accounting is a job that requires a lot more cross-functional collaboration, procedures, and deadlines. It is important to demonstrate organization, time management, as well as healthy communication with clients and staff.

Holt states that accountants need to be clear about how they can manage their time and divide it between client checks, accounting processes, and team checks.

Question #22 – What does a Contra Account mean?

One can use Contra Account to lower or offset the account’s value.

It is the opposite sign for a specific type of account. An account that has a debit balance, such as an Asset a/c, will have a credit balance in its counter account. For a liability account, the opposite will be true.

Question #23: What are drawings, and what account type is it?

Drawings are when a proprietor withdraws goods or money from its business for personal use. It reduces capital investment and is a temporary account cleared at the close of each accounting period. Drawing is a Personal Account and is displayed on the liability side of a balance sheet.

Question #24: What does a Bank Reconciliation statement or BRS mean?

Nearly all questions in finance and accounting interview questions contain at least one question about BRS. This topic is important. Bank Reconciliation Statement, or BRS, is a statement that reconciles the bank balance on the passbook or bank statement with the cash balance in the cash book.

Question #25: What are contingent liabilities?

Contingent liabilities may or may not be incurred by businesses depending on the outcome of future events. One can create this type of liability if a future event occurs.

Example: Let’s say that Apple files a lawsuit against Samsung for patent violations. Samsung realizes it may need to pay the violations but also estimates how much total. Samsung will then record the estimated amount as a contingent liability in its books.

Question #26 – What is depreciation? How many types are there?

Depreciation is the cut-off in the value of tangible fixed assets due to normal use, wear and tear or unfavorable market conditions.

  • Method of Diminishing Value
  • Straight Line Method
  • Sum-of-the-years’ digit method
  • Method of hourly machine rate
  • Annuity method
  • Method of revaluation

Question #27 – What is Amortization?

One can do Amortization only for intangible assets and not for tangible assets. Amortization is the process of reducing the value of an intangible asset by dividing its cost over multiple accounting periods.

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