Choosing accounting as a professional career is a dream for many. But, are you aware of its success rates? Well, in order to seek a job, the first and foremost essential is none other than cracking the interview round. With good prospects in terms of academics and even as a professional career, most people with a good hold of numbers and calculations seek a job as an accountant. But even before we delve deeper into the interview aspects, let’s take a look at the relevant skills required to pursue accounting as a career option.
As an accountant, your primary skills need to revolve around excellence in mathematics, a high sense of analysis, good knowledge of technology, and many more. But no matter wherever you go pursuing a career, it is the interview that comes your way as a professional. Therefore, this piece has come up to highlight some of the accounting interview questions and answers to guide you through your way out in securing a dream job.
List of commonly asked accounting questions
If you are looking for the right source to guide you in cracking the accounting interview questions, you have landed on the right platform. Under this subhead, we have enlisted some basic accounting interview questions that one can commonly expect to face during an accounting interview. Let’s get started with the list of probable accounting interview questions:
This accounting interview question is introduced as a part of the ice-breaking session between you and the employer at the other end of the table. Keep in mind that your answer creates an initial impression on the employer about you and instances that led you to opt for a career in accounting. Your employer seeks to know you better and put up questions based on your answer. It would be wise to be careful yet reluctant with portraying your original self.
Any point that would make the employer have a perception of your initial potentials and the struggles you have made to what you are today would be a good start considering the question at hand. You can put forth examples of situations that are relevant to support your answer. An example-driven answer is always a great option to prove your point, which can highly impress the recruiter you are dealing with.
2. What are the different types of accounting you are aware of?
Well, this is the most basic accounting interview question that entitles you to establish your grounds as someone who is well associated with the field. To answer this question, no extra effort is necessitated. The basic types of accounting are as follows:
- cost accounting
- financial accounting
- tax accounting
- management accounting
These are the subcategories of accounting that the employer wants you to talk about. Make sure to get yourself well equipped with the technical terms at hand so that you do not fail to meet the expectations and ace the accounting interview. Before entering the field as a professional, you must keep yourself updated on the technical definitions and their applicability in real terms. Additionally, it would be ideal for determining how each concept of accounting is different from all others. A fairly detailed answer can secure yourself an excellent chance to establish your grounds as the right candidate for the role at hand.
3. What, according to you, is working capital?
Well, there is a trick that underlies the accounting interview question itself. However, it might just be intended to put you off your wits. Nevertheless, you are expected to be bold and brave in determining the right answer for the question at hand. The term ‘working capital’ has everything to do with your understanding. The interviewer is going to judge you on your interpretational skills. If you think that bringing forth a mugged-up bookish answer would help, that might not be the ideal thing to do.
Apart from your understanding of the concept, do not forget to support your answer with examples wherever you have the chance to. The employer is not probably looking for your general knowledge, but, as a professional, it is your technical knowledge on the subject matter that counts. There is a huge possibility that you can secure the job once you provide assurance about the fact that you had been a dedicated and loyal student at school. Yes, that’s precisely where your academics count.
4. What is your perception of accounting accuracy, and how do you ensure the same?
As an accounting professional, you would be expected to value accounting accuracy to the utmost. Hence, make sure to rely on such a foundation that makes the employer accept your true potential. For any organization, accounting accuracy determines its profits and losses, and if such data goes wrong, it stands out to be the worst of nightmares coming true. Make sure to cite all strategies adopted by you to ensure accounting accuracy.
For example, if you are a fan of using MS Excel to store relevant data and then produce results, do talk about that. Additionally, it would be of help to you to highlight how you prefer to address contingencies if there is a chance for any. A full-proof answer should ideally consist of all the above-discussed points to make it stand out among all others who aim to secure the same chance you’re struggling for.
5. Any suggestions on how a firm can improve working capital and its accountability?
Cash, inventory, and other firm investments form a part of the working capital in day-to-day activities. One way to improve the working capital could be to improve the cash flow. However, that cannot be regulated to a great extent as it mostly depends on the debtors. Nevertheless, the other ideally suited choice would be to control the inventory. It is all in the hands of the firm to regulate its inventory.
Measures such as cutting off excess inventory or with high stock-turnover rates, an accountant can chalk out plans to enable improvement in the working capital. That is what your employer tends to seek out of your answer. Any person hiring you would only do so only if you can regulate its finances well. Thus, make it a point to include all profitable aspects into your answer when facing such a simple yet tricky question.
6. What steps would you embark on to reduce costs for a particular firm?
As a professional, one can expect to encounter such an accounting interview question at the hands of its employer. However, as a fresher you, this question might not be apt for you. Nevertheless, in any case, your target is to answer the question in a way that the employer is sure to hire you. If you happen to be an experienced professional, it would be ideal for quoting examples from your previous experiences, if any. Briefly narrate the situation and what measures you had taken to reduce costs for the firm.
As a fresher, you might not have a similar experience to portray. But you can put forth examples of any projects or internships that you had taken involving the same matter in question. This would be a great option to throw light on the fact that you have the potential to work on matters even as a beginner. You might expect many questions in return for your answer, but it is on you to handle them smartly with care.
7. Rate your proficiency in using numerical data and graphical representation while handling projects.
Presentation skills are a must as an accounting professional if you want to convince your manager. Thus, your employer leaves no chance to look into those aspects where you have curated such a need for yourself or your previous place of employment. In the answer, you can include positive points on how with the help of graphical representation and statistics, you could conquer the goal of convincing your manager of a particular aspect.
As a fresher with very little to no experience, you can talk about projects mostly based on graphical results and turned out to be successful while you were involved with academics in your college days. Also, when the matter is about rating yourself, do not overrated or underrated, as, in both situations, things will not work in your favour. Someone else is more likely to take up the opportunity if you fail to meet the desired standard of answer. The employer is looking for a suitable candidate, and you need to prove to be one.
8. What is the biggest challenge you expect to face in the professional accounting industry?
The employer is wise enough to put you in a state of dilemma. By putting forward such an accounting interview question, the recruiter wants to know if you are well aware of the intricacies that the accounting field involves. It is an essential requirement for any and every job profile you appear for. Similar is the case when you are to appear for an accounting interview. The ideal trick would be bringing about intelligent answers that are capable enough to meet the expectations of the employer on the other side of the table.
For example, to support and justify your answer is a better way, you can mention some of the amendments in the legislation pieces that had an impact on the accounting policy functioning in the region. Besides, any new changes in any sub-sector that the accounting profession demands can also be talked about while preparing answers to such questions.
9. Briefly describe any accounting process that you have worked within the past.
The answer to this accounting interview question has no straight jacket formula. As a beginner, you might not have a fair chance to deal with such intrinsic matters practically associated with any firm. However, on the contrary, if you happen to be a fresher with quite some experience, you can frame the answer in the best ways highlighting just the important aspects that the employer seeks out of you.
In both scenarios, the burden lies on you to prove your potentiality. Hence, it would be apt to talk about any fictitious idea that you have in mind and also provide accounting solutions for the same. For the ones with experience, you can highlight any such project dealing with the accounting process in the last place of employment. The trick lies in helping your employer know that you have the qualities he has been looking for in the right candidate for the job role at hand.
10. How do you ensure that you meet strict deadlines? What steps do you take to make sure the job is done in a short time span?
On the one hand, most of us expect a leisurely working environment, which might not be the case for accounting professionals. Working with strict deadlines is something that most accounting professionals need as a part of their skill set. The intention behind asking such a question is to ensure you are an ideal candidate who is fearless to work in all circumstances. It is your consistency in terms of meeting deadlines that are counted on as a great advantage.
As a fresher, you can highlight some examples of your overnight work journey that led to successful results. Besides, you can also talk about your previous job association where you had taken the extra initiative to prepare accounting statements within a short period of time. At any point in time, an employer would seek a hard-working candidate and would not hesitate to provide an appraisal for the hard work you put up. Thus, make it a point to secure your employer’s best interest to ensure you have your dream job at hand.
11. How would you rate your communication skills about explaining matters to clients from a non-accounting background?
Any job profile seeks their ideal candidates to be excellent with their communicating skills. Especially when you have the task of dealing with clients from non-accounting backgrounds, your job role as an accountant might not be specific, and you might have to deal with a team of members from different departments. That’s where your communication skills count. If you are good with communication skills, you have a greater chance to get hired by the employer.
The employer puts up such an accounting interview question to analyze your capability of self-assessment. Therefore, in support of your answer, do not forget to talk about previous experiences where you had the opportunity to deal with a team. You did your best to go beyond figures and technical accounting terms to make your language understandable to everyone present. It can be a great way to leave an impressive impact on the employer you are dealing with.
12. What, according to you, is the role of accounting software in the professional accounting field?
It is practically impossible that a person is well acquainted with all the probable accounting software. And the employer is there to adjudge your vast know-about of some of the majorly used software that forms part of day-to-day activities as an accountant. It would be ideal to talk about your experience in working with some of the accounting software and the reason behind your choosing that particular software among all others.
As a fresher, you are most likely not to have in-hand experience in dealing with any such instance. However, do make it a point to portray your interest in the tools that form part of the field. A piece of basic knowledge as a fresher is all that the employer seeks to know out of you. Nevertheless, as an experienced professional, you must cite some of the relevant software and its applicability in real terms.
13. Highlight some of the pros and drawbacks of the accounting software you have been in the use of.
As a professional, expecting such an accounting interview question is no shocking experience. The employer is willing to seek your analytical skills and how good of a critical thinker you are. Make sure to highlight some of the critical drawbacks that have come your way while dealing with the topic in question. For an even better outcome and to stand out among all others in the crowd, it would be ideal for bringing about suggestions for improvement in the software.
As an experienced accounting professional, you would be expected to know the tit-bits of how accounting software is of use. Having said that, the question at hand is more about how you analyze problems and come up with alternative suggestions, if any. Your answer would speak a lot about yourself and your involvement in the field. Thus, make it a point to focus on the analytical part rather than just going by the protocol.
14. Highlight a point of time when you had to meet a tight deadline to prepare some financial statement. What was your reaction, and what result did you get?
Here your interviewer is looking forward to knowing about your time management. Always remember that time management is the trait that any company would search for in their employer. Accountants look for such chances to prove the time management skills that they need to meet their deadlines throughout the year. You need to be very smart with your answer. Be humble and realistic with your example of how you managed projects with time constraints without exaggeration.
Always keep in mind that the employers are experienced interviewers, and any flaunting line will be a reason for your downfall. Try to look for the best example you have. Highlight how you coordinated the work with the other departments of the firm and delivered on your promise. Highlight the aspect of teamwork rather than individual presence. This will help them perceive you as a team player, thus increasing your chances of getting hired.
15. What would keep you enthusiastic if you were the CFO of our company?
Always remember that your interviewers are looking for the best candidates to occupy the important positions of their company. When you have this kind of question shot at you, the point of focus will be your vision and strategies. Here you have the opportunity of showing your analytical skills. Tell them how you analyzed their figures of growth and predicted their strategies propelling the growth. Not just their company, put forward your view concerning the other mentionable companies in the same industry.
You can focus on three aspects;
- Income statement: Explain to them how the knack of widening the growth margins and increasing the profit of their company will keep you unhinged.
- Balance sheet: Highlight your viewpoints on how you would regulate their capital assets using various credit metrics. Make them believe that you intend to promote liquidity via liquidity ratios.
- Cash flow: Convince them how you would frame campaigns as a CFO to help you gather investments from people to push the business to new heights. Not just that, you need to prove your skills of keeping the flow of money to the shareholders intact.
List Of Accounting Interview Questions and Answers Based on Academia
Well, if, as an interviewee, you’ve prepared yourself on the basic accounting interview question and miss out on the academic aspect, it is going to fetch you nothing. Thus, the very foundation needs to be kept intact. The primary step that leads you to the field of accounting as a professional career is none other than your academic qualification. Thus, it is equally important that you prepare specific basic academic-based accounting interview questions and answers to be a wholesome fit for the role.
16. How do you differentiate between ‘accounts payable (AP)’ and ‘accounts receivable (AR)’?
The answer to this accounting interview question of difference lies in the definitions of the issues. You just have to explain the aspects of your interviews and portray a clear perception of how you strike a difference between them. For this, first, understand what they specifically stand for;
- ‘Accounts payable (AP)’: Accounts payable refer to those payments that a company has to make to the vendors or suppliers from whom they bought the products or services on credit. Remember these payments are liabilities for the borrowing company.
- Accounts receivable (AR): Here, the role completely changes. The company is now the one due to collect the payments for the goods and services it offered to the client company. The amount is a credit for your customers. Conversely speaking, here, these payments will add to your assets.
Understanding this easy difference will help you answer more smartly. A literal definition is not something the employer is seeking. Your sense of interpretational skills is put to the test through such basic yet challenging questions.
17. How do you strike a difference between a trial balance and a balance sheet?
Though both these terms look the same, they do not mean the same. People usually tend to get confused between the two terms and end up giving wrong answers. Therefore, the following definitions will help you understand the meaning of the two in a better way;
- Trial balance: A trial balance refers to a worksheet that includes the balance of all the ledgers. In this bookkeeping worksheet, the debit and credit amounts are calculated together to ensure the principal amount you spent. A company prepares its trial balance sheet in different periods, mainly after every reporting period is over. The objective of preparing the trial balance is to ensure that the mathematical calculations fall in place.
- Balance sheet: A balance sheet is a report of all the liabilities your company has to pay and the balance of the principal amount and returns that stay.
The primary difference between a trial balance and a balance sheet lies in the fact that a trial balance is a periodical. The balance sheet is a perpetual process that gives you the amount at the end of the financial year.
18. What do you mean by tally accounting?
Tally accounting refers to an accounting package that assists us in maintaining accounts with ease and transparency. This accounting package will help you extract the various MIS reports like closing stock reports per item, the stock movements, the age of your debtors, etc., for making essential decisions via clicking some buttons on the keyboard. When we enter journal entries in this accounting software, we get the full set of accounts, help prepare the trial balance, and update financial statements.
You also get to know about your errors, along with a chance to rectify them. Small and medium enterprises gain a lot through tally accounting. Now you have to explain this to your interviewer, what your perception of tally accounting is, and how you would use it to ensure their company’s growth. With that, you would indicate to the employer that your concepts are all clear and reasonable.
19. What, according to you, are the cons of the double-entry system?
As of now, no system has zero flaws. The efficiency of systems matters; some are more efficient, whereas some lack in their service quality. We tend to opt for the best systems available to make our work as smooth as possible. The double-entry system is one such system. Different accounting departments use this system for making their work easier, but this system has a few disadvantages;
- If there are few errors in the final result, you would have a hard time detecting them. This system does not support the facility of rectifying the errors, as it is unable to find them in the first place.
- This system requires more clerical labour to make progress with its work. Thus, you can understand that this is not a self-sufficient system and requires more human help.
- As we already discussed, this system is troublesome when it comes to detecting errors. The double-entry system will not facilitate finding the blunders of the transaction recorded in your balance books.
- Sometimes your client or even the CEO of your company might ask for all the necessary information about a particular transaction. The double-entry system will fail you in this aspect as well. You should not prefer a system like this for looking up information if it does not have a solid record in the book.
20. Throw light upon the aspect of the general classification of accounts that various ledger accounts involve
Before you delve into the general classification of accounts, you need to have a clear understanding of the general ledger account. A general ledger account refers to a particular account that helps in recording all the necessary information. Such accounts will assist you in maintaining a record of the incomes and expenses in diverse accounts.
After you understand this, let us now go into the general classification of accounts that ledger accounts normally involve;
- Assets: All cash and credits that the company is supposed to receive.
- Liabilities: All credits and loans that the company has to pay back.
- Stockholders equity: Stock of the common shareholders.
- Operating revenues: Revenues generated through sales.
- Operating expenses: Expenses that the company has to incur for its sales activities, like the rent expenditure and disbursal of salary to employees.
- Non-operating revenues and gains: The income via investment and the gain through the disposal of goods and services.
- Non-operating revenues and losses: The most lost through the interests given and the losses incurred through equipment disposal.
21. According to you, briefly explain the three factors that act as a catalyst to push business profitability and cash flow.
Smooth flow of cash and rising business profitability is something that every business craves. Without the proper presentation of these two factors, the business will go down to ruins in no time. There are primarily three factors that can add to your business profitability and pull cash flow into your business;
- Cash flows through various activities of investment: Such investment activities include bonds, shares, business machinery, and any physical property you own.
- Cash flows for facilitating operational activities: These cash flows do not come in through other investment procedures.
- Cash flow via financial activities: The cash flow from various financial transactions include;
- The payments of dividends that the company has to pay to its shareholders.
- Any money that is a part of the public stock.
- The money that a person will borrow from the lender.
22. List the various accounting events that influence the compound entries
Before we get into the list, you have to understand what precisely a compound journal entry is. A compound journal entry resembles any other entry, just that this entry refers to more than one debit, more than one credit, or more than one of both debit and credit. Therefore, it is the combination of various journal entries.
Compound entries involve a few accounting events that are as follows;
- Record multiple items in the line that are a part of the supplier invoice addressing the various expenses.
- Record of all the deductions from the bank along with the bank reconciliation.
- Record of all the payments and deductions concerning a payroll.
- Record of the amount due to be received along with the sales tax from the customer invoice.
The goal is to put forward a direct and simplified answer. And, what else could be better than the one listed above. Go ahead with the best answers at your hand.
23. Throw light on the various rules of debit and credit for different accounts that will allow you to increase the money in your business account.
Everyone is involved in a business primarily for the sake of profit. You need to know the various rules of debit and credit so that you can continue adding money to your business account. Following are the set of rules every accountant has to know;
- When you consider the capital amount, you have to credit to increase the balance and debit to reduce.
- Talking about asset capital, you have to debit if you wish to increase and credit for reduction purposes.
- Concerning a liability account, you need to debit for decreasing the debts, and crediting any amount would increase the liability.
- Talking about an expense account, debit increases the money, and credit adds to the balance, thus decreasing it.
- Considering an income account, credit will increase it, and debit will lead to its reduction.
The rules of debit and credit are expected to be at your fingertips as an accountant. Any discrepancy in your answer would only lead you to doom. Thus, for a more precise understanding, make it a point to give the best answer, and that is probably all that is expected out of you.
24. Tell the things that will not be part of the bank reconciliation statement
There are a few things that the bank reconciliation will not include;
- Dishonoured cheques that are not recorded in the cashbook.
- The direct payments that a bank makes without entering it in the cashbook.
- The charges of the bank and debited interest by the bank.
- The cheques are already deposited but are yet to receive clearance.
- Wrong records of debit given by the bank.
- Direct payments to the bank that are not recorded in the cashbook.
25. How will you adjust the diverse entries into the account?
Adjusting entries into an account is of utmost importance as it will help you keep any confusion far. When the entries into an account are legit, there will be no question of discrepancy. You can adjust the entries into an account through the five categories;
- Accrued expenses: The expenditure that is already made, but the vendor is yet to prepare or generate an invoice.
- Accrued revenues: The company’s revenues are already earned, yet the sales invoices are still not prepared or generated by the company.
- Deferred revenues: The money that the company receives in advance before the stipulated payment or earning.
- Deferred expenses: Where the money was paid, keeping a future expense in mind.
- Depreciation expense: An asset that you purchase in a time must be for the expense in every accounting period that the asset lives for.
26. Explain the various activities that propel the cash inflow statement
The cash inflow statement points out the generated cash and used cash throughout the months or years. Cash inflow involves various activities that are as follows;
- Operating activities: The various business activities that require cash.
- Investing activities: The cash invested in buying or selling a property or pieces of equipment.
- Financial activities: Such activities refer to the purchasing of own bonds and stocks.
- Supplemental information: This refers to an exchange of significant items without including cash in the deal.
27. Give reasons as to why some of the asset accounts have a credit balance
You would notice various asset accounts having a credit balance. Such a scenario develops owing to;
- Continuing with the diminution and depreciation of an asset that has already reached zero.
- When the number of checks issued exceeds the amount present in the cash account.
- When an error happens owing to posting an amount into the wrong account.
- When the expenses occur faster than the agreed or stipulated pre-payments.
- When an asset account receives and posts an amount more than the record, it can receive.
28. What should be the things that a financial accountant should know?
Your interviewer would grill you to know the knowledge you have. The knowledge that you project will determine whether you get hired for the accountant post or not. There are a few things you should know, provided you dream of being a financial accountant;
- Principles/practices of accounting/bookkeeping.
- Reporting the data concerning finances along with its analysis.
- Audit of the various financial practices and principles.
- Management of accounts.
- Deciding on a budget.
- All the software knowledge goes into accounting.
- Keeping adequate information concerning the laws, codes, and regulations of accountancy.
- A good grip over soft skills.
- A knack for working as a part of the team and not as an individual.
- The capability to learn a skill and adapt to one with quick precision.
- The basic technical skills that a financial accountant should know.
29. Briefly elucidate on the diverse methods of calculating depreciation
The various methods of calculating depreciation have been enumerated as under;
- Method of Double declination: This method is used to calculate book value, which gets multiplied with a fixed rate of depreciation.
- Method of units of production: This method is a way of charging the depreciation on assets. Such a method is put to use when the asset value is close to the units produced in the year of use.
- Straight-line method: You can calculate via this method by finding the difference between the cost of assets and salvage value. Then you have to divide it by the number of years you expect to use.
- Sum of year digit method: This method is based on the prediction that the value of an asset decreases with time.
- Sinking fund method: This method is used when the cost of replacing an asset is too high.
30. Elucidate the difference between depreciation and amortization.
The difference between Depreciation and Amortization are as follows;
Refers to losing the value of an asset owing to its usage and wear and tear over time.
Refers to paying off or writing off the debts over a stipulated time. It is associated with loans and intangible assets.
The costs of depreciation are calculated based on tangible assets like plants, machinery, building, etc.
The costs are calculated via intangible assets like goodwill, loans, trademarks, etc.
The easier way of calculating depreciation cost is to find out the loss in value of an asset over time.
The cost of amortization depends on the expenditure incurred on the intangible assets throughout the lifetime.
The methods of depreciation include- group depreciation method, declining balance method, straight-line depreciation, production depreciation method, unit of time depreciation method, etc.
The methods of amortization include zoning amortization, negative amortization, and business amortization.
Some tips and tricks to answer accounting interview questions
Not just in an accounting interview specifically, any round of interview is most likely to encompass within itself questions ranging from diverse aspects. Right from academics to anything you put up on your resume, it all needs a justification. Your skills, behaviour, work habits, etc., everything is put to the test. Besides looking into the different accounting interview questions and answers, one needs to know certain basic tricks to frame answers.
- Firstly, while asking accounting interview questions, the employer seeks to test your experience and knowledge as a professional. Thus, any answer attached with a relevant supporting instance is more likely to stand a fair chance to impress the interviewer.
- Secondly, put utmost emphasis on the job description before appearing for an interview. Doing so will entitle you to have a better understanding of the role and responsibilities at hand. Moreover, you will be able to correlate your answer to the accounting interview questions with the role you are to perform during your tenure of work.
- Thirdly, make sure to be well versed with the company’s mission, vision, and strategies. The interviewer is very likely to ask accounting interview questions to test your research skills on the company and its operations.
- Last but not least, while appearing for an interview, you need to portray your interest in the job as well. To highlight your interest, you can go a step forward to ask any relevant questions to the interviewer, which in turn establishes your interest in the role.
Just preparing for the interview with the list of most expected accounting interview questions and answers will not be helpful if one is not aware of other disciplinary proceedings. Showing up at the right time, professional dressing, and many other factors, too, are accountable for getting the job. As an aspirant of an accounting professional, you need to hone the basic skills, but that is not the ultimate criteria. Any candidate who shows more confidence than you can secure a reputable position that you were aspiring to hold.
Having said that, the aforementioned list of accounting interview questions and answers is something that will act as a catalyst in helping you secure a job you have always dreamt of. While, on the one hand, we cannot look into the contingent events, one can focus on the probable aspects at hand. Similarly, good preparation on the probable questions can be a great deal to start with your career goals. If you have perceived accounting interviews to be nerve-wracking, you might not be wholly wrong. The fact is, every accounting interview question has, on the contrary, an ideal answer to it.
Hence, no matter what accounting interview questions you are faced up with, the answer is always there to fetch you your dream job. It is just a matter of analysis that counts. With that, we have come to the end of this article with all the best knowledge and information for the accounting aspirants out there. Make sure to take full utility and give your best in the next scheduled round of accounting interviews you would appear for.