The accounting job interview questions will differ. How? Accountants are vital to every company, institution, or government that handles money. Smaller companies that can’t afford in-house accountants utilize outside freelancers. Accountants work for advising companies, banks, and as tax advisors. As an accountant, you’ll encounter industry-specific interview questions. Others are prevalent in accounting interviews across industries. View this collection of common accounting interview questions and sample responses to help you crack your upcoming accounting interview.
1. What Are The Different Types Of Accounting?
There are different kinds of accounting.
- Financial accounting: This part of accounting keeps track of, sums up, and reports on all the business transactions in an organization over a certain amount of time. Both the private and the public sectors need it.
- Administrative accounting focuses on the organizational parts of a company. It is mainly used to see if the goals we set are being met and to make the strategy used better. It is beneficial for making predictions and planning what to do and what resources to use.
- Tax Accounting: Tax accounting helps people keep track of their tax returns and prepare reports for the public treasury. It also allows people to pay their taxes.
- Cost accounting is a type of accounting that industrial companies mainly use. It helps to thoroughly analyze the unit costs of production, sales, and the company’s overall production process.
- Management Accounting: Management accounting has a bigger picture than cost accounting because it keeps track of all the company’s economic and financial information to make short- and long-term decisions.
2. Suggest Anything To Improve The Company’s Working Capital Flow.
The stock on hand can be the key to increasing the company’s working capital. The store is the only part of the working capital we control. We can pressure our debtors to pay us right away, but we can’t directly control them as they’re legally distinct entities, and, in the end, they are the ones who offer us business.
We may be slow to pay our suppliers, but that hurts our business relationships and the industry’s reputation. Also, they might not sell us goods again if we don’t pay on time. Keeping money in the bank as liquidity can help with the flow of working capital, but it comes at a cost.
With all of this in mind, I think that inventory management can help a lot to improve the company’s working capital. The stock should not be too high, and the rate of stock turnover should be increased. Some industries, like electronic commerce, telecommunications, etc., work with negative working capital. So, before you answer, do some research on working capital.
3. How Do You Maintain Accounting Accuracy?
Accounting is essential for a business because if it isn’t done right, the company could lose a lot of money. One can use many tools and resources to make mistakes less likely to happen and fix them quickly if they do. The one I like best is MS Excel.
Some of the most common ways to make sure that accounting numbers are correct are:
- Find ways to make money.
- Pay close attention to bills and receipts.
- Prepare tax returns to avoid penalties.
- Prepare financial statements
- Keep track of tax-deductible costs.
4. What Are The Most Common Accounting Mistakes?
The most common accounting mistakes are –
- Combining personal and business accounts
- The company and the accountant didn’t talk to each other much.
- Not keeping a backup
- One used the wrong resources
- Not keeping the bills
- Doing accounting by hand
5. Do You Know What Accounting Standards Are? How Many Indian Accounting Standards Do They Have?
Even if you’ve never been an accountant, you need to know about International Accounting Standards. Even though this is such a big topic that it’s impossible to know everything by heart, you should still study the most recent changes before the interview so you can talk about them.
Currently, the International Accounting Standards Board usually puts out 41 accounting standards (IASB).
6. Why Do You Think Accounting Standards Are Mandatory?
Accounting Standards are essential to making an excellent financial report that is correct. It makes sure that financial statements are accurate and useful.
Accounting Standards tell every business how to make its financial documents. Because everything is the same, you can compare its market position to others who follow the same rules. As long as everyone uses the same method, there is no way to lie.
7. How Does Tally Accounting Work?
Small businesses and shops use accounting software to handle routine accounting transactions. Tally Solutions made this accounting software, which is very popular. It is used for all accounting tasks, like keeping track of financial transactions, making statements of assets and liabilities, and other analytical tasks.
8. How Much Does Documentation Matter In Accounting?
I think a company’s accounting team must give the company’s shareholders and management an accurate and fair picture. The accounting team is like the organization’s guard dog. Because of this, keeping good records is very important in accounting. One must check the correct paperwork to ensure an audit trail is marked and can be used when required.
9. What Are The Most Important Limitations That Can Stop Relevant And Trusted Financial Statements From Being Made?
- Delay, which leads to information that doesn’t matter
- Costs and benefits don’t match up.
- There was no balance between the qualities.
- The accurate and fair view presentation was not clear.
10. What Does Gaap Mean?
GAAP stands for Generally Accepted Accounting Principles (GAAP), which are rules put out by the Institute of Chartered Accountants of India (ICAI) and the Companies Act of 1956. It is a group of accounting rules and standard business practices. Organizations use it to:
- Write down the correct information about their money
- Put together financial statements from accounting records.
- Share information when asked to.
11. What Are Some Types Of Liability Accounts?
Some examples of widespread liability accounts are:
- Payable Accounts
- Accrued Expenses
- Payable Bonds
- Money paid by customers
- Taxes on income to be paid
- Installment Loans Payable
- Interest to be Paid
- Lawsuits Payable
- Mortgage Loans Payable
- Payable Notes
- Salaries Payable
- Liability for Warranties
12. Name Different Accounting Concepts.
The most common ideas in accounting are –
- Concept of Accounting Period
- The Idea of a Business Entity
- Price Idea
- Concept of Two Sides
- Concept of Going Concern
- Putting Ideas Together
- Measurement of Money Idea
13. Explain Contingent Liabilities.
Possible commitments that may or may not become actual liabilities are called contingent liabilities. They depend on the result of an uncertain future event. For example, suppose an ex-employee of the company ABC sues it for discrimination based on gender for a certain amount. In that case, the company has a contingent liability. If the company is found guilty, it will have to pay, but if it is not found guilty, it won’t have to pay anything.
14. List Some Of The Most Frequent Accounting Mistakes And Explain Them.
Some common accounting errors are:
- The error of omission is when an entity omits information from its financial statements that Generally Accepted Accounting Principles would otherwise require.
- An error of commission employee receives commissions instead of base pay for goods or services provided to the company. This can result in inaccurate financial statements since these payments are not reflected in net income as they should be. Additionally, this error makes it difficult to track changes over time and can distort comparisons between periods.
- Inaccurate depreciation: Depreciation represents an expense incurred on equipment, software, buildings, land, etc.,
- An error of commission occurs when an employee receives commissions instead of base pay for goods or services provided to the company. This can result in inaccurate financial statements since these payments are not reflected in net income as they should be. Additionally, this error makes it difficult to track changes over time and can distort comparisons between periods.
- The flawed assumption about interest rates: When making assumptions about future interest rates, companies may make errors that could have serious consequences. For example, if a company assumes a too-low interest rate will prevail during its forecast period, this could cause it.
- An error of original entry: This error generally occurs when entries are made in an accounting system without verifying that they conform to Generally Accepted Accounting Principles. This can lead to the incorrect recording of transactions, which could significantly impact financial statements.
- An error of accounting principle: This type of error typically occurs when a company follows one set of accounting principles, but the situation changes and results in an incorrect financial statement. For example, if a company reports revenue from product sales that exceeds its expenses by $10 million but later determines that it overstated expenses by $5 million to write a more significant profit margin on its financial statements.
- Compensating error: This error occurs when an employee is compensated for work that is not done. For example, an employee may be paid for hours spent on vacation. This can significantly distort the company’s financial performance.
- The error of entry reversal: This error generally occurs when the entries for one account are reversed in another tab without adequately documenting the reason. This could result in an incorrect financial statement that does not reflect reality.
- The error of duplication occurs when duplicate entries are made in one or more accounts, which can lead to inaccurate financial statements. For example, if a company records the purchase of a machine for $100,000 twice – first as an expense and then as a capital acquisition – this would be an example of an error of duplication.
15. What Are The Various Stages Of Project Implementation?
There are six steps involved in project implementation: identifying a need, Generating and screening ideas, conducting a feasibility study, Developing the project, Implementing the project, and Controlling the project.
- In the first stage of project implementation as an accountant, Identifying needs, it is essential to remember that you always need to be aware of the organization’s goals and objectives. For you to generate a variety of ideas, it is also necessary for you to know the different business sectors in which your client operates.
- As an accountant, generating and screening ideas is the second stage of project implementation. You will look at various potential solutions to meet the identified need during this stage. It would be best if you also remembered to take into account various budget constraints, as well as feasibility and practicality considerations.
- The third stage of project implementation as an accountant is Conducting a feasibility study, which is used to determine whether a proposed project will be financially viable.
- The next stage as an accountant for project implementation is Developing the project. Here, you will be looking at the various components of the proposed project and determining their feasibility.
- Implementing the project is the next stage. As an accountant, this step of project implementation requires a clear understanding of the project objectives and how one will achieve them. You should also ensure that all stakeholders are on board with the proposed project and that any necessary approvals have been obtained.
- The final stage of project implementation as an accountant is Controlling the project. During this stage, you will be monitoring progress and making any necessary adjustments to ensure the successful completion of
16. Share Some Intangible Assets.
There are a few intangible assets that can help your business – they include customer loyalty, brand recognition, and a solid online presence.
One can build customer loyalty through excellent customer service and by providing value-added products and services that your customers will appreciate. One can foster brand recognition through effective marketing strategy and consistent branding efforts. And one can achieve a solid online presence through well-written, well-designed content, on-brand social media profiles, and other online channels.
Other intangible assets include –
- Patents
- Domain names
- Copyrights
- Brand names
- Trademarks
These valuable assets can help your business grow, attract new customers, and cement your place in the marketplace. So, prioritize these investments in your marketing strategy – they will pay off in the long run!
17. Clarify The Term Dual Aspect.
The dual aspect term in accounting refers to the two aspects of an entity – financial and non-financial. Financial elements include assets, liabilities, and net worth, while non-financial aspects include goodwill, trademarks, and customer relationships.
Every business transaction needs double-entry bookkeeping due to the dual aspect. This may be seen with the help of an example: if you buy something, you give money and get goods, whereas if you sell something, you lose goods and gain money. The following characteristics define every transaction.
18. What Is The Difference Between Provision And Reserve?
Provision is the amount of money a business sets aside in anticipation of future liabilities. Keeping the funds for a specific obligation is referred to as provisions. In summary, EXPENSES. The term reserves refer to saving part of the profit for later use. In summary, PROFITS. Reserve is the cash and other assets kept on hand to meet those liabilities.
For example, suppose ABC Corporation has $1 million in cash and $2 million worth of short-term debt obligations due within one year. The corporation would make a provision for its short-term debt.
19. What Is The Difference Between ‘Accounts Payable (AP)’ And ‘Accounts Receivable (AR)’?
A business has two primary accounts – accounts payable and accounts receivable. Accounts payable are the expenses a company promised to pay soon, such as salaries, rent, and medical bills. Accounts receivable are the expenses that a company has already received from customers, such as sales revenue.
Accounts payable (AP) are a set of financial statements that show the amount of money owed to creditors. In contrast, accounts receivable (AR) are a set of financial statements that show the amount of money that creditors are owed.
The main difference between AP and AR is that AP usually reflects the money already paid out to creditors, while AR reflects the still due. This is important because it allows you to understand your financial position better and track changes over time.
It’s also worth noting that AP and AR are often used together in business because it’s often difficult to know which statement is more important without looking at both simultaneously.
When a company owes money to someone, it often withholds money from its account payable to cover those costs. When a company receives cash from customers, it may deposit that money into its account receivable. This balance will reflect the amount of money the company expects to receive in future transactions from its customers.
20. What Is Working Capital?
Working capital is a measure of a company’s current financial position. It reflects the difference between what was brought in (income) and what was paid out (expenses). Working capital can be used to help management make decisions about how to invest resources, and it can also provide critical insights into a company’s ability to generate cash flow. A company’s working capital is often used as an indicator of its financial health. Generally, when working capital is low, this may indicate problems with the company’s cash flow or that it has been investing in high-risk ventures. Similarly, high working capital levels suggest that the business generates healthy cash flow and has enough liquidity to cover its short-term obligations.
21. Which Accounting Platforms Have You Worked On? Which One Do You Prefer The Most?
No one platform is definitively better than the others. Each has its strengths and weaknesses, so choosing one that matches your specific needs and preferences is essential. Some popular accounting platforms include Microsoft Excel, QuickBooks, and Oracle QuickStart. It depends on what you need to do with your data – if you’re looking to create basic reports or graphically represent financial information, then one of these platforms might be all you need. However, if you want more intricate features or greater confidence when making complex financial decisions – perhaps because you work in the finance industry – then one of the more comprehensive platforms might be a better fit.
22. Since You Mentioned That MS Excel Is Your Favorite, Please Give Us Three Cases Where Excel Will Make Your Life Easier.
- Suppose you have a spreadsheet with data from multiple accounts, and you need to produce a simple report showing how each version performs. Excel can quickly summarize the data in your spreadsheet into a concise statement that’s easy to read.
- Suppose you need to create complex financial models or perform advanced calculations on your data. Excel is mighty for making these types of analyses quickly and easily.
- Suppose you are working with large amounts of data – perhaps hundreds or thousands of rows – and it becomes difficult to track down specific information without referring back to your source documents. Excel can quickly help you organize your data and search for detailed information, making it much easier to work with.
23. What Is The Difference Between A Trial Balance And A Balance Sheet?
A balance sheet is a financial statement that shows a business’s assets, liabilities, and net worth. It summarizes the company’s financial position at a particular point in time. More so, balance sheet analysis is used to identify any red flags or deficiencies in a company’s financial health.
A trial balance is a financial statement showing a business’s transactions for a specific period. It helps the owner or controller (if there is one) determine whether the amounts recorded in accounts are correct and accurate. A trial balance is a similar document but also includes information about transactions during the period examined (for example, sales and purchases). A trial balance is a financial statement that shows the assets and liabilities of a business at the beginning of a period. It determines a company’s income and expenses during the period.
24. What Is The Difference Between Depreciation And Amortization?
Depreciation is a costly accounting expense that comes as companies use assets (such as land, equipment, or software) over time. The amount of depreciation allocated to each purchase can be affected by factors such as age and expected life span. Amortization is an unrelated expense whereby companies deduct a set amount of money from their accounts every month to cover the costs associated with acquiring or using long-term intangible assets (such as patents, trademarks, and copyrights).
25. Tell Me The Golden Rules Of Accounting, Just The Statements.
There are many accounting rules that every business should be aware of, but here are some of the most common ones:
- All transactions must be recorded chronologically and adequately documented to support financial statements.
- Every entity must have a legal name, which should be recorded in the company’s records.
- All assets and liabilities must be accurately reflected in the company’s financial statements and recorded in relevant currency to the company’s business.
- The net income or loss for a period should reflect all income and expenses incurred during that period, as well as any equity changes during that period.
- One must prepare the company’s financial statements by Generally Accepted Accounting Principles (GAAP).
Other includes:
- Charge the receiver and give the giver a credit
- Subtract what comes in and add what goes out.
- Subtract all expenses and losses and add all gains and incomes.
Hopefully, these rules will help accountants keep their business running smoothly and ensure that their financial statements are accurate and reflect reality at any given time.
26. Please Explain What It Means To “Charge The Receiver And Credit The Giver.”
When a company charges someone, they are crediting that person’s account. When a company gives someone something, they debit that person’s account. The account balances are updated in the company’s books in both cases.
In the case of personal accounts, this rule is used. Suppose a person gives money to an organization in cash or by check. In that case, it is an inflow, and one must credit that person in the organization’s books of accounts. So, when an organization gets the money or check, it has to give credit to the person who paid and took money from the organization.
27. In The Balance Sheet, What Are Some Examples Of Fixed Assets?
Fixed assets can be anything from furniture to office equipment to land. The critical thing to remember is that these assets are not used or consumed during business operations – they are held for future use. Some common examples of fixed assets include:
- Furniture – This includes items like desks and chairs and any other office equipment that is not used daily.
- Computers and software – This includes computers and software used specifically for business purposes.
- Vehicles – This includes cars, trucks, and boats, as well as any other equipment that is used for transportation purposes.
- Land – This includes any land owned or leased by your business. One can use it for any purpose, including manufacturing or retail space.
28. What’s Not So Great About A Double Entry System?
- It’s hard to find the mistakes, primarily when the transactions are written down.
- If there is a mistake, one must do a lot of paperwork.
- You can’t tell everyone about a transaction incorrectly written down in the journal.
29. What Are Revenue Recognition And Matching Principles?
Revenue recognition decides when an organization should recognize revenue from its products or services. This principle says that payment should be realized and noted when it is discovered and earned, regardless of when one paid the money.
Matching principles tell an organization how to account for revenues and expenses when they occur. Matching tenets include the following:
- The substitution principle states that an organization should match revenue from one type of sale with expenses related to that sale. For example, suppose a company sells widgets and spends money on advertising. In that case, it should record the income from widget sales and any associated costs (like advertising) in its accounts.
- The commitment principle says that an organization must account for all contract elements—including revenue and expense items—to determine whether or not a contract has been met. So, suppose Company A signs an agreement to sell widgets for $10 each and pays Company B $5 upfront to cover inventory costs. In that case, Company A should record the sale of gadgets and the $5 it paid to B in its financial records.
- The reality principle says an organization should account for all revenue and expense items incurred during a given period. So, if you delivered your software on July 1st but didn’t collect any sales until August 15th (because people were still testing it), then you would include those sales in your totals from July 1st through August 15th, even though
The matching Principle is a rule saying that a company should simultaneously put an expense on its income statement as the related revenue. It has to do with accounting on an accrual basis.
30. How Many Stages Does The Double Entry System Have?
In the Double Entry System, every transaction has two effects. For example, every debit transaction will have an equal credit transaction. Individuals and organizations use this system to keep track of their day-to-day business transactions, such as when they get or give up benefits.
The double-entry accounting system is made up of three steps. Here’s what they are:
- First Stage: It starts with making entries in the Journal of Primary books of accounts.
- The second stage: Putting transactions into the correct ledger accounts and making a trial balance are both ways to classify transactions.
- The third phase: This process ends when the books are closed and the final books of accounts are made.
Conclusion
Accounting interview questions include a combination of accounting concerns and your accounting talents, plus soft skills, character, and work habits.
Never put up a fake front during a job interview since your employer may see your lack of openness as a sign of deeper concerns.
You may boost your chances of being hired by practicing popular job interview questions and questions for accountants. Use career examples and be organized to succeed. You want to present a fascinating, fact-based tale, but don’t go too specific.
