Do Handling Accounting Interview Questions Make You Nervous?
This blog will not only calm your nerves but will also prepare you to answer accounting interview questions confidently.
The scope of accounting is diverse. It is used in business, public limited, private companies, banks, and finance companies. Companies use standard basic rules of accounting. Accounting includes recording, analyzing, and review of financial transactions. The review of accounting reports gives details of the financial status of a company. Trade and commerce are evolving. This is due to developments in technology. Hence, the job of an accountant will always be in demand. And so, it is a great career option. It is hence, necessary for the candidates to prepare themselves to handle accounting interview questions and answers. This will help to prove that you are the best candidate for the accountant post.
Here is the list of the Top 50 Accounting Interview Questions with Answers.
Q1. Why do you want to choose Accounting as a career? ( Frequently asked accounting interview questions)
Answer. I have an interest in numbers. And I have scored distinction in accounts throughout my graduation. In fact, this is one profession where we have to keep ourselves updated. Hence, the choice.
Q2. What according to you are the skills an accountant should possess?
Answer. The skills an accountant requires are:
- Good knowledge of Math
- Analyzing abilities
- Technological skills
- Organized, and
- Disciplined approach
Q3. What is the accounting software you have worked in? ( One of the frequently asked accounting interview questions)
Answer. Some of the software I have used so far are Tally, Zoho, FreshBooks, and Wave. Out of these TallPrime is the best software for handling accounts, taxation, banking, and payroll. I plan to learn Oracle Netsuite to update myself on the latest technology. This accounting software helps not only keep the finances on track but also keeps them safe. Moreover, I have knowledge of myBillBook.
Q4. How are assets and liabilities shown in the balance sheet?
Answer. Assets are on the left side of the balance sheet. It is a summary of what the company possesses. However, liabilities are on the right side of the balance sheet. It is a summary of what the company has to pay others
Q5. What are the 7 types of accounting? ( One of the frequently asked accounting interview questions)
Answer. The top 7 types of accounting are:
- Financial Accounting- This involves not only recording and studying but also presenting financial data.
- Managerial Accounting- This method of accounts presents money-related data. So, this accounting is used for internal purposes.
- Cost accounting- It is a form of accounting that reviews the total cost of the product manufactured or the services offered by the company.
- Auditing- This is a check or an inspection of the entire accounting method used.
- Tax Accounting- The Internal Revenue Code governs tax accounting.
- Accounting Information- The data that is collected from various financial statements is accounting information.
- Forensic Accounting- This method of accounting examines if the company or the person has been involved in a crime.
Q6. What is working capital? ? How do we calculate it?
Answer. Working capital is the funds used in day-to-day business. When the accountant subtracts current liabilities from current assets, we get working capital. Moreover, in accounts working capital is the amount of money with the company at any given point in time. In fact, the company uses working capital for short-term expenses. However, apart from cash it also includes short-term financial products.
Q7. Can you suggest a few ways to increase the company’s working capital flow?
Answer. According to me, stocks on hand can help in increasing the working capital. In fact, it is under our control. Moreover, we can urge debtors to repay debts. But we cannot depend completely on these funds. As they are separate entities and the business depends on them. We can delay payments by a few days but this affects the goodwill of the company. In conclusion, maintaining a sufficient bank balance also helps.
Q8. How can one ensure the maintenance of accounting accuracy? ( One of the frequently asked accounting interview questions)
Answer. I feel this is the foremost duty of an accountant. If the company does not maintain proper accounts, it will make losses. There are many methods to use to limit errors. Some of the ways of removing errors are:
- Identify sources of income
- Keep invoices and receipts in check.
- Tax to be filed on time.
- Prepare all statements within the given time frame.
- Keep a close watch over expenses that can be deducted.
- Any small variation in accounts needs to be handled instantly.
- Account books should be maintained as per standards.
Q9. What is TDS? Where does TDS appear on the balance sheet?
Answer. Tax is deducted when income is received from various sources. TDS is tax deducted at the source. TDS appears on the assets side of the balance sheet. The entry of TDS is after the heading of the current asset.
Q10. What is the difference between AP and AR?
Answer. Accounts payable come under liabilities. In fact, it is the amount a company owes to its vendor. Since the goods or services are purchased from him on credit. Accounts receivable come under assets. It is the amount the company is due to receive. Since the goods or services are sold to vendors on credit.
Q11. Are a trial balance and balance sheet the same? ( One of the most asked accounting interview questions )
Answer. In fact, the trial balance and balance sheet are not the same.
- A trial balance is a summary of all ledger accounts of a business.
- It contains the name of each ledger account with the ledger balance.
- The ledger balance can have a debit or a credit balance.
- It is a worksheet with debit and credit balances.
- This is to ensure all entries are accounted for correctly.
- A balance sheet is a complete record of all the company owns, what the company has to repay, and equity.
- It is one of the three important financial statements for a business.
- The statement gives a perfect picture of the company’s affairs.
- It is prepared at the end of specific periods.
Q12. What are inactive and dormant accounts?
Answer. The accounts that are closed and will not be used in the future are called inactive accounts. The accounts that are closed temporarily but may be opened in the future are called dormant accounts. In fact, dormant accounts can be opened again.
Q13. What are the most common accounting mistakes? ( One of the most asked accounting interview questions)
Answer. The most common mistakes done in accounting are
- Not recording receipts.
- Maintaining manual accounts.
- Not updating books of accounts.
- Misuse of resources.
- Not maintaining separate accounts not only for personal use but also for the company.
Q14. How many kinds of accounting standards are there? (most asked accounting interview questions)
Answer. According to the IASB, there are 41 accounting standards.
Q15. Do you think it is compulsory to follow accounting standards?
Answer. I feel it is mandatory to follow accounting standards. In fact, it is a benchmark for accuracy. Since every company follows these standards it brings about uniformity. Aii in all, a company’s reliability is assessed based on these standards.
Q16. What is service tax? When is it levied?
Answer. The government levies taxes on vendors providing service. But it is actually paid for by customers. In fact, it comes under the heading of indirect tax. It was started in 1994.
Q17. Who uses tally accounting? ( One of the frequently asked accounting interview questions)
Answer. It is accounting software. And it is used by small shops and business houses for day-to-day transactions.
Q18. What is the meaning of fictitious assets?
Answer. Assets that have no physical entities are called fictitious assets. They appear on the assets side in the financial statement. In fact, they are losses that are not written off during that particular period.
Q19. If you had an option of reviewing just one financial statement to access the company’s affairs, which would you ask for and why? ( One of the most asked accounting interview questions)
Answer. It would certainly be the balance sheet. In addition, to what the company owns and what the company has to pay, it gives information about the owner’s equity. In fact, a simple equation can be used to review the affairs of the company. Assets = Equity + Liabilities. The balance sheet provides information on how the business is financed and how funds are used. Moreover, it helps to understand the performance of the business.
Q20. What is public accounting?
Answer. Preparing financial statements, auditing, filing tax returns, and counseling on mergers and takeovers for clients is called public accounting. Moreover, here the accountant provides accounting services to clients for a particular fee.
Q21. Can you explain the periodic inventory system? ( One of the frequently asked accounting interview questions)
Answer. In this system of inventory, the accounts are updated at the end of the accounting period. It is not made with every sale or purchase made. In addition, this system helps to record inventory balance at the beginning and at the end of a particular period.
Q22. What is CPA? ( One of the frequently asked accounting interview questions)
Answer. The full form of CPA is certified, public accountant. It is the highest degree in the field of accountancy, the world over. In fact, it is a designation given to accountants who have cleared the exam conducted by AICPA.
Q23. What do you know about departmental accounting? Have you used it before?
Answer. Each department has a separate accounting system. In addition, trial balances are also prepared for each department. Moreover, each department is looked up as a separate unit with a separate set of books for each. The main purpose of this kind of accounting is to review the performance of each department.
Q24. What is the difference between public and private accounting?
Answer. Public accounting involves analyzing financial statements. This is done to check if the accounts meet the standards. After the analysis, the statements are revealed to the public. Whereas private accounting is done for internal purposes. An internal auditor takes charge of accounting for the company’s finances.
Q25. How are bad debts calculated? ( One of the frequently asked accounting interview questions)
Answer. An amount of debt that is not paid by the debtor has to be written off. That debt is called bad debt. An average percentage is taken based on past bad debts. That percentage is applied to net sales. In fact, this gives a rough estimate of bad debts.
Q26. What does GST stand for?
Answer. GST stands for Goods and Service Tax. A person utilizing a service has to pay tax at a certain rate. However, the seller has to transfer this amount to the government. All in all, it is an additional tax levied.
Q27. How is VAT different from GST? ( frequently asked accounting interview questions)
Answer. The full form of VAT- value-added tax. The service provider deducts taxes for the services. The rates vary from state to state. Whereas GST is levied on the sale of goods and services. It is a fixed rate across India.
Q28. Can you throw some light on the bank reconciliation statement?
Answer. The comparison made between a person’s bank account and the bank records is a reconciliation statement. However, the accountant generally makes the statement when there is a variation in the passbook and the cash book of the bank.
Q29. What is the relationship between assets, liabilities, and owner’s equity?
Answer. The value of assets is equal to the sum of all liabilities and owner’s equity.
Q30. Define the implementation of a project. ( One of the frequently asked accounting interview questions)
Answer. The implementation uses plans to achieve goals. There are six steps for implementation. They are:
- Understanding goals
- Brainstorm new ideas
- Analyses various options
- Creation of project
- Put the project into action
- Final overview of the project
Q31. What is the main difference between accounting and auditing?
Answer. Accounting is maintaining day-to-day business transactions. Whereas auditing ensures the business follows accounting standards
Q32. Define purchase returns in Accounting.
Answer. In accounting, PR means sending defective products back to the vendor.
Q33. What is retail banking?
Answer. Banks handle money transactions of common people. This is retail banking.
Q34. What is depreciation? ( One of the frequently asked accounting interview questions )
Answer. With the passing of time assets tend to lose their initial value. Moreover, the assets are subject to wear and tear. This results in a decrease in their valuation. All in all, depreciation is the reduction in the value of an asset.
Q35. What is Acid-Test Ratio?
Answer. This is a test to check the short-term liability of a company.
Q36. Does documentation play an important role in accounting?
Answer. The accounting process starts with documentation. So, the company maintains bills and receipts. Moreover, it helps with the audit process. The auditor may want to see the documents to verify accounts.
Q37. What is scrap value in accounting? ( One of the frequently asked accounting interview questions)
Answer. The value of an asset when it stops adding value to the business.
Q38. Can a company have negative working capital?
Answer. Sometimes the company’s current liabilities might be more than the current assets. Then it is termed negative working capital.
Q39. What is the difference between a consignor and a consignee? ( One of the frequently asked accounting interview questions)
Answer. The consignor is the person who owns and sends goods to the vendor. Whereas a consignee is a person who gets goods from the consignor.
Q40. Is the knowledge of statistics necessary for accounting?
Answer. Along with statistics, good knowledge of maths is also necessary for accountancy.
Q41. What is marginal costing?
Answer. Companies use excess raw materials to produce units more than their normal output. Marginal costing is the use of excess materials.
Q42. What are overhead expenses? ( One of the frequently asked accounting interview questions )
Answer. Business houses use expenses to run their daily transactions. These expenses are overhead expenses. Eg. Payments to employees, shop rent, etc.
Q43. What are trade bills?
Answer. Companies use trade bills to settle business deals. In fact, the vendor gives it and the purchaser takes it. Moreover, there are 3 forms of trade bills.
Q43. What is fair value accounting?( One of the frequently asked accounting interview questions)
Answer. The process of analyzing a company’s assets and liabilities based on market value is fair value accounting.
Q44. Can you shed some light on Offset accounting?
Answer. The business uses offset accounting in loan accounts. In addition to salary, deposits link this account.
Q45. What is the difference between provision and reserve?
Answer. Reserve is the profit deposits of a company. In fact, a reserve is a fixed amount of money. The business keeps it as a reserve. Hence, this helps to meet daily expenses.
Q46. Explain the first golden rule of accountancy. ( One of the frequently asked accounting interview questions)
Answer. The business makes a debit entry for the receiver. The business makes a credit entry for the giver.
Q47. How do we calculate capital funds?
Answer. The total sum of assets minus the total sum of liabilities gives a capital fund.
Q48. What are liquid assets?
Answer. Liquid assets are assets that give instant cash in a short span of time.
Q49. What information can we gather from a company’s balance sheet? ( one of the frequently asked accounting interview questions)
Answer. A company’s balance sheet is the reflection of the affairs of the company. In fact, it gives details about the company’s finances. All in all, the balance sheet shows the net worth of capital at the current rate.
Q50. Can you prepare the profit and loss and the balance sheet of a company if the financial details are provided? ( One of the frequently asked accounting interview questions )
Answer. Yes, I have experience in preparing the profit and loss and the balance sheet of a company. As I have worked as an accountant for 2 years.
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Add on Courses to Help Answer Accounting Interview Questions
A good accounting and taxation course goes a long way in helping one handle accounting interview questions and answers. In fact, you can be confident and positive only when you have the right knowledge. Moreover, it is necessary to research the company to which you are applying. Speaking in a loud, confident voice creates an impression in the minds of the interviewer. When in doubt it is always better to accept you don’t know. In fact, it is much better than beating about the bush. In addition to preparing for the interview read the newspaper regularly. This will keep you abreast with the latest news. And remember learning never stops. Keep updating your skills and never stop learning. All the very best for all your future endeavors.