Interviews for accounting positions can be very stressful as the candidate has no idea as to which specific area is going to be tested. Accounting jobs include technical expertise, financial knowledge, the ability to analyze, and also need to focus on ethics. The questions listed below are 50 of the most frequent accounting interview questions and their responses have been explained in detail. It does not matter whether you are a newcomer to the working world or an experienced worker these questions will assist in getting an idea of what questions may be asked in an interview and the appropriate response.

50 Accounting Interview Questions and Answers:

Q1. What are the different types of financial statements?

The basic categories of financial statements include the Balance Sheet, Income Statement, Statement of Cash Flows, and Statement of Changes in Equity.

Q2.Can you explain the difference between accounts payable and accounts receivable?

Accounts payable is the money whichthata business has to pay to its suppliers; accounts receivable is money that a business is expecting from its customers.

Q3. What is double-entry accounting?

Double-entry system of recording involves making at least entry for each transaction under a particular account and its corresponding entry in another account.

Q4. How do you define working capital?

This means that working capital is the amount by which total current assets of a business exceeds or is less than the total current liabilities, an essential determinant of the short-term financial position of a business.

Q5. What are deferred revenues?

Accumulated revenues are the amounts that a firm has received in cash for products that have not yet delivered or service has not been rendered.

Q6. What is accrual accounting?

Accrual accounting recognizes revenues and expenses in the periods when they are earned or incurred, although cash flows may occur in a different period.

Q7. Explain the accounting equation.

This is known as the accounting equation: assets = liabilities + equity to confirm that we always have a balanced balance sheet.

Q8. What is depreciation, and why is it important?

Depreciation refers to the process of writing off or expensing out the cost of a tangible asset from its value over its useful life. It vital for the matching of expenses with revenues and in the determination of the right value for assets.

Q9. Can you differentiate between capital expenditure and revenue expenditure?

Capital expenses refer to expenses incurred on acquiring and maintaining fixed assets while revenue expenses are any expenses that affect operations in the short term.

Q10. What is a trial balance?

A trial balance is a statement that presents the balance of accounts in the general ledger to ensure that the accounting transactions are proper.

Q11. What are adjusting entries?

Adjustments entries are the journal entries made at the end of an accounting period to ensure that the accounts so to reflect as near as possible the current economic reality in preparation of the statement of financial position and the income statement.

Q12. Explain the difference between a general ledger and a subsidiary ledger.

A general ledger is a single book of account which contains all the accounts to record transactions, whereas subsidiary ledgers has records of particular accounts like accounts receivables or accounts payables.

Q13. What is the purpose of reconciling a bank statement?

Bank statement reconciliation involves comparing records of the company with the records of the bank towards the end of the month or any other period to detect such anomalies.

Q14. How do you account for bad debts?

Bad debts are provided for by making a provision for doubtful accounts, assessing the amount that will not be recoverable and then taking the necessary and appropriate provision for specific bad debts that have been identified.

Q15. What is inventory valuation, and what methods are commonly used?

It is a part of accounting which identifies the cost of inventory. These methods are incorporating the First-In, First-Out (FIFO), the Last-In, First-Out (LIFO) and Weighted Average Cost methods.

Q16. What are contingent liabilities?

Contingent liabilities refer to probable future cash outflows which will occur in the future when particular conditions are met for instance, litigation costs or warranty costs.

Q17. What is the purpose of a statement of cash flows?

Statement of cash flows is an important financial statement that shows the company operating cash receipts and cash payments during the accounting period under operating, investing, and financing activities.

Q18. How do you calculate earnings per share (EPS)?

Net Income is calculated as company revenues less expenses while Preferred Dividends are the portions of earnings that a company allocates to preferred stockholders.

Q19. What is the difference between gross profit and net profit?

Gross profit is the revenue that is left after removing the direct cost of the products sold, while net profit is the result of subtracting all expenses of the business including the cost of goods sold, cost of sales, operation expenses, interest, and taxes.

Q20. What is the difference between cost accounting and financial accounting?

Cost accounting focuses on capturing a company’s total production cost, while financial accounting is concerned with reporting financial information to external parties.

Q21. Explain the concept of materiality.

Materiality is one of the most fundamental concepts in accounting and it refers to the threshold below which costs, revenues or assets and liabilities are deemed to be immaterial and hence do not require recognition in the accounts of the business.

Q22. What is a bank reconciliation?

Bank reconciliation is a procedure, which consists of comparing the figures in the enterprise’s records and checking the corresponding data in the statement of a certain bank.

Q23. What are intangible assets?

Intangible assets are assets with no physical existence, but they possess value and are recognized as assets, for example, patents, trademarks, and goodwill.

Q24. How do you account for bad debts?

Uncollectible accounts receivables are estimated and the journal entry made to record bad debt expenses which adjusts the allowance account for doubtful accounts.

Q25. What is goodwill?

Goodwill is recognized as an intangible value if a company buys another company for an amount higher than the total net fair amount of its assets.

Q26. What are contingent liabilities?

These are often legal contingencies which depend on the occurrence of one more more future events – litigation, guarantees etc.

Q27. Explain the matching principle.

The matching rule asserts that arising costs should be reported in the fiscal period as corresponding to the revenue-generating activity to correctly measure profit.

Q28. What is a contra account?

A contra account reduces the balance of the account that it is linked to, for instance, accumulated depreciation that reduces the balance of the associated asset account.

Q29. What is the purpose of an audit?

An audit is a detailed check of all financial statements to make sure that the financial data is correct and follows established accounting rules.

Q30. Explain the term “liquidity.”

Liquidity is the measure of readiness of an item to be sold and converted to cash without changing its price.

Q31. What is equity?

Equity refers to the balance the owners have in the total value of a firm’s stake minus its liabilities.

Q32. How do you calculate net income?

Net income implies the difference between total revenues and total expenses incurred in business operations.

Q33. What is an operating cycle?

An operating cycle is the period that starts with the purchase of stock, then selling the stock and collecting cash from it.

Q34. What is capital budgeting?

Capital budgeting is also known as investment appraisal and entails the assessment of a firm’s long-term investments by analyzing possible projects or new investments based on their expected returns.

Q35. What is variance analysis?

This is a financial tool which aims at comparing the results of the company’s actual performance with the planned results in order to demonstrate any differences (variance analysis).

Q36. Explain the term “retained earnings.”

It is the amount of money that has been earned by the company through its operations less the amount paid out as dividends to the shareholders.

Q37. What is a cash flow statement?

Cash flow statement is an important report that provides information on cash receipts and payments from operations, investments and financing activities during a period and it measures the operating capacity and solvency of the firm.

Q38. What is a petty cash fund?

Petty cash is a small amount of money set aside for immediate, unanticipated expenses that may come up.

Q39. How do you account for inventory?

Methods of inventories include first-in, first-out (FIFO), last-in, first out (LIFO) method, and average cost method, and they have different impact on the cost of products sold and on inventories.

Q40. What is a budget?

A budget is a projected plan of expenditures and revenues encompassing a given period of time which provides the framework for choice and an assessment of the organization’s past performance.

Q41. What are accrued expenses?

Accrued expenses are those expenses in which payment has been made, or the expense has been incurred and it has not yet been accounted for at the end of an accounting period.

Q42. What is revenue recognition?

Revenue recognition refers to the guideline that the recognition of the revenue should occur at the time when the revenue is earned despite the fact that the amount may not have been received.

Q43. What are long-term liabilities?

Long-term liabilities are those items that are due after more than one fiscal period or after twelve months; examples are bonds that are repayable after one year or loans that are due after one year.

Q44. What is a general journal?

A general journal is a source document that contains a record of the financial transactions that have occurred during a particular period in a business entity and is used to record all transactions in the chronological order in which they occurred.

Q45. Explain what a fixed asset ?

Property plant and equipment are consumables used in the business operations for more than one accounting period, for instances, buildings, vehicles, etc.

Q46. What is inventory turnover?

This is interpreted as the number of times a product is sold and restocked in a given period, hence show how efficient the firm is in management of stocks.

Q47. What is the purpose of financial ratios?

Financial ratios that can be used to measure different aspects and condition of the business operations of a particular company.

Q48. What is a contingent asset?

A contingent asset is the one whose realization is contingent upon the occurrence of a particular event or the outcome of such an event.

Q49. What is the purpose of a statement of changes in equity?

A statement of changes in equity reveals the changes in equity accounts throughout a period, by means of net income, dividends, and other equity-bases.

Q50. What is an accounting standard?

Generally accepted accounting principles (GAAP) are standardized rules that act as a framework in terms of presenting accounting and complete financial records.

Conclusion

If you are going for an interview on accounting and finance it is important to prepare well. Above is a list of questions that are frequently asked by interviewers and coworkers, with their answers You prepare for your interview and get ready to impress your would-be employer by answering each of these: Taken together, use of these questions will ensure that you present yourself in the best way possible to the employers, especially if you are just beginning or when searching for promotion.