Financial accounting is a domain that will never go out of fashion. And that is one of the reasons why it can be an excellent career option for you. But bear in mind that if you do plan to go with financial accounting, you'll need to ensure that you have the right skills, and get in-depth knowledge of financial accounting.
You see, accounting(and taxation) is a vast field wherein you'll need expertise in a variety of subjects. For an entry-level candidate especially, it can be an uphill task to know exactly which accounting job interview questions will be asked by the recruiter.
And hence this guide on account related questions for the interview that you can browse and then realize how to best answer the basic accounting questions for interview. The recruiter—who will be asking you interview questions for accounting job—will be solely focusing on uncovering your knowledge. Perhaps, they might actually refer to several interview questions for accountant jobs compiled in this manner to prepare a questionnaire for you come d-day.
And if you already have a solid understanding of what will be asked and how you will respond, you can expertly exhibit your industry knowledge and accounting job related skills. Needless to say, this will only make a first good impression.
By asking account interview questions, recruiters will want to know how to fit in at the organization, but more importantly, how you work. Such accounts interview questions and answers will definitely help you understand the recruiter's ideal candidate much before the real interview.
In fact, these interview questions for accountant jobs can assist you in finding more about the vast array of skills and abilities that are needed for the job. Do keep in mind that when answering these accounts interview questions for freshers and experienced candidates, you should provide as many examples as possible that highlight your skills, achievements, and overall personality.
Question #1: What is a balance sheet? What is the process behind preparing one?
Question #2: How do you ensure that accounting accuracy is maintained?
Question #3: What are the differences between Accounts Receivable (AR) and Accounts Payable (AP)?
Question #4: According to you, which are some of the most-common mistakes in Accounting?
Question #5: What do you know about Accounting Standards and how many does India have?
Question #6: Can you explain a deferred tax asset and how value is created?
Question #7: What can you tell us about Tally Accounting?
Question #8: What is the importance of documentation in terms of accounting?
Question #9: Can you tell us something about the stages of a Double-Entry System and its disadvantages?
Question #10: What do you know about Generally Accepted Accounting Principles (GAAP)?
Question #11: What are some common examples of accounts that can be considered as liabilities?
Question #12: What do you understand about the term "dual aspect"?
Question #13: Define credit and debit notes?
Question #14: According to you, which are some of the common errors in Accounting?
Question #15: What is an Accounting Information System(AIS)?
Sample Answer: Balance sheet is basically a sort of press release that consolidates and states all the assets and liabilities of the organization at a particular instance. The business entity, at the end of the financial year, closes its business journal with specific entries till that particular date.
These entries in the journal are put up in the corresponding ledger accounts. Also, the accounts are matched to prepare the final balance sheets with details about all liabilities and assets.
Sample Answer: For any business organization, it's really important to maintain accounting accuracy because if it isn't, there will be significant losses. In my opinion, any accounting professional can rely on certain resources (software and tools) that can not only limit the number of errors, but also quickly correct them without any hassles.
For an entry-level or experienced accountant, one of such tools that helps in accuracy is Microsoft Excel. The other ways, in my opinion, that can help in reducing accounting errors include.
- Monitoring receipts and invoices
- Keeping track of deductible expenses
- Preparing tax returns to limit or totally avoid penalties
- Preparing financial statements and identifying revenue streams
Sample Answer: AR is the amount that a business organization has the right to collect as a result of the services or goods it sold to customers on credit. Accounts Receivable can be thought of as assets.
On the other hand, AP is the amount that a business organization owes to a supplier or a vendor in exchange of goods or services it purchased on credit. Accounts Receivable can be thought of as liabilities.
Sample Answer: As an accounting professional, I think the following are some of mistakes in accounting:
- Performing manual accounting
- Disregarding the need of creating a backup
- Not segregating business and personal accounts
- Not saving receipts for reference and misallocating resources
- Not updating accounting books and performing manual accounting
- Little to no communication between the accountant and the business group
The International Accounting Standards Board (IASB) is an independent international body based in London that sets (issues) accounting standards i.e. International Accounting Standards (IAS).
International accounting can be thought of as a subset of accounting that considers accounting standards at the time of balancing books. These globally-accepted standards promote accountability, transparency, and efficiency in all major financial markets all around the globe. With the standards in place, market participants and investors can make informed (economic) decisions with regard to risks and investment opportunities which can ultimately improve capital allocation.
International Accounting Standards have also had a huge role to play in reducing regulators and reporting costs. It is beneficial, especially to companies who operate out of (or have subsidiaries) other countries.
In India, the National Financial Reporting Authority (NFRA) recommends the accounting standards to the Ministry of Corporate Affairs (MCA), Government of India. The MCA, in turn, has to elucidate the accounting standards that will be applicable for business entities in India. Currently, the MCA has spelled out 41 Indian Accounting Standards for companies in India.
Sample Answer: A deferred tax asset can be defined as the tax amount that is either carried forward or paid, but hasn't been recognized as a part of the income statement. Value is eventually created if the taxable income is subtracted from the book income.
Sample Answer: Tally is an accounting software utilized by small and medium-sized business entities to monitor and manage day-to-day accounting transactions. The popular accounting software engineered by Tally Solutions can be used for a variety of accounting activities such as generating statements of liabilities and assets, recording financial transactions and other analytical tasks.
Sample Answer: It's my honest belief that the accounting team at any business organization has to shoulder the responsibility of exhibiting a fair and true view of the company's financial dealings (and overall financial health) to the management and shareholders. They, in many ways, are custodians of the company's future and overall growth.
In this regard, documentation holds a high value when it comes to accounting. That said, when documentation is prepped, the accounting team themselves must inspect it for any irregularities(errors) so that a proper audit trail is not just maintained, but also justified when the time arises for the same.
Sample Answer: A Double-Entry System in Accounting comprises 3 stages.
#1 The recording of transactions in the system for accounting
#2 The preparation of a trial balance for every respective ledger account
#3 And finally, the preparation of final documents the closing of the books for respective accounts
Sure, the Double-Entry System has its own flaws. In my opinion there are 3 major disadvantages.
- It's cumbersome to locate errors when all the transactions are recorded in books
- If there is an accounting error then the manual labour required is extensive
- There is no possibility of disclosing all the details of the transaction that isn't correctly recorded in the journal
Sample Answer: Generally Accepted Accounting Principles or GAAP, is issued by the Institute of Chartered Accountants of India (ICAI). It is also governed and bound by the provisions of the Companies Act, 1956.
It's basically an assemblage of accounting standards that is utilized by business entities in India to properly record details about their financial information, disclose any financial information whenever required, and summarize accounting records into financial statements.
Sample Answer: In my opinion the following can be considered as accounts that can be thought of as liabilities for any business organization in India.
- Salaries Payable
- Lawsuits Payable
- Mortgage Loans Payable
- Warranty Liability
- Bonds Payable
- Installment Loans Payable
- Interest Payable
- Customer Deposits
- Accounts Payable
- Income Taxes Payable
- Accrued Expenses
- Notes Payable
Sample Answer: What dual aspect means is basically that every transaction of a business organization needs double-entry bookkeeping. This can be better understood from a simple example.
For instance, whenever you buy any product or subscribe to any service, you offer money in exchange. Similarly, when you want to sell anything, you give up the commodity in exchange for money. This is the basic principle that governs every transaction regardless of its high or low value.
Sample Answer: A credit note is nothing but a receipt that is handed to a customer by the seller (business organization) for returning a product (or giving up a service). The transaction is indicative of the fact that the account of the buyer is being credited for the same purpose.
A debit memorandum (or debit note) on the other hand is a commercial document from the buyer that is forwarded to the seller as a formal request for a credit note. In this case, the original document is forwarded to the entity that receives the returned commodity. The duplicate copy of the document is then retained by the returnee for future reference.
Sample Answer: Some of the most-common examples of errors in accounting are:
- Compensating error
- Error of entry reversal
- Omission error
- Original entry error
- Error of accounting principle
- Error of duplication
- Commission error
Sample Answer: An Accounting Information System(AIS) is a computer-aided mechanism that is utilized to track accounting activity. This activity involves collecting, storing, processing, organizing, and summarizing accounting transactions and financial data.
An AIS also assists in aggregating important financial reports and transactions which, in turn, can be leveraged by the concerned stakeholders to make informed decisions. With an AIS to process and store financial data, business entities can sidestep any data mishandling occurrences, measure overall financial performance, utilize GAAP principles, and get a detailed understanding of the company's finances and then compare it with previous reports to ultimately come to a conclusion.
Those were 15 of the most common accountant interview questions and answers you should know about. Of course, there may be moments where an interview question for accountant job based on a specific topic can be asked by the recruiter.
That is why you should stay up-to-date about the latest developments in accounting, brush up on your basics, and then possibly get in touch with professional accountants who could give you important tips about interview questions and answers for accountant jobs.