Top Accounting Interview Questions and Answers

1. Tell me about yourself!

Sure, my name is Md Rejaul Karim, and I have been working as an accountant for 8 years with a
focus on preparing financial statement.
I earned my Bachelor’s degree in Accounting from United International University, where I
developed a strong foundation in financial management, auditing, working capital management
and taxation.

In my previous role at Rokon Wassallh Trading Est, I was responsible for managing the financial
statements and preparing detailed reports for executive review. I also played a crucial role in
streamlining the company’s budgeting process, resulting in a 20% reduction in overhead costs. Prior
to that, I worked at Sanabel Al Farat Trading Company, where I gained extensive experience in
conducting internal audits and ensuring compliance with regulatory requirements.

I possess a strong analytical mindset and exceptional attention to detail, which enable me to identify
discrepancies and resolve financial issues efficiently. I am proficient in using accounting software
like oddo, Quickbooks and I have a solid understanding of generally accepted accounting principles
(GAAP) and International Financial Reporting Standards (IFRS).
In the long term, I aim to further develop my financial analysis expertise and eventually progress
into a managerial role. I am particularly excited about the opportunity to join your esteemed
organization, as I believe it would provide me with the right platform to contribute my skills and
continue growing as an accounting professional.”

2. Why do you want to be an accountant?

I want to be an accountant because it’s a job that comes with high level of responsibility and
accountability. If you don’t perform your role as an accountant to the expected standards, the
consequences can be far reaching.
The natural skills and qualities I possess, and my desire to work under pressure to high standards,
means the role of an accountant is one that I will excel in on a consistent and reliable basis.
I am an inquisitive person who has patience and exceptional attention to details skills, all of which
go to make me the perfect candidate to be an accountant with your company.

3. Why do you want to work for our company as an accountant?

I want to work for your company for three specific reasons. The first reason is you are clearly
following an accounting standards who sets high standards.
Second reason is, you are company who has a strong reputation within the industry and I would
feel proud to be an accountant with your company.
Finally having caring out lots of research before applying for this accountancy job, I feel you will
support me in my role and encourage me to continually develop and improve, which is really
important to me as a professional accountant.
 4. What experience do you have that would be applicable to this accountant role?

The experience and competencies I have gained so far can be allocated to three main areas.
Firstly, I have experience of working with a variety of different clients, both small and large. Whilst
working will all types of clients I always provide a consistent level of service and go out of my way
to get the job done on time and to an accurate standard.
Secondly, I have experience of working under pressure to tight deadlines whilst managing multiple
accounts and clients.
Thirdly, I have experience of working collaboratively with other accountancy team members and
bookkeepers to ensure accounts are completed and submitted on time. I believe the experience I
have gained so far will enable me to perform highly within this role and I will always act as a
positive role model in my capacity as an accountant for your company.

5. How do you handle pressure?

To be truthful, I feel I work better when I am under pressure and I enjoy the challenge of getting my
accountancy work completed on time and to the right standard. I handle pressure by first of all
drawing up a list of task that need to be completed and by which timescale.
I will then work the necessary hours to make sure the job is completed on time. More often than not,
I will work from home in the evenings to get my work completed as I don’t like to fall behind.
As I say, working under pressure is something I do well and feel I thrive when I have to get more
tasks completed within a set period of time.

6. What do you expect to be doing on a day to day basis as an accountant?

The main duties I expect to be carrying out as an accountant include, providing financial account
management information to clients as and when required, preparing asset, liability and capital
account entries by analyzing account information, recommending financial actions after careful
analysis of accounts, and also preparing balance sheets, profit and loss statements and also
management accounts on a periodic basis.
I will also be required to guide accounting staff to assist the company is ensuring accounts are
prepared on time, liaise with clients and provide advice and information based on their financial
accounts, maintain financial security by following organizational procedures and protocol, and also
maintaining client confidence whilst adhering to rules, regulations and the law surrounding GDPR.
Finally, in addition to reconciling financial discrepancies after careful analysis of clients account
information, I will be required to keep my own knowledge and professional development up-to-
date based on developments from within the financial sector and industry.

7. What are the different types of business transactions in accounting?

There are two types of business transactions in accounting which are given below;

a. Cash Transactions and Credit Transactions

b. Internal Transactions and External Transactions

Cash Transactions
When a transaction is labelled as a cash transaction, it signifies that the payment was made or
received in cash at the time of the transaction. For example, if Mary buys a new shirt from a store
and pays at the checkout, Mary and the store have engaged in a cash transaction. Even if the
payment is made with a debit or credit card, this transaction is still recognized as a cash transaction
since the payment is made at the time the transaction occurs.
Credit Transactions
Payment which is made in a credit transaction after a defined length of time, often known as the
credit period. Mary, for instance, wishes to buy a couch from a furniture store. Instead of accepting
payment at the time of purchase, the store accepts payments up to 30 days later. Although no cash
is exchanged at the time of sale, Mary will be obliged to pay for the couch after the 30-day credit
period has expired.

Internal Transactions
Internal transactions (also referred to as non – transactions) are ones that take place without the
involvement of any external parties. These transactions do not include the exchange of values
between two parties, but the occurrence that includes the transaction is monetary in form and has
an impact on the financial condition of business. Examples of internal transactions involve
recording depreciation of fixed assets and realizing the loss of assets destroyed by fire etc.

External Transactions
External transactions (also considered as exchange transactions) are transactions in which a
company trades money for goods or services with third parties. All transactions that aren’t internal
are typically referred to as external transactions. These are the common transactions which a firm
undertakes on a daily basis. Examples of external transactions involve purchase of goods from
suppliers, sale of goods to consumers, purchase of fixed assets for business use, payment of rent to
owner, payment of gas, electricity or water bills, payment of salary to staff etc. External transactions
make a major amount of any business transactions.

8. What are the different types of financial statement?

The three main types of financial statements are the balance sheet, the income statement, and the
cash flow statement. These three statements together show the assets and liabilities of a business,
its revenues, and costs, as well as its cash flows from operating, investing, and financing activities.

9. What’s the difference between deferred revenue and accounts receivable?

When a company receives advance payment from a customer before the product/service has been
delivered, it is considered deferred revenue. Unlike accounts receivable, which is considered an
asset, deferred revenue is listed as a current liability on the balance sheet.

10. What are the different types of accounting?

Different types of accounting are –
 Financial Accounting – This branch of accounting records, summarizes and reports the business
transactions that take place over a time period in an organization. It is required in both the private
and public sectors.
 Administrative Accounting – Administrative accounting is focused on the administrative
aspects of the company and is used above all to assess the fulfilment of the established objectives
and improve the implemented strategy. It is very useful for making forecasts and planning the
actions and resources to be used.
 Tax Accounting -Tax accounting helps to register and prepare reports related to tax returns to
the public treasury and payment of taxes.
 Cost Accounting – This type of accounting is more focused on companies of an industrial nature.
It helps to make a detailed analysis of the unit costs of production, sales, and, in general, the
production process that the company carries out.
 Management Accounting – Management accounting has a broader vision than cost accounting
since it records all the economic and financial information of the company to be able to make
short-term and long-term decisions.

11. Which accounting platforms have you worked on? Which one do you prefer the most?

I have experience working with several accounting platforms, including Oddo, QuickBooks, and
Smart POS. My preferred platform is QuickBooks. I have used it extensively in my previous role
and found it user-friendly, efficient, and well-suited for small to medium-sized businesses. It has
robust reporting capabilities and seamless integration with other software.
12. What is working capital?

Working capital is calculated as current assets minus current liabilities, which is used in day-to-day
trading. In a simple accounting scheme, the concept of working capital focuses on the capital
resources that a given company can count on in the short term to operate. These resources owned
by the company are the cash, the portfolio of financial products, and other investments made by the
company.

13. Give a suggestion to improve the company’s working capital flow.

In my opinion, the stock on hand can be the key to improving the working capital of the company.
Of all the components of working capital, the stock is something we can control. We can pressure
our debtors to pay us instantly, but we cannot have direct control over them because they are
separate legal entities and, in the end, they are the ones who give us business.

14. How do you maintain accounting accuracy?

Maintaining the accuracy of an organization’s accounting is an important activity as it can result in

a huge loss. There are various tools and resources which can be used to limit the potential for errors
to creep in and address them quickly if any errors do arise. My favorite is MS Excel.
Some of the most common ways of maintaining accuracy in accounting are:
1. Identify revenue streams
2. Keep a close eye on invoices and receipts
3. Prepare tax returns to avoid penalty
4. Prepare financial statements
5. Keep tabs on deductible expenses

15. Since you mentioned that MS Excel is your favorite, please give us three cases where Excel
will make your life easier.
As an accounting professional, I find MS Excel an indispensable tool for streamlining various tasks.
Here are three cases I can think of.
Financial Data Analysis
Excel’s powerful data analysis tools, such as pivot tables and charts, simplify organizing and
interpreting financial data. With pivot tables, I can quickly summarize large sets of financial
information, generate reports, and gain valuable insights into the company’s financial performance.
Excel also has good charting capabilities that enable me to present data visually. Because of that,
stakeholders have been able to understand complex financial trends and patterns.
Budgeting and Forecasting
Creating budgets and forecasts is a fundamental aspect of accounting. I can perform complex
calculations and projections using Excel’s built-in formulas and functions. For example,
spreadsheets make it easy to calculate NPV (Net Present Value), IRR (Internal Rate of Return), etc.
Excel’s flexibility also allows me to adapt the budget as circumstances change. It ensures that
financial planning remains accurate and up-to-date.
Financial Reporting Automation
Excel’s automation features help me save considerable time in generating financial reports. I can
input new data through predefined formulas and Excel will automatically update the entire report
accordingly. This automation minimizes the risk of manual errors and ensures that reports are
consistently formatted and accurate. I also like the ability to link data from other sources, such as
accounting software or databases, further streamlines the reporting process.
“A person liable to make specified payments to another person must deduct tax at source and remit
it to the Central Government. The deductee, from whose income TDS has been deducted, can claim
the credit based on Form 26AS or the TDS certificate issued by the deductor.
TDS rates are specified in the relevant provisions of the Income Tax Act or the First Schedule to the
Finance Act. For payments to non-resident individuals, rates specified under Double Taxation
Avoidance Agreements (DTAA) are considered.
Let’s consider a scenario where a company in India pays its employee a monthly salary of ₹50,000,
and the applicable TDS rate for salary payments is 10%. The company is required to deduct TDS
from the salary and remit it to the Indian government on behalf of the employee.
Calculation of TDS: Salary Amount: ₹50,000
TDS Rate: 10%
TDS Amount: ₹5,000 (10% of ₹50,000)
The company will deduct ₹5,000 as TDS from the employee’s salary and remit this amount to the
government. As a result, the employee will receive a net salary of ₹45,000 (₹50,000 – ₹5,000) after
TDS deduction.
The TDS amount of ₹5,000 withheld by the company will be reported as a liability on its balance
sheet until it is paid to the Indian government. This ensures that the company fulfils its obligation
of remitting the TDS amount promptly.
The employee will also receive a TDS certificate (Form 16) from the company as proof of tax
deduction. This certificate is important for the employee to file their income tax return and claim
credit for the TDS deducted from their salary.”
16. What is the difference between ‘accounts payable (AP)’ and ‘accounts receivable (AR)’?

Accounts Payable Accounts Receivable

The amount a company owes because it
The amount a company has the right to collect because
purchased goods or services on credit
it sold goods or services on credit to a customer.
from a vendor or supplier.
Accounts payable are liabilities. Accounts receivable are assets.
 17. What is the difference between a trial balance and a balance sheet?
A trial balance and a balance sheet are both essential components of the accounting process, but
they serve different purposes and are prepared at different stages of the accounting cycle.
Trial Balance: A trial balance is a statement that lists all the general ledger accounts with their
respective debit and credit balances at the end of an accounting period. Its main purpose is to ensure
that the total debits equal the total credits, which helps in detecting errors or discrepancies in the
accounting records. The trial balance is typically prepared before the financial statements are
finalized, and it serves as an intermediate step in the accounting process.
Balance Sheet: On the other hand, a balance sheet is one of the primary financial statements that
provide a snapshot of a company’s financial position at a specific point in time. It presents the
company’s assets, liabilities, and shareholders’ equity. The balance sheet is prepared after all
adjusting entries and closing entries have been made to the accounts. It is a reflection of the
company’s financial health, as it shows what the company owns (assets), what it owes (liabilities),
and the residual interest of the owners (equity).
Differences:
The key difference between a trial balance and a balance sheet lies in their timing, content, and
purpose. The trial balance is prepared during the accounting period, mainly to check for accuracy
and completeness of the ledger balances, while the balance sheet is prepared at the end of the
accounting period to present the company’s financial position. The trial balance includes all ledger
accounts and their balances, while the balance sheet consolidates these balances into the respective
categories of assets, liabilities, and equity.”

18. Is it possible for a company to show positive cash flows and still be in grave trouble?

Yes, if it shows an unsustainable improvement in working capital and involves a lack of revenue
going forward in the pipeline.
In general, when referring to positive cash flows, a company receives more money than spending.
But that does not define the financial stability of the company always. There can be uncertain
situations even when there are positive cash flows but the company may still not be stable or
successful.
Some situations are as follows.
 High Debts – A company may have significant debt. Even if the cash flow is positive, the
company may only pay the debts and not invest in growth or operational activities.
 Decline in the Future Market – The Company’s industry may be going through a change which
can be impossible to survive in the long run. The positive cash flows at the moment may be
surplus, but that is not a guarantee for the future.
 Legal Issues – If a company has fines or lawsuits, positive cash flow will not be of any help. There
will be financial repercussions.
Although positive cash flows are a positive indicator, they should be evaluated in conjunction with
other factors to determine the overall financial position of a company. Factors such as profitability,
debt levels, liquidity, market conditions, and long-term sustainability should be considered to
assess a company’s financial health comprehensively. Positive cash flows alone do not guarantee a
company’s financial stability, and it is important to analyze the broader financial context to identify
any potential risks or challenges.
 19. What are the common mistakes in accounting?

The most common mistakes in accounting are –

 Mixing personal accounts with that of the company
 Little communication between the company and the accountant
 Not keeping a backup
 Misallocated resources
 Not saving the receipts
 Performing manual accounting
 Not keeping the accounting books up to date

20. What is the difference between inactive and dormant accounts?

In accounting, inactive and dormant accounts are two distinct terms used to describe the status of
certain accounts, and they have specific characteristics that set them apart.
Inactive Accounts: An inactive account refers to an account that has had no financial transactions
or activities over a specific period. But it still remains open and is not officially closed or classified
as dormant.
Dormant Accounts: A dormant account, on the other hand, is an account that has remained inactive
for an extended period and has little to no financial activity.

Differences: The key difference between inactive and dormant accounts lies in their level of
inactivity and the treatment they receive.

21. Are you familiar with the Accounting Standards? How many accounting standards are
there in India?
“Yes, I am familiar with the Accounting Standards, which are a set of principles and guidelines that
govern the preparation and presentation of financial statements. These standards play a crucial role
in ensuring consistency and transparency in financial reporting.

22. Why do you think Accounting Standards are mandatory?

“In order to accurately record the transactions related to the three bank accounts for payment
processing, the minimum number of ledgers required will depend on the specific types of accounts
involved in the organization’s accounting system.
23. What are some of the ways to estimate bad debts?
“While there are many other ways to estimate bad debts, here are the ones I know.
Percentage of Outstanding Accounts Method
The percentage of outstanding accounts method estimates bad debts by applying a predetermined
bad debt percentage to the total outstanding accounts receivable balance. This percentage is
typically based on historical data or industry standards. The formula used is:
Bad Debts Estimate = Outstanding Accounts Receivable Balance * Bad Debt Percentage
Aging Analysis Method
The aging analysis method categorizes accounts receivable based on the length of time they have
been outstanding. It then applies different bad debt percentages to each age category, reflecting the
likelihood of collection for older accounts. The formula used for each category is:
Bad Debts Estimate for an Age Category = Outstanding Receivables in the Category * Bad Debt
Percentage for the Category
Percentage of Credit Sales Method
The percentage of credit sales method estimates bad debts by applying a predetermined bad debt
percentage to the total credit sales made during a specific period. The formula used is:
Bad Debts Estimate = Total Credit Sales * Bad Debt Percentage

24. What is deferred tax liability?

“I would describe deferred tax liability as something that represents the income tax obligation that
a company is likely to face in the future. This could happen due to temporary differences between
the financial accounting treatment and the tax treatment of certain items.
25. What is a deferred tax asset and how is the value created?

“A deferred tax asset represents a potential future tax benefit for a company. It arises due to
temporary timing differences between the financial accounting treatment and the tax treatment of
certain items. This results in lower taxable income reported for tax purposes when you compare to
the income in the financial statements.
26. What is the equation for Acid-Test Ratio in accounting?

Acid-Test Ratio = (Current assets – Inventory) / Current Liabilities

Current Assets
These are the company’s assets. They are expected to be converted into cash or used up within the
next operating cycle or one year. A few common examples include cash, marketable securities,
accounts receivable, and short-term investments.
Inventory
This represents the value of the company’s stock of goods or raw materials that are held for
production or resale. Since inventory may not always be quickly converted into cash, it is excluded
from the quick assets used in this ratio.
Current Liabilities
These are the company’s short-term obligations that are due within the next operating cycle or one
year, whichever is longer. Some examples include accounts payable, short-term debt, and accrued
expenses.”
27. Name some popular accounting applications.
“I am familiar with accounting apps like QuickBooks, Zoho Books, Xero, Wave, and Sage Intacct. I
can tell which are useful for what due to my education (and on-the-job training).
QuickBooks: A comprehensive accounting software widely popular among small and medium-
sized businesses. It offers various features like invoicing, expense tracking, bank reconciliation, and
financial reporting.
Xero: A cloud-based accounting solution known for its user-friendly interface and real-time
collaboration features. Xero is suitable for small businesses and offers bank connections, payroll,
and inventory management tools.
Wave: A free accounting software designed for freelancers, entrepreneurs, and small business
owners. Wave provides features like invoicing, expense tracking, and receipt scanning.
FreshBooks: Primarily targeted at self-employed professionals and small business owners,
FreshBooks offers invoicing, time tracking, expense management, and client management
functionalities.
Sage Intacct: Geared towards mid-sized and enterprise-level businesses, Sage Intacct is a cloud-
based accounting system with advanced financial management features, multi-entity capabilities,
and robust reporting options.
Zoho Books: Part of the Zoho suite of business applications, Zoho Books is known for its integration
capabilities and affordability. It offers invoicing, expense tracking, inventory management, and
multi-currency support.
NetSuite: A cloud-based ERP (Enterprise Resource Planning) solution that includes comprehensive
accounting functionality along with other modules like inventory, CRM, and e-commerce.
SAP Business One: An ERP system designed for small and mid-sized businesses, SAP Business
One offers accounting features integrated with other business processes like sales, purchasing, and
inventory management.”

28. Which accounting application do you like the most and why?

“The accounting application I like the most is QuickBooks. There are several reasons why I find
QuickBooks to be an excellent choice for businesses.
1. It has a user-friendly interface that makes it easy for accounting professionals and non-accounting
users to navigate the software. The layout is intuitive, and the menu options are well-organized.
This makes accessing various features and functionalities simple.
2. The software offers various accounting features, including invoicing, expense tracking, bank
reconciliation, financial reporting, and payroll management. This comprehensive suite of tools
allows businesses to efficiently manage their financial records and stay on top of their finances.
3. It caters to businesses of all sizes, from freelancers and startups to large enterprises. It can adapt
to a growing business’s changing needs and complexities, making it a versatile solution.
4. This software integrates seamlessly with various third-party applications, such as payment
gateways, e-commerce platforms, and CRM systems. This integration capability streamlines data
flow between different business processes and enhances efficiency.
5. It offers a cloud-based version, which allows users to access their financial data from anywhere
with an internet connection. This cloud-based functionality is particularly valuable for remote teams
or businesses with multiple locations.
6. It has a large user community, with numerous online forums, tutorials, and resources available.
This extensive support network makes finding solutions to common issues easier and learning new
tips and tricks.
 29. What is a bank reconciliation statement?

“The main purpose of a bank reconciliation statement is to identify and rectify discrepancies
between the cash balance shown in the company’s books and the balance reported by the bank.
These discrepancies may arise due to various reasons, such as outstanding checks, deposits in
transit, bank fees, or errors in recording transactions.
The process of preparing a bank reconciliation statement involves the following.
 Obtain the latest bank statement from the financial institution and collect the company’s cash
balance as recorded in the general ledger.
 Compare each transaction recorded in the bank statement with the corresponding entry in the
company’s cash account. Identify any differences or discrepancies.
 Outstanding checks, which have been issued but not yet cashed by the recipients, and deposits
in transit, which have been made but have not yet been credited by the bank, are the common
items causing discrepancies.
 Make adjustments for outstanding checks and deposits in transit to reconcile the cash balance
between the bank statement and the company’s records.
 Account for any bank fees, service charges, or interest earned that may not have been recorded
in the company’s books.
 After making all necessary adjustments, update the company’s cash balance to match the
reconciled amount.
 Summarize the adjustments made during the reconciliation process in a formal document known
as the bank reconciliation statement.
A bank reconciliation statement is a critical control mechanism for a company’s financial
management. It helps ensure the accuracy and integrity of financial records by detecting errors,
unauthorized transactions, or fraudulent activities.
30. What is tally accounting?

It is accounting software used by small businesses and shops to manage routine accounting
transactions. It is a popular accounting software created by Tally Solutions. It is used for all kinds
of accounting-related activities including recording of financial transactions, generating statements
of liabilities and assets, and other analytical purposes.
Basic accounting questions for interview, like this one, are to test your hands-on knowledge of tools.
So craft your answers that show how much you know about the features.
31. What are fictitious assets?

Fictitious assets are intangible assets and their benefit is derived over a longer period, for example,
goodwill, rights, deferred revenue expenditure, miscellaneous expenses, preliminary expenses, and
accumulated loss, among others.

32. What is CMM?

The Capability Measuring Model framework has several interconnected elements which can help
in knowing the organization’s accounting progress.
 33. What is the meaning of purchase return in accounting?

Purchase returns occur in various scenarios. This could happen when the received goods are
damaged during transit, not as per the specifications. It could also happen when the buyer is
overstocked and needs to return excess inventory. In these situations, the buyer initiates the return
process by notifying the seller about the problem and seeking authorization for the return.
The accounting treatment for purchase returns involves adjusting the financial records to account
for the returned goods accurately.
If the purchase return results in a cash refund or a credit note, additional journal entries would be
made accordingly.
34. What is retail banking?

Retail banking or consumer banking involves a retail client, where individual customers use local
branches of larger commercial banks.

35. What is offset accounting?

Offset accounting is the process of cancelling an accounting entry with an equal but opposite entry.
It decreases the net amount of another account to create a net balance.

36. What are the trade bills?

“Technically, trade bills are defined as essential elements in the field of accounting that represent
the credit transactions between businesses for the sale and purchase of goods or services.
Based on my understanding, there are many important benefits.
 Trade bills enable businesses to offer credit to customers, promoting sales by allowing them to
purchase goods or services with a promise to pay at a later date. This credit facility strengthens
customer relationships and enhances sales opportunities.
 Trade bills influence a company’s cash flow by representing pending payments from customers
and outstanding payments to suppliers. Proper management of trade bills is crucial to
maintaining a healthy cash flow and liquidity position.
 Trade bills form a part of a company’s working capital management. Efficient management of
trade receivables and payables ensures that the company has adequate funds to meet its short-
term obligations and invest in business growth.
 Accurate accounting and reporting of trade bills are vital for preparing financial statements, such
as the balance sheet, income statement, and cash flow statement. These financial reports provide
valuable insights into a company’s financial health and performance.”
37. Describe in one sentence the meaning of fair value accounting.
When cash is collected from customers but not yet recorded as revenue in the accounting records,
it creates a situation where there is unrecorded cash inflow in the business.
So how should an accountant fix that?
In such cases, the unrecorded cash is typically considered as “Unearned Revenue” or “Deferred
Revenue.” Unearned revenue represents the cash received from customers for goods or services
that have not yet been delivered or fully rendered. Instead of recognizing this cash as revenue
immediately, it is recorded as a liability on the balance sheet.
As the goods or services are delivered, and the revenue can be recognized, the unearned deferred
revenue is gradually reduced. Then the corresponding amount is transferred to the revenue
account. This process is typically done using adjusting entries at the end of an accounting period.”
38. How important is documentation when it comes to accounting?

I believe that the accounting team of any company has a responsibility to present a true and fair
view to the shareholders and management of the company. The accounting team is like the
watchdog of the organization.
That is why documentation becomes very important in accounting. Appropriate documentation
must be verified so that an adequate audit trail is maintained and justified when necessary.
39. What is an MIS report, have you prepared any?

Yes, I have prepared MIS reports. It is an acronym for Management Information System, and this
report is generated to identify the efficiency of any department of a company.

40. What do you mean by the company’s payable cycle?

“The company’s payable cycle refers to the series of activities involved in managing and processing
payments to suppliers for goods or services received. It represents the time frame between the
acquisition of goods or services and the actual payment made to the suppliers.
Let me also explain how it works.
The payable cycle starts with the company’s purchase of goods or services from suppliers on credit.
After receiving the goods or services, the company verifies the accuracy and quality of the delivered
items. An invoice is generated by the supplier, indicating the amount owed and the payment terms.
The company then reviews and approves the invoice for payment. Depending on the agreed-upon
credit terms, the payment is scheduled for a specific period, such as 30 days or 60 days. During this
time, the company’s accounts payable department maintains a record of outstanding payables,
keeping track of due dates and ensuring timely payments.
The company’s payable cycle impacts the company’s cash flow by influencing the timing of cash
outflows for payments. It also provides valuable data for financial planning and budgeting.”
41. What is Scrap Value in accounting?
“Scrap value refers to the estimated worth of an asset at the end of its useful life or after it has been
fully depreciated. In accounting, it represents the amount that a company expects to receive from
selling or disposing of the asset at the end of its productive life.
Depreciation Expense = (Initial Cost – Scrap Value) / Useful Life
42. Which account is responsible for interest payable?
“Interest payable is the amount of interest that a company owes but has not yet paid to its lenders
or creditors. It arises from borrowing money through loans, bonds, or other debt instruments, where
the company has an obligation to pay interest to the lender based on the agreed-upon interest rate
and payment schedule.
The interest expense is recognized in the income statement when a company incurs interest on its
outstanding debt. The balance sheet records the corresponding interest payable as a current
liability.
Interest payable, being a current liability, is crucial for financial reporting and assessing the
company’s short-term obligations. It is expected to be settled within a relatively short period,
usually one year or the operating cycle, whichever is longer. Proper management of interest payable
helps evaluate the company’s liquidity and short-term debt obligations. This influences financial
decisions related to cash flow management and working capital.”
43. What is the departmental accounting system?

It is a type of accounting information system that records all the financial information and activities
of the department. This financial information can be used to check the profitability and efficiency of
every department.

44. What is a perpetual inventory system?

Perpetual inventory is a methodology that involves recording the sale or purchase of inventory
immediately using enterprise asset management software and computerized point-of-sale systems.

45. What do you mean when you say that you have negative working capital?

When a company’s current liabilities exceed its current assets, it is named negative working capital.
It is a common terminology in certain industries like retail and restaurant businesses.

46. What are the major constraints that can hamper relevant and reliable financial statements?

Here are some of the major constraints:

1. Delay, which leads to irrelevant information
2. No balance between costs and benefits
3. No balance between the qualitative characteristics
4. No clarity in true and fair view presentation
47. Tell me the golden rules of accounting, just mention the statements.

This accounting interview question tests your professional view of the subject. You can mention by
elaborating this accounting interview answer on the three golden rules of accounting.
 Debit the receiver, credit the giver

 Debit what comes in, credit what goes out

 Debit all expenses and losses, credit all incomes and gains
48. Please elaborate on what this statement means – “Debit the Receiver, Credit the Giver”.

This principle is used in the case of personal accounts. If a person is giving any amount either in
cash or by cheque to an organization, it becomes an inflow and thus, that person must be credited
in the books of accounts. Therefore, when an organization received the money or cheque, it needs
to credit the person who is paying and debit the organization.
 49. Any idea what is ICAI?

“ICAI or the Institute of Chartered Accountants of India is an authorized accounting body that is
responsible for regulating the Chartered Accountant profession as well as the overall accounting
profession in the country.
It has formulated the Indian Accounting Standards (Ind-AS) that are followed by almost all
organizations in India.
50. Give some examples of fixed assets that you record in the balance sheet?

A brief intro such as – fixed assets are those which are not consumed in one fiscal year, will ensure
the recruiter that you mean these are long-term assets. You can further mention that these assets are
recorded in the asset section of the balance sheet.
Some typical examples of fixed assets are automobiles, furniture, office, or any equipment an
organization requires.
51. What is Executive Accounting?

Executive Accounting is specifically designed for service-based businesses. This term is popular in
finance, advertising, and public relations businesses.

52. What are the bills receivable?

Bills receivable are the proceeds or payments a merchant or company will receive from its customers
in the future.
“I would like to describe that bills receivable is a written promise that a company receives from its
customers or other parties for the amount owed. These bills are legally binding and entitle the
company to receive payment from the debtor on a specified future date.
There are two parties involved in bills receivable. The issuer (the company) and the acceptor (the
customer or debtor). The company issues the bill, while the customer accepts the bill.
Bills receivable have a specific maturity or due date, indicating when the payment is expected. This
due date can be short-term (e.g., 30, 60, or 90 days) or long-term, depending on the terms of the bill.”
53. Define Balancing.

Balancing means equating or balancing both the debit and credit sides of a T-account. Ideally, you
can mention the parts of a T-account and even provide examples for this accounts interview
question.

54. What is Marginal Cost?

If there is an increase in the number of units produced, the total cost of output is changed. Marginal
cost is that change in the cost of an additional unit of output.

55. What are Trade Bills?

Every transaction is documented and the trade bills are those documents, generated against each
transaction.
 56. Can you define the term Material Facts?

Material facts, in the context of accounting and financial reporting, refer to information or events
that could significantly influence the economic decisions of users of financial statements.
These facts are deemed “material” only when their omission or misrepresentation would likely
affect the judgments or decisions made by stakeholders.
If relevant material information is not disclosed, stakeholders may make uninformed decisions.
That would lead to potential financial risks and adverse consequences for both the company and its
stakeholders.
Allow me to give an example of the importance of material facts.
Let’s consider a hypothetical scenario involving a publicly traded company, XYZ Inc. The company
recently faced a significant product recall due to safety concerns. But, in their financial statements
and public disclosures, XYZ Inc. did not clearly state the material facts related to the recall.
Now when it comes to financial reporting, investors and stakeholders may not be aware of the
potential financial impact of the recall on the company’s revenue, expenses, and future profitability.
The lack of clear disclosure about the product recall could erode trust in XYZ Inc. among its
investors, customers, and other stakeholders.”

57. What are the different stages of the Double Entry System?

There are three different stages of the double-entry system, which are –
 Recording transactions in the accounting systems
 Preparing a trial balance in respective ledger accounts
 Preparing final documents and closing the books of accounts

58. What are the disadvantages of a Double Entry System?

 Difficult to find the errors, especially when transactions are recorded in the books
 In case of any error, extensive clerical labor is required
 You can’t disclose all the information of a transaction, which is not properly recorded in the
journal

59. What are Assets Minus Liabilities?

Assets – Liabilities = Net Assets.

“Based on the formula (Assets – Liabilities = Net Assets)
An asset is an economic resource. It is owned or controlled by an individual, organization, or entity.
This has the potential to provide future economic benefits. Overall, they are the valuable resources
that a company possesses and can use to generate revenue or provide services.
Some examples of assets are cash, accounts receivable, inventory, property, plant, equipment,
patents, trademarks, and investments.
Liabilities represent the claims of creditors against the company’s assets. They reflect the company’s
obligations to repay borrowed funds, fulfil contracts, or settle outstanding obligations.
A few examples of liabilities are accounts payable, loans, bonds, and salaries payable.
Net Assets represent the ownership claim of the company’s shareholders on the company’s assets,
also known as owner’s or a stockholder’s equity”

60. What is GAAP?

GAAP is the abbreviation for Generally Accepted Accounting Principles (GAAP) issued by the
Institute of Chartered Accountants of India (ICAI) and the provisions of the Companies Act, 1956.
It is a cluster of accounting standards and common industry usage, and it is used by organizations
to:
 Record their financial information properly

 Summarize accounting records into financial statements

 Disclose information whenever required

61. Can you tell me some examples of liability accounts?

These are basic accounting concepts that you should explain.

Examples Description
Accounts Payable Unpaid debts to suppliers or creditors for goods or services received.
Accrued Expenses Expenses incurred but not yet paid or recorded in the accounting books.
Long-term debt securities issued by a company to raise funds from
Bonds Payable
investors.
Advance payments made by customers for goods or services to be
Customer Deposits
delivered in the future.
Income Taxes Payable Taxes owed to the government based on the company’s taxable income.
Installment Loans
Long-term loans paid in regular installments over a specified period.
Payable
Interest Payable Unpaid interest on borrowed funds or debts.
Lawsuits Payable Liabilities arising from pending legal actions or settlements
Mortgage Loans
Long-term loans secured by real estate property.
Payable
Notes Payable Short-term or long-term written promises to repay borrowed funds.
Wages owed to employees but not yet paid at the end of an accounting
Salaries Payable
period.
Obligations to cover potential costs of repairs or replacements for
Warranty Liability
products under warranty.
 62. What is the difference between accounts receivable and deferred revenue?

Accounts receivable is yet-to-be received cash from products or services that are already
sold/delivered to customers, whereas, deferred revenue is the cash received from customers for
services or goods not yet delivered.
You could further highlight the nature of the transactions that give rise to accounts receivable and
deferred revenue.
Enrich this answer by mentioning that the accounts receivable arise from credit sales, where a
company allows customers to make purchases without immediate payment. Deferred revenue, in
contrast, arises when a company receives payment from customers before fulfilling its obligation to
provide goods or services.

63. Where should you record a cash discount in a journal entry?

A cash discount should be recorded in the “Accounts Receivable” or “Accounts Payable” account,
depending on whether the company is offering or receiving the discount. Additionally, it should be
recorded in a separate “Sales Discounts” or “Purchase Discounts” account to track the discounts
separately from the main accounts.

64. What is a compound journal entry?

A compound journal entry is just like other accounting entries; the only difference is that it affects
more than two account heads. The compound journal entry has one debit, more than one credit, or
more than one of both debits and credits.

65. What is the dual aspect term?

The dual aspect suggests that every business transaction requires double-entry bookkeeping. This
can be understood with the example- If you purchase anything, you give the cash and receive the
stuff, and when you sell anything, you lose the stuff and earn the money. This defines the aspects
of every transaction.

66. Define depreciation.

This is one of the most basic accounting questions for an interview. You can just mention that
depreciation refers to the decreasing value of any asset that is in use. It is necessary for calculating
a business’s net income in every accounting period.

67. What are the different types of depreciation?

This is a follow-up to the previous accounting interview question. Mention the following, common
depreciation methods.
1. Straight Line Depreciation
2. Double Declining Balance
3. Units of Production
4. Discounted Cash Flow
All these methods have similar inputs as variables.
1. Useful Life – This refers to a period when the asset remains an economical option for a business.
Beyond this time, the asset is not useful.
2. Salvage Value – This refers to the asset’s value after the useful value. A business can sell it for
a reduced price.
3. Total Cost of Asset – It is the inclusive cost of taxes, shipping and others.

To support this accounting interview answer, you can highlight how they are calculated.
The formula for Straight Line Depreciation over a year is

Total Cost of Asset – Salvage Value (estimated) / Useful life of an Asset = Depreciation Expense
(Annual)
The formula for calculating Double Declining Balance is
(Total Cost of Asset – Salvage Value (estimated) / Useful life of an Asset) x 2 = Depreciation Expense
(Annual)

68. What is the difference between the consignor and consignee?

Consigner – S/he is the shipper of the goods

Consignee – S/he is the recipient of the goods.

69. Define Partitioning.

Partitioning refers to the division/subdivision/grouping/regrouping of financial transactions in a
given financial year.
Ideally, do broaden the scope of this basic accounting concept.
Try the following ways. We will also elaborate on the tips below.
 Describe the purpose or significance of partitioning in accounting or financial contexts.
 Mention how partitioning is applied or used in specific accounting or financial scenarios.
The purpose of partitioning is to break down financial information into meaningful subsets. This
helps identify trends, assess performance, and make more informed business decisions.
The applications of partitioning are as follows.
 In cost accounting, partitioning helps allocate costs to specific cost centers or cost objects.

 For publicly traded companies, partitioning assists in preparing segment-wise financial reports.
 In financial statement preparation, partitioning is used to categorize assets, liabilities, and equity
into current and non-current components.
 Partitioning cash flows into operating, investing, and financing activities helps assess the
company’s cash generation, capital investments, and financial position.
 Financial ratios often require partitioning specific financial data to calculate key performance
indicators.
70. Differentiate between Provision and Reserve.

For such direct accounting interview questions, try to keep your answer to the point.
Provisions – This refers to keeping the money for a given liability. In short, EXPENSES.
Reserves – Refers to retaining some amount from the profit for future use. In short, PROFITS.
 71. What is an over-accrual?
“An over-accrual is an accounting error that occurs when a company records an expense or liability
in excess of the actual amount that should have been recognized.
This is how an over-accrual occurs.
Over-accruals typically arise due to estimates made by the company to match revenues and
expenses accurately. In accrual accounting, expenses are recognized when incurred, regardless of
cash payment. If the actual expense turns out to be lower than the estimated accrual, an over-accrual
occurs.
To rectify an over-accrual, the company must make adjusting entries in the accounting records. The
following steps are typically taken:
 The first step is to identify the specific expense or liability that was over-accrued and determine
the correct amount.
 An adjusting entry is made to reverse the over-accrued amount from the accounts, reducing the
expense or liability to the correct amount.
 A new entry is made to record the actual expense or liability based on the correct information.”

72. What is reversing journal entries?

Reversing entries refer to the journal entries that are made when an accounting period starts. These
entries reverse or cancel the adjusting journal entries that were made at the end of the previous
accounting period.

73. Name some intangible assets.

Intangible assets include –
 Patents – Patents are exclusive rights granted to inventors by a government for a specified period,
allowing them to prevent others from making, using, or selling their inventions without
permission.
 Copyrights – Copyrights ensure that authors and artists retain control over their works and can
monetize them through licensing and other means.
 Trademarks – Trademarks are distinctive signs, symbols, words, phrases, or logos used by
businesses to identify and distinguish their goods or services from others in the marketplace.
 Brand names – Brand names are unique names or titles that identify a company, product, or
service in the market.
 Domain names – Domain names are unique addresses used to identify websites on the internet.
They provide a user-friendly way for individuals to access websites and serve as an online
identity for businesses.
74. What is a Bad debt expense?

Bad debt expense is asset accounts receivable of a company and is considered to be uncollectible
accounts expense or doubtful accounts expense.
Companies often offer credit to customers, allowing them to purchase goods or services on credit
with an agreement to pay later. While most customers pay their dues on time, some may default on
their payments for various reasons, such as financial difficulties, bankruptcy, or disputes. The
amount deemed uncollectible is recognized as bad debt expense.
The estimated uncollectible amount is recorded as an expense by creating an “Allowance for
Doubtful Accounts”. Suppose a specific customer account is confirmed to be uncollectible. In that
case, it is written off as a bad debt from both accounts receivable and the “Allowance for Doubtful
Accounts” to maintain the accuracy of the accounting records.
Further, the income statement reports bad debt expense as an operating expense, reducing the
reported net income. On the balance sheet, the “Allowance for Doubtful Accounts” reduces the
accounts receivable, indicating the estimated uncollectible portion.
75. When do you capitalize rather than expense a purchase?

This is one of the most common situation-based, accounts interview questions. Mention that an
item’s cost is capitalized if it is expected to be consumed by the company over a long period. This
way, their economic value does not depreciate.

76. When does goodwill increase?

Goodwill can be increased through the acquisition of another company as a subsidiary, by paying
more than the fair value of its tangible and intangible assets.
Goodwill is not amortized like other intangible assets but is subject to an annual impairment test to
assess its value.
Investors and stakeholders use goodwill to assess the success of mergers and acquisitions, as it
indicates the perceived value of the target company’s intangible assets and potential future growth
opportunities.
77. What are Revenue Recognition and Matching Principles?

Revenue Recognition Principle – This principle suggests that the revenue should be recognized and
recorded when it is realized and earned, no matter when the amount has been paid.
Matching Principle – This principle dictates the company to report an expense on its income
statement at the time the related revenues are earned. It is associated with the accrual basis of
accounting.
78. Name different accounting concepts.

 Accounting Period Concept: Financial activities of a business are divided into specific time
periods for reporting and analysis purposes.
 Business Entity Concept: The business’s financial transactions and affairs are separate and
distinct from those of its owners or stakeholders.
 Cost Concept: Assets are recorded at their historical cost rather than their current market value.
 Dual Aspect Concept: Every transaction has two aspects – a debit and a credit – affecting different
accounts in the accounting equation.
 Going Concern Concept: Assumes that the business will continue to operate and meet its
obligations for the foreseeable future.
 Matching Concept: Expenses should be matched with the revenues they generate in the same
accounting period to determine net income accurately.
 Money Measurement Concept: Only transactions and events that can be expressed in monetary
terms are recorded in the accounting system.
 79. What is the owner’s equity?

The owner’s equity is a business owner’s claim against the assets of the business. It is also called the
capital of the business and is calculated by subtracting the equity of creditors from the total equity.
Owner’s equity is a critical indicator of the financial health and stability of the business. It shows
the owner’s financial interest in the company and their stake in the assets. Positive owner’s equity
implies that the business has more assets than liabilities, while negative owner’s equity suggests
that the business owes more to creditors than its total assets.
80. What is a debit note?

A debit note or debit memorandum is a commercial document sent to a seller, by a buyer, formally
requesting a credit note. The original document is sent to the party to whom the goods are being
returned and the duplicate copy is kept for office record.

81. What is a credit note?

Ans. A credit note is a receipt given to a buyer who has returned a product, by the seller/shop. This
intimation suggests that the buyer’s account is being credited for the purpose indicated.

82. Explain Contingent Liabilities.

Contingent Liabilities are potential obligations that may or may not become an actual liability. They
may or may not be incurred by an entity, based on the outcome of an uncertain future event, e.g. –
If an ex-employee of an ABC company sues it for gender discrimination for any particular sum, the
company has a contingent liability. In case the company is found guilty, it will have a liability, and
if it is not found guilty, the company will not have an actual liability.

83. What is GST?

GST or Goods and Service Tax is an indirect tax charged on the value of the service or product sold
to a customer. Here the consumers pay the tax to the seller, who thereby deposits the GST to the
government.

84. Can you name some common errors in accounting?

Some common accounting errors are –

 Error of omission

 Error of commission
 Error of original entry
 Error of accounting principle
 Compensating error
 Error of entry reversal
 Error of duplication
 85. What is project implementation?

Project implementation is a phase when the plans and visions come into reality. This includes
carrying out the tasks to deliver the outputs and monitor the related progress.

86. What are the various stages of project implementation?

There are six steps involved in project implementation, which are –

 Identifying need

 Generating and screening ideas

 Conducting a feasibility study
 Developing the project
 Implementing the project
 Controlling the project
87. Are you in favor of having accounting standards?

I believe that accounting standards contribute to high quality and accurate reporting and ensure
reliable financial statements.

88. What do you mean by Amortization and also mention its journal entry?

Amortization is an accounting concept that is used to gradually write off the cost. Through
amortization, over a period of time, one can allocate the cost of any intangible asset. Also, it can be
done to repay any loan principal. However, those assets which have an indefinite life like Goodwill
cannot be amortized.

Below is the journal entry for amortization:

Debit Credit
Amortization expense x~xx
Accumulated amortization xxx

89. What is the total value of accounts receivable in the above transactions?

All entries related to accounts receivable:

 Accounts receivable = 20,000

 Income from selling CCTV camera = 42,000

 Billed Fixing services = 10,000
 Accounts receivable = 60,000
Hence, here is the total calculation of accounts receivable:
20,000 + 42,000 + 10,000 + 60,000 = 1,32,000
90. What is the value of the total fixed assets?
As no other assets apart from land are mentioned we will consider Land as the only fixed asset:
Value of Fixed Asset:
Land = 60,000
 91. What will all be included in current assets?

We will include the following things:

 Closing inventory

 Bank and cash value

 Supplies
 Account Receivables
92. What will be included in the Owner’s equity?
We will include the following things in owner’s equity:
 Capital (Common Stocks)
 Retained earnings (balance at the beginning of the year, profits for the current year, less dividend
paid, capital contributed during the year if any)
93. What will be included in the Current Liabilities?

Under the current liabilities, we will include the amount for creditors/payables which is 10,000 in
the above case.

94. What do you mean by Days Payable Outstanding (DPO)?

DPO or Days Payable Outstanding refers to the average number of days that ideally a company
takes to clear its credit purchase in regards to the outstanding suppliers. Most of the time, DPO is a
monthly task for a business, however, each month the day of clearing the outstanding payment
might differ, hence the average is taken out to estimate the payment period.
Below is the formula for calculating DPO:
Closing accounts payable / Purchase per day
Or (Average accounts payable / COGS) X Number of days
Find out the DPO in the below query.

Average accounts payable in June 50,000

Cost of Goods sold in June 5,00,000
As the month of June has 30 days the DPO will be:
(50,000/5,00,000)*30 = 3 days
Hence, the DPO in the above situation is 3 days. This states that a company takes 3 days on average
to clear all its pending invoices.
95. What are the different types of liquidity ratios in accounting?

Basically, there are five different types of ratios in accounting:

1. Current Ratio: The higher the company has current ratio, the better is the company’s strength
to handle short-term financial issues. It is calculated by – Current ratio = Current Asset/
Current Liabilities
2. Net-Working Capital Ratio: It articulates whether or not a company has sufficient funds to carry
out short-term operations. It is calculated by – Current Asset – Current Liabilities
3. Quick ratio: The quick ratio is also known as the acid test ratio or liquid ratio which illustrates
the company’s short-term liquidity to meet any short-term obligations. If the quick ratio is
 below 1:1, the company is not in a good state to handle short-term debts. Quick ratio = Liquid
Assets / Current Liabilities
4. Super-Quick Ratio: Super Quick Ratio = (Cash + Marketable Securities) / Current Liabilities
5. The operating Cash Flow ratio: It is calculated by dividing cash flow from operations with
current liabilities. It is observed that a sound operating cash flow ratio makes the firm’s liquidity
position better.

96. What is the Accounting Information System (AIS)?

AIS is a computer-based method used for tracking accounting activity and involves – collecting,
storing, processing, organizing, and summarizing accounting data and transactions. It also helps in
cumulating financial transactions and essential financial reports, which helps stakeholders in
decision making. Using AIS for storing and processing financial data helps in the following tasks:
 Measure the financial performance
 Evaluate the finances of the company and compare it with the previous period to draw a
conclusion
 Avoid any miss-handling of data
 Connects Information Technology with GAAP principles

97. What do you mean by tangible real accounts and intangible real accounts?

Tangible Real Account – Those assets which can be touched and have a physical existence are
defined as tangible real accounts.
Example – Machinery A/c, Vehicle A/c, Building A/c
Journal Entry –
 Debit what comes in

 Credit what goes out

Intangible real account – Those assets which have some monetary values but can’t be touched are
referred to as intangible real accounts.
Example – Goodwill, Patents, Copyrights
Journal Entry –
 Debit what comes in

 Credit what goes out

98. How to perform an income statement analysis?

This is one of the important technical accounting interview questions. Mention that the income
statement is the company’s core financial statement highlighting the profits and losses of the
company. It involves: All revenues – expenses (both operating and non-operating activities)
To analyze this statement, financial analysts consider vertical analysis and horizontal analysis.
1. Vertical analysis: It involves comparing the up and down of the income statement to the
revenue (in percentage). The key metrics involved are:
 Cost of Goods Sold (COGS)

 Gross profits
 Depreciation
 Interest
 Earnings Before Tax (EBT)
 Tax
 Net earnings
2. Horizontal analysis
It involves comparing the year-over-year (YoY) change of each line in the income statement. To
perform this analysis:
 Take the value in Period N and
 Divide it by value in Period N-1
 Subtract the value by 1 (gives the percent change)
To learn more about how to conduct a financial analysis you can consider taking the following
courses:
 Financial Analysis Fundamentals by CFI
 Valuation and Financial Analysis For Startups Specialization by Coursera

99. What is Section 209(4A) in The Companies Act, 1956?

Section 209(4A) in The Companies Act, 1956 states that:

Every company must preserve the books of accounts, together with the vouchers relevant to any
entry in such books of account, in good order, relating to a period of not less than 8 years
immediately preceding the current year.
100. Which latest accounting trends do you think are continuing in 2023?

Below are some of the latest accounting trends:

Increased dependency on cloud
Companies are now using cloud computing as a technology for tracking – tracking inventory, sales,
and expenses. A report by Accounting Age suggests that 78% of small businesses will rely solely on
cloud technology and 67% of accountants say that cloud technology will make their role easier.
Automated data entry
More than two-thirds of accountants consider automation of processes, workflows, and payments
the biggest challenge that will impact accountancy in the next 12 months. That’s why a lot of
companies have started depending upon automation software as they are efficient and reduce the
chances of error or loss of entry.
1. Data analytics for risk management and forecasting
2. Use of ERP
3. Blockchain technology adoption
101. Explain real and nominal accounts with examples.

A real account is an account of assets and liabilities. E.g. land account, building account, etc.
A nominal account is an account of income and expenses. E.g. salary account, wages account, etc.
102. What is double-entry bookkeeping? What are the rules associated with it?

Double-entry bookkeeping is an accounting principle where every debit has a corresponding credit.
Thus, the total debit amount is always equal to the total credit. In this system, when one account is
debited then another account gets credited at the same time.
 103. Briefly explain the procurement process.

The procurement process begins with a purchase request for a particular apartment. This is then
verified and approved. Based on the purchase request, a purchase order is created for the items
already purchased. In this step, it is the responsibility of the facilities and administrative team to
verify rates, delivery milestones, place of delivery, supplier payment terms, contractual obligations,
etc., and then issue a purchase order to the supplier. The seller will accept the purchase order.
104. Where do you see yourself in five years?
It is a question that interviewers ask in all sectors, but in accounting, it takes on special relevance.
Without a doubt, this is the perfect time to show your ambition. Therefore, try to give a modest and
truthful answer in which you highlight your desire to occupy a position in the company to boost
your career and serve as a key point in your career. It is ideal that you mention your strengths and
weaknesses, and how you are motivated to turn your weaknesses into strengths in your career.

105. Share a stressful situation that you have been a part of and how you have handled
the situation.
In the field of accounting and finance, you are constantly under pressure. It’s not a job to be taken
lightly, which is why interviewers ask such basic accounting interview questions, just to assess your
composure in times of stress. Be careful to bring up a really stressful situation and don’t worry about
the work pressure they have faced on a day-to-day basis, as no one wants to hire someone who can’t
handle work pressure.
Also, be realistic about the stressful situation you mention. You shouldn’t sound fake. The situation
can be one of employee fraud, massive damage to the company due to natural calamities, scrutiny
of the income tax of years when you were not even part of the organization, etc.
106. Have you ever helped your company to save money or use their available financial
resources effectively?
Explain in this accounting interview question, that if you have proposed an idea that has affected
the company’s finances positively. Tell how you have optimized the process and how you came to
such a decision through a historical data review.

107. How do you minimize the risk of making mistakes in your work?

As an accountant, you would need to showcase the highest degree of excellence, since even the
smallest error can lead to chaos. When answering such basic accounting interview questions,
emphasize that you are in charge of reviewing the work several times before sending it and that
you have a system of pros and cons that leads you to make decisions. Do not hesitate to give an
example of some occasion in which you detected an error through the double control formula.

108. How does OPEX differ from Capital Expenses?

OPEX is the abbreviation for operating expenses that refers to the costs a company incurs on a
regular basis. But just don’t limit your response to this definition. Give numerous examples ranging
from utilities, insurance, license fees, and inventory costs to property taxes.
Capital Expenses are the other costs associated with a business investment that promises benefits in
the future. Some examples are real estate, upgrading furniture or exteriors of property for higher
appreciation, etc.
After a brief explanation of the two, do mention that generally, capital expenses are higher than
operating expenses and how these two are taxed differently.

109. Tell us about the importance and benefits of fixed asset register maintenance

A fixed asset register helps a company maintain accurate accounting information for future
decision-making.
Apart from that, a fixed asset register can be managed with simple spreadsheet software such as
Microsoft Excel, or when the organization is expanding, it can be easily integrated into proper
accounting software. Even for a small enterprise, it can make it simpler to calculate annual
depreciation.

110. How would you calculate the debt-to-equity ratio?

The debt-to-equity ratio is the percentage of an organization’s debt in relation to its shareholder’s
equity.
The best response would be to show your prospective employer how it is calculated through the
formula:
Debt-to-equity = Total debt/Shareholder’s Equity
To add some competitive advantage, you can also mention that the higher the ratio, the higher is
the organization’s risk.

111. Briefly explain IFRS and why it is necessary for accounting.

IFRS stands for International Financial Reporting Standards. So, highlight your response with how
this accounting framework has been issued by the International Accounting Standards Board to set
common global standards.
Coming to its significance, mention that IFRS makes international capital transactions convenient
through the maintenance of balance sheets and statements of profits and losses.
Overall, this framework supplements transparency, efficiency and accountability. You can further
expand on these points through relevant examples.

112. What are the 4 main standard requirements of IFRS?

1. Financial Position Statement

2. Income Statement
3. Equity Changes Statement
4. Cash Flows Statement

113. What is IASB?

As this is another textbook accounting interview question, simply mention that IASB stands for
International Accounting Standards Board. Also mention that this privately operated body creates
and sanctions IFRS and is controlled by IFRS Foundation.

114. How do you bridge the gap when you are trying to make an individual with no
accounting knowledge grasp complex accounting concepts?

Try giving an in-depth answer to this question. To provide strategic advice, you can highlight that
you don’t use figures and accounting terms, which will show that you are trying to understand their
pain points.
When you can say that you simplify the technical terms through anecdotes or analogies, it only
shows you are clear with the accounting concepts.
Another appropriate response would be that you choose to write summaries and/or use PPTs for
non-accounting professionals across different departments. This displays your patience and
teamwork.

115. How do you calculate Earnings Per Share?

Earnings Per Share or EPS is the amount that the shareholder will earn from the earnings of the
company. It is calculated by the following formula:
EPS = (Net Income – Preferred Dividends)/Average outstanding common shares

116. Why does a company require different budgeting methods?

Calculating a company’s budget through efficient budgeting methods prevents future bankruptcy.
Activity-based, zero-based, incremental and value proposition are the four main types of budgeting
methods. It would be ideal if you explain these four through examples.

117. What are the main differences between US GAAP and Indian GAAP?

Indian GAAP follows the accounting standards of the Institute of Chartered Accountants of India
(ICAI), while US GAAP follows the Financial Accounting Standards Board (FASB).
You can further highlight the technical differences between the two based on the table below:
Indian GAAP US GAAP
Investment & The income statement only recognises Appreciation and depreciation fall
Marketable the unrealised depreciation on under Other Comprehensive
securities Available-For-Sale securities Income
Follows Companies Act of 1956 under
Format of financial
presentation requirements of Schedule No specific format
statements
VI
Based on rates prescribed in the
Depreciation Tentative period of an asset
Companies Act, 1956
Subsidiary
Accounts Not mandatory It is mandatory
Consolidation

118. Name some of the Enterprise Resource Planning systems you have used.

Small companies hardly use ERP systems. If your previous job was in one, you can be completely
honest that you are willing to learn about ERP systems. Also refer to Enterprise Resource Planning,
our in-depth beginner’s guide.

However, if you are experienced with Microsoft Dynamics GP or any other Enterprise Resource
Planning system, mention how you were using it. This will help your employer understand how
much more you need to know about them.
 119. Which skills do you consider important as an accounting professional when you
are working remotely?

Since the work environment currently remains unpredictable, you need to highlight how you can
work around this issue productively.
Showing adaptability, the ability to take on new challenges and diplomatic teamwork are among
the most desirable characteristics for accounting professionals of any level.

120. Name some common ways of identifying fraudulent entries.

I know some of the most common fraudulent behaviors such as

1. Out-of-period revenues are used for recording inflated revenue.
2. To show earnings, the cost of repairs is used as fixed assets.
3. Liabilities are not present on the balance sheet.
4. Sometimes, expenses also can be shown as earnings when they are re-categorized as company
reserves.
To detect fraud, I follow these preventive measures:
1. First, I understand the organization’s financial reporting process.
2. I also select journal entries for testing.
3. Interview individuals directly who have been involved in the financial reporting process.

121. How do you manage deadlines with multiple accounting projects?

1. I lay out the time-sensitive tasks first and complete them.

2. I can multitask without hampering the quality of another project at hand.
3. I identify repeatable tasks such as sales proposals and client billing and turn them into the
standard operating procedure (SOP). So each time I do these, I don’t have to start from scratch.
4. I use time-tracking apps for each project.

122. What exactly is double-entry? How are transactions recorded in such an accounting
system?

Double entry is one of the oldest accounting systems. It simply means that for every accounting
entry there is a corresponding entry into a different account. In this system, all transactions are
recorded as credits and debits. This bookkeeping method relies on the fundamental accounting
equation –
Assets = Liabilities + Equity of the Shareholder
To explain how it works, you can give this example:
Suppose, ABC Company purchases Rs.5000 worth of office supplies by paying cash upfront. In this
case, ABC Company’s asset account is required to increase by Rs.5000, while cash will need to
decrease by Rs.5000. The asset account will be debited, while the cash amount will be credited. Here,
the debit amount is always equal to the credit amount.

123. Name at least five different types of accounts in double-entry bookkeeping.

1. Liability Account – When a company owes money to other businesses and will pay at a later
date, it uses a liability account.
2. Capital Account – A capital account determines the net worth over a specific period, commonly
during a year. These accounts include the shareholder’s equity.
3. Expense Account – This type of account includes a company’s daily operation costs. The costs
can be for money spent on advertising or other expenses that are administrative in nature.
 4. Income Account – This account shows what a company has earned over a specific period. It
records the sources where the money originates from as well as the revenue gained for the sale
of products/services.
5. Asset Account – It refers to any cash or goods a company owns.

124. What differentiates contingent liability from bad debts?

Contingent liability is not recorded on a balance sheet. It is simply the result of a record that may
not occur. On the other hand, bad debt is recorded at the same time when there is a sale.

125. Why are financial projections required in accounting?

A financial projection is necessary for managing any business, be it, small, medium or large. It shows
forecasts on financial estimates including revenues and financial statements’ expenses. It takes into
account the analysis of historical data and predicts different factors in the market outside a
business. Typically financial projections include the following:
1. Income Statement projection – It includes expenses, revenues, total income (Revenue –
Expenses), income tax and net income over a particular period.
2. Cash flow projection – It includes cash revenues and cash disbursements.
3. Balance Sheet projection – The balance sheet determines a business’s net worth. It includes
assets, liabilities and equity.
If you are a senior accountant candidate, support this accounting interview question with the
importance of financial projections such as:
1. With a financial projection, it is convenient for investors to know a business will operate.
2. A financial projection can predict potential risks in business operations much before.
3. A business can prepare a clear budget with a financial projection.

126. What is included in a journal entry?

A journal entry can have multiple data elements, as it records every business transaction in the
journal ledger or subsidiary ledger. The common elements in a journal entry are divided across five
columns in an Excel spreadsheet.
 Column 1 has the date of transaction

 Column 2 has the record of any business transaction

 Column 3 has the folio or reference number
 Column 4 has the debit amount
 Column 4 has the credit amount
 127. What are the main types of journal entries?

You can mention that there are 6 types of journal entries.

1. Compound Journal Entry
2. Adjusting Journal Entry
3. Opening Journal Entry
4. Closing Journal Entry
5. Reversing Journal Entry
6. Transfer Journal Entry

128. Explain a drawing account in a journal entry and how it differs from an expense
account.

A drawing account tracks all the money and assets that are withdrawn from a business. Generally,
this money is withdrawn by the owners/proprietors of the business for personal purposes. This
account shows the reduction of the money the business has. On the other hand, an expense account
records the expense of the business and is not for personal use.

129. Describe Cost Object with an example.

A cost object is an item that the business measures separately. The item here refers to a product,
department, customer, or anything that costs the business. By calculating cost objects, the business
can determine its operational or output-related costs and assess if they are cost-efficient. Cost objects
also help in preparing annual reports.
A basic example of a cost object could be a marketing department of a company. The expenses of
creating campaigns digitally or offline, staffing requirements, office space and supplies for the
marketing team are common. Based on that, the company can set a price strategy for the product
that is going to be commercialized.