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Accounting Interview Questions with Answers [Updated]

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Accounting is an evergreen profession, with a consistent demand for skilled accountants across different domains. It can be a great career option for those with a flair for numbers and spreadsheets. To grow in the career as an accountant, you would need to have a solid understanding of the principles of accountancy and other related topics. If you are planning to attend an accountant interview and are looking for the most popular accounting interview questions then you have landed the right place.

This article lists some of the most frequently asked accounting interview questions and answers that can help you crack your next accounting interview.

List of the Most Popular Accounting Interview Questions and Answers –

Q1. Tell me about yourself!

Ans. The employer’s intention is none other than to break the ice and get to know you a little better to steer the conversation in the direction you want. Without a doubt, this is why it is so important. In your answer, you must give examples of circumstances and moments in your life that led you to the accounting field. Were you the treasurer of your soccer team when you were a child? Have you saved for months to buy a car? Anything goes to make a positive first impression.

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Q2. What are the different types of accounting?

Ans. Different types of accounting are –

Financial Accounting – This type of accounting records information related to the financial status of the company.

Administrative Accounting – Administrative accounting is focused on the administrative aspects of the company and is used above all to assess the fulfillment 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, of 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.

 

To learn more about Accounting & Finance, read our blog on – What is Accounting & Finance?

 

Q3. Which accounting platforms have you worked on? Which one do you prefer the most?

Ans. Describe the accounting platforms (QuickBooks, Microsoft Dynamic GP, etc.) that you have worked with and which one you liked the most.

 

Q4. What is working capital?

Ans. 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.

 

Q5. Give a suggestion to improve the company’s working capital flow.

Ans. 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.

We may tend to delay payments from our suppliers, but it ruins business relationships and hinders goodwill in the industry. Also, if we delay payments, they may not supply goods in the future. Maintaining liquidity in the form of funds in the bank can help the flow of working capital, but it comes at an opportunity cost.

With all of this in mind, I personally believe that inventory management can be of great help in improving the working capital of the company. Over-stock should be avoided and stock turnover rates should be high.

This answer is generic. There are industries that work with negative working capital, such as electronic commerce, telecommunications, etc. So do some research on working capital before answering.

 

Q6. How do you maintain accounting accuracy?

Ans. 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.

 

Q7. Since you mentioned that MS Excel is your favorite, please give us three cases where Excel will make your life easier.

Various reports can be extracted from the Software. However, reports in specific formats are often required and this may not be possible in the Software. This is where Excel appears. Data can be sorted, filtered, redundant data fields can be removed, and data can be presented in a custom format.

Excel is also required to link multiple data sets. Therefore, different reports can be extracted from the software, and then, using the search function, they can be grouped into one report.

The use of Excel becomes the most important for doing various reconciliations. This cannot be done in software. For example, if I need to reconcile the vendor ledger balance, I will pull the ledger from the software into Excel and get a similar vendor Excel for your ledger. All reconciliations will have to be done only in Excel.

 

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Q8. What is TDS? Where do you show TDS on a balance sheet?

Ans. TDS (Tax Deducted at Source) is a concept aimed at collecting tax at every source of income. In a balance sheet, it is shown in the assets section, right after the head current asset.

 

Q9. What is the difference between ‘accounts payable (AP)’ and ‘accounts receivable (AR)’?

Ans.

Accounts Payable Accounts Receivable
The amount a company owes because it purchased goods or services on credit from a vendor or supplier. The amount a company has the right to collect because it sold goods or services on credit to a customer.
Accounts payable are liabilities. Accounts receivable are assets.

 

Q10. What is the difference between a trial balance and a balance sheet?

Ans. A trial balance is the list of all balances in a ledger account and is used to check the arithmetical accuracy in recording and posting. A balance sheet, on the other hand, is a statement that shows the assets, liabilities, and equity of a company and is used to ascertain its financial position on a particular date.

 

Q11. Is it possible for a company to show positive cash flows and still be in grave trouble?

Ans. Yes, if it shows an unsustainable improvement in working capital and involves a lack of revenue going forward in the pipeline.

 

Q12. What are the common mistakes in accounting?

Ans. This is one of the most frequently asked accounting interview questions.

The most common mistakes in accounting are –

 

Q13. What is the difference between inactive and dormant accounts?

Ans. Inactive accounts are which are closed and will not be used in the future. Dormant accounts are not currently functional but may be used in the future.

 

Q14. Are you familiar with the Accounting Standards? How many accounting standards are there in India? [Frequently asked accounting interview question]

Ans. Even if you’ve never worked as an accountant before, it is essential that you show knowledge of International Accounting Standards. Although it is true that this is such an extensive subject that it is impossible to know it by heart, before the interview you should have studied the most recent changes to be prepared to talk about them.

There are currently 41 Accounting Standards that are usually issued by the International Accounting Standards Board (IASB).

 

Q15. Why do you think Accounting Standards are mandatory?

Ans. Accounting Standards play an important role in preparing a good and accurate financial report. It ensures reliability and relevance in financial reports.

 

Check Out >> IFRS vs GAAP: Which is suited for you?

 

Q16. If our organization has three bank accounts for processing payments, what is the minimum number of ledgers it needs?

Ans.Three ledgers for each account for proper accounting and reconciliation processes.

 

Q17. What are some of the ways to estimate bad debts?

Ans. Some of the popular ways of estimating bad debts are – the percentage of outstanding accounts, aging analysis, and percentage of credit sales.

 

Q18. What is deferred tax liability?

Ans. Deferred tax liability signifies that a company may pay more tax in the future due to current transactions.

 

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Q19. What is a deferred tax asset and how is the value created?

Ans. A deferred tax asset is when the tax amount has been paid or has been carried forward but has still not been recognized in the income statement. The value is created by taking the difference between the book income and the taxable income.

 

Q20. What is the equation for Acid-Test Ratio in accounting?

Ans. The equation for Acid-Test Ratio in accounting

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

 

Q21. Name some popular accounting applications.

Ans. I am familiar with accounting apps like CGram Software, Financial Force, Microsoft Accounting Professional, Microsoft Dynamics AX, and Microsoft Small Business Financials.

 

Q22. Which accounting application you like the most and why?

Ans. I find Microsoft Accounting Professional the best as it offers reliable and fast processing of accounting transactions, thereby saving time and increasing proficiency.

 

Q23. Tell me something about GST.

Ans. GST is the acronym for Goods and Service Tax and it is an indirect tax other than the income tax. The seller charges it to the customer on the value of the service or product sold. The seller then deposits the GST to the government.

 

Q24. What is a bank reconciliation statement?

Ans. A bank reconciliation statement or BRS is a form that allows individuals to compare their personal bank account records to that of the bank. BRS is prepared when the passbook balance differs from the cashbook balance.

 

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Q25. What is tally accounting?

Ans. It is accounting software used by small businesses and shops to manage routine accounting transactions.

 

Q26. What are fictitious assets?

Ans. 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.

 

You can also consider taking up courses & certifications like:

Cost Accounting Courses
• IFRS Courses
• GAAP Courses
• Business Accounting Courses
• ACCA Courses
• GST Courses
• Capital Budgeting Courses

Q27. Can you explain the basic accounting equation?

Ans. Yes, since we know that accounting is all about assets, liabilities, and capital. Hence, its equation can be summarized as:

Assets = Liabilities + Owners Equity.

 

Q28. What is CMM?

Ans. Capability Maturity Model (CMM) is a document that provides a model and six elements of infrastructure used for measuring the effectiveness and capability of an organization’s finance process.

 

Q29. What is the meaning of purchase return in accounting?

Ans. As the name suggests, a purchase return is a transaction where the buyer of merchandise, inventory, or fixed assets returns these defective or unsatisfactory products back to the seller.

 

Q30. What is retail banking?

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

 

Q31. What is offset accounting?

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

 

Q32. What are the trade bills?

Ans. These are the bills generated against each transaction. It is a part of the documentation procedure for all types of transactions.

 

Q33. What is fair value accounting?

Ans. As per fair value accounting, a company has to show the value of all of its assets in terms of price on the balance sheet on which that asset can be sold.

 

Q34. What happens to the cash, which is collected from the customers but not recorded as revenue?

Ans. It goes into “Deferred Revenue” on the balance sheet as a liability if no revenue has been earned yet.

 

Q35. How important is documentation when it comes to accounting?

Ans. 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.

 

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Q36. What is an MIS report, have you prepared any?

Ans. 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.

 

Q37. What do you mean by the company’s payable cycle?

Ans. It is the time required by the company to pay all its account payables.

 

Q38. What is Scrap Value in accounting?

Ans. Scrap Value is the residual value of an asset that any asset holds after its estimated lifetime.

 

Q39. Which account is responsible for interest payable?

Ans. The current liability account is responsible for interest payable.

 

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Q40. What is the departmental accounting system?

Ans. 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.

 

Q41. What is a perpetual inventory system?

Ans. 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.

 

Q42. What do you mean when you say that you have negative working capital?

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

 

Q43. What are the major constraints that can hamper relevant and reliable financial statements?

Ans.

  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

 

Explore More – What is Corporate Finance.

 

Q44. Tell me the golden rules of accounting, just mention the statements.

Ans. There are three golden rules of accounting –

Q45. Please elaborate, what this statement means – “Debit the Receiver, Credit the Giver”.

Ans. So, this is among the most frequently asked accounting interview questions. Your reply should be –

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.

Q46. Any idea what is ICAI?

Ans. Of course, it is the abbreviation of the Institute of Chartered Accountants in India.

 

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Q47. What do you mean by premises?

Ans. Premises refer to fixed assets presented on a balance sheet.

 

Q48. What is Executive Accounting?

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

 

Q49. What are the bills receivable?

Ans. Bills receivable are the proceeds or payments, which a merchant or a company will be receiving from its customers.

When replying to accounting interview questions, be very specific, and don’t talk about generic stuff.

 

Q50. Define Balancing.

Ans. Balancing means equating or balancing both the debit and credit sides of a T-account.

 

Time For Accounting Interview Question Quiz

The right answer is the balance sheet.

The right answer is the 2nd option – the income statement will be impacted.

The right answer is -Cash flow statement.

The right answer is the Quick Ratio.

 

Q51. What is Marginal Cost?

Ans. 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.

 

Q52. What are Trade Bills?

Ans. Every transaction is documented and the trade bills are those documents, generated against each transaction.

Q53. Can you define the term Material Facts?

Ans. Yes, these are the documents such as vouchers, bills, debit and credit notes, or receipts, etc. They serve as the base of every account book.

 

Q54. What are the different stages of the Double Entry System?

Ans. There are three different stages of the double-entry system, which are –

 

Q55. What are the disadvantages of a Double Entry System?

Ans.

 

Q56. What are Assets Minus Liabilities?

Ans. Assets Minus Liabilities stand for an owner’s or a stockholder’s equity.

Q57. What is GAAP?

Ans. 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:

 

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Q58. Can you tell me some examples of liability accounts?

Ans. Some popular examples of liability accounts are –

Q59. What is the difference between accounts receivable and deferred revenue?

Ans. 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.

Q60. Where should you record a cash discount in a journal entry?

Ans. A cash discount should be recorded as a reduction of expenses in a cash account.

Q61. What is a compound journal entry?

Ans. 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.

Q62. What is the dual aspect term?

Ans. 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.

 

Q63. What is retail banking?

Ans. Retain banking is also known as consumer banking, where individuals use the local branches of larger commercial banks.

 

Q64. Define depreciation.

Ans. Depreciation refers to the decreasing value of any asset that is in use.

 

Q65. What are the different types of depreciation?

Ans. Depreciation is of two types –

  1. Straight Line Method
  2. Written Down Value Method

 

Q66. What is the difference between the consignor and consignee?

Ans. Consigner – S/he is the shipper of the goods

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

 

Q67. Define Partitioning.

Ans. Partitioning refers to the division/subdivision/grouping/regrouping of financial transactions in a given financial year.

 

Q68. Differentiate between Provision and Reserve.

Ans.

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.

 

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Q69. What is an over accrual?

Ans. It is a situation where the estimate for accrual journal entry is very high, and this may apply to the accrual of revenue or expense.

 

Q70. What is reversing journal entries?

Ans. 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.

 

Q71. Name some intangible assets.

Ans. Intangible assets include –

 

Q72. What is Bad debt expense?

Ans. Bad debt expense is asset accounts receivable of a company and is considered to be uncollectible accounts expense or doubtful accounts expense.

 

Q73. When do you capitalize rather than expense a purchase?

Ans. 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.

 

Q74. When does goodwill increase?

Ans. 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.

 

Q75. What are Revenue Recognition and Matching Principles?

Ans. 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 companies to report an expense on its income statement the time the related revenues are earned. It is associated with the accrual basis of accounting.

 

Q76. Name different accounting concepts.

Ans. The most popular accounting concepts are –

 

Q77. What is the owner’s equity?

Ans. 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.

 

Q78. What is a debit note?

Ans. 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.

 

Q79. 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.

 

Q80. Explain Contingent Liabilities.

Ans. 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.

 

Q81. What is GST?

Ans. 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.

 

Q82. Can you name some common errors in accounting?

Ans. Some common accounting errors are –

 

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Q83. What is project implementation?

Ans. 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.

Q84. What are the various stages of project implementation?

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

Q85. Are you in favor of having accounting standards?

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

 

Q86. What do you mean by Amortization and also mention its journal entry?

Ans. 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 can not be amortized.

Below is the journal entry for amortization:

Debit Credit
Amortization expense x~xx
Accumulated amortization xxx

The concept of amortization in accounting is different from depreciation. The major point of difference between amortization and depreciation is their usage. Amortization works for intangible assets whereas depreciation works for tangible assets. Also, unlike depreciation, amortization has no salvage value. Another key difference between both is that depreciation can be implemented using both the straight-line method and accelerated method but amortization is implemented through the straight-line method.

 

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Using the below transactions solve the practical accounting questions:

Firm’s Name – ABC Ltd. which is 10 years old firm on December 31, 2018. As of January 01, 2019, below are the trial balance entries

Transactions/entries Amount in INR
Accounts Payable 50,000
Accounts Receivable 20,000
Cash 4,50,000
Merchandise inventory 6,620
Land 60,000
Unearned revenue 10,000
Salaries payable 32,000
Common Stocks 15,000
Prepaid Rent for Office 15,000
Supplies 20,000
Retained Earnings 25,000

 

 

 

Later other transactions that took place in 2019 are:

    1. Paid salaries payable from 2018.
    2. As of March 2019, the petty cash expense made was Rs 10,000.
    3. Advanced payment made for the company’s car which was on lease Rs, 1,00,000 on May 1, 2019.
    4. Paid office rent in advance Rs. 25,000 on May 3, 2019.
    5. Supplies purchased for Rs. 10,000 on the account.
    6. During the year, purchased 20 CCTV cameras for Rs. 20,000 for cash.
    7. Sold 103 CCTV cameras for Rs. 42,000 (calculate the cost of goods sold using FIFO method)
    8. Accounts payable was Rs. 30,000
    9. Petty cash replenished and the receipts included office supply expenses – Rs. 2,000, miscellaneous Rs. 7,000. Currency left Rs.1000
    10. Billed Fixing services for Rs 10,000 for the year.
    11. The salaries paid were Rs. 30,000 in cash
    12. Accounts receivable were Rs. 60,000
    13. Ad and marketing expense Rs. 6,000
    14. Utility expense paid Rs. 5,000
    15. The dividend paid to the shareholders was Rs. 15,000.

 

Q87. What is the total value of cash in the above transactions?

Ans. Here is the total calculation of cash:

All Cash Transactions and balances:

Hence as per the nature, here is the actual calculation of cash:

4,50,000 – 32,000 – 1,00,000 – 25,000 – 20,000 – 30,000 – (10,000 – 1,000) – 1,000 + 60,000 – 5,000 – 15,000 = 2,73,000

 

Q88. What is the total value of accounts receivable in the above transactions?

Ans. All entries related to accounts receivable:

Hence, here is the total calculation of accounts receivable:

20,000 + 42,000 + 10,000 + 60,000 = 1,32,000

 

Q89. What is the value of the total fixed assets?

Ans. As no other assets apart from land is mentioned we will consider Land as the only fixed assets:

Value of Fixed Asset:

Land = 60,000

 

Q90. What will all be included in current assets?

Ans. We will include the following things:

 

Q91. What will be included in the Owner’s equity?

Ans. We will include the following things in owners equity:

 

Q92. What will be included in the Current Liabilities?

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

 

Q93. What do you mean by Days Payable Outstanding (DPO)?

Ans. DPO or Days Payable Outstanding refers to the average number of days which 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

 

Read more – What is Corporate Finance

 

Q94. Find out the DPO in the below query.

Ans.

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.

 

Q95. What are the different types of liquidity ratios in accounting?

Ans. 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
  1. Net-Working Capital Ratio
    It articulates that whether or not a company has sufficient funds to carry out short term operations. It is calculated by – Current Asset – Current Liabilities
  2. 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
  3. Super-Quick Ratio
    Super Quick Ratio = (Cash + Marketable Securities) / Current Liabilities
  4. 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.
    Here cash flow from operations will generally include:
    All revenues from operations + Non-cash based expenses – Non-cash based revenue
    Whereas Current Liabilities will include:
    Balance payments, creditors, provisions, short term loans, etc.

 

Q96. What is the Accounting Information System (AIS)?

Ans. This is a frequently asked accounting interview question thus you should know everything about 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:

 

Q97. What do you mean by tangible real accounts and intangible real accounts?

Ans.

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 –

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 –

 

Q98. How to perform an income statement analysis?

Ans. 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 the 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:
  1. Horizontal analysis

It involves comparing the year-over-year (YoY) change of each line in the income statement. To perform this analysis:

To learn more about how to conduct a financial analysis you can consider taking the following courses:

 

Q99. What is Section 209(4A) in The Companies Act, 1956?

Ans. 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.

So of the Current Year Ending is – March 2020 then, the company needs to store the accounts and vouchers for the following years:

March 2019, 2018, 2017,……, to 2012

 

Q100. Which latest accounting trends you think are prevailing in 2020? [one of  the most frequently asked accounting interview questions]

Ans. Below are some of the latest accounting trends:

  1. 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.
  1. Automated Data Entry:
    As per the Practice of Now 2020 survey, nearly 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.

 

Q101. Explain real and nominal accounts with examples.

Ans. 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.

 

Q102. What is double-entry bookkeeping? What are the rules associated with it?

Ans. 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.

 

Q103. Briefly explain the procurement process.

Ans. 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.

 

Q104. Why do you want to join this company?

Ans. Interviewers want to know that you’re genuinely interested in working for their organization. To give a thorough answer, research the company’s website to learn more about its goals, mission, and work environment. Choose one or two things that you like the most and explain why they make you want to work for the company.

 

Q105. Where do you see yourself in five years?

Ans. 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.

 

Q106. Share a stressful situation that you have been a part of and how you have handled the situation.

Ans. 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.

 

Q107. Have you ever helped your company to save money or use their available financial resources effectively?

Ans. Explain 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.

 

Q108. How do you minimize the risk of making mistakes in your work?

Ans. As an accountant, you would need to showcase the highest degree of excellence, since even the smallest error can lead to chaos. When answering this question, 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.

 

The Parting Note

Going through the above accounting interview questions will probably have given you an idea of the type of accounting interview questions that are asked during an accounting interview. These will also help you to freshen up your accounting knowledge.

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