- What are accounting interview questions?
- Why is it important to prepare for an accounting interview?
- Common accounting interview questions with sample answers
Preparing for an accounting interview requires you to review industry-specific questions. By taking the time to prepare answers to potential interview questions, you can present yourself as a qualified candidate and provide the interviewer with an accurate representation of your employability. This article will discuss accounting interview questions, why it is important to prepare for an accounting interview and provide sample answers and explanations to a number of these questions.
What are accounting interview questions?
Accounting interview questions could be asked during a job interview with a finance company or an accounting firm. These questions go beyond general questions such as ‘Where do you see yourself in five years?’ or ‘Why do you want to work at our company’ and address topics that are specific to the finance industry and accounting practices.
Examples of accounting interview questions:
- If you weren’t an accountant what career path would you choose?
- If you could be an accountant for any major corporation besides ours, who would it be and why?
- Do you believe continued education is important for those employed in the finance industry?
- What is the most important skill an accountant should have?
- What was it that interested you in accounting?
- How did you ensure accuracy in your last accounting job?
- Do you know how to operate MS Excel and related programs?
- Do you have an accounting process?
- What are the three types of financial documents and what are they used for?
- What are three common budgeting methods and how would you define them?
- What is the difference between accounts receivable and deferred revenue?
- Can you explain what PP&E is and why it’s important?
- How would you explain working capital to someone with no accounting experience?
- What factors would you consider when planning our company’s budgeting process?
- What would you do if you and a coworker disagreed on how to proceed with a particular budgeting issue?
- How would you approach a merger situation within our company?
- What do you think about acquisition opportunities?
- What factors would you use to determine how to pay off our current liabilities?
- If you could only use one financial statement to evaluate our company’s financial health, which would it be and why?
Why is it important to prepare for an accounting interview?
An interview is a unique opportunity for you to demonstrate that you have the skills and qualifications that are mentioned on your resume and should demonstrate your readiness to apply those skills to the company with which you are applying.
As an accountant, you should be well-versed in industry terminology, practices and procedures that are instrumental to the financial stability of a company. This can ensure that you present yourself in a way that aligns with your industry qualifications.
Common accounting interview questions with sample answers
Here are some common accounting questions with tips and answers to help you create your own response:
Can you explain what PP&E is and why it’s important?
This question not only requires you to provide a definition for PP&E but it also requires that you identify its significance within accounting procedures. Your answer should not only reflect your ability to recall this accounting term but also its importance.
Example: ‘PP&E, or property, plant and equipment is a company asset that plays a major role in generating company revenue and cash flow. It is also complex in the way it is recorded on company balance sheets as a company must first record its initial purchase value and follow up by recording an asset’s depreciation as it is gets used.’
What are three common budgeting methods and how would you define them?
An interviewer might ask this question to determine your familiarity with budgeting methods and procedures. Your answer should identify and define these three methods in detail.
Example: ‘The three common budgeting methods are value-based budgeting, zero-based budgeting and incremental budgeting. Value-based budgeting is the method by which you identify a change, asset or procedure that appears of more value than your current company assets or procedures, however, they cost the same amount. Therefore, it is only the value that changes.
Zero-based budgeting is the method by which you identify your company’s departments as having a zero-dollar budget at the beginning of each quarter. You analyze the projected needs of a department and the potential cost, and build a budget that is tailored to fit those needs. However, the next quarter could require a more or less expensive budget depending on the department’s adjusted needs.
Incremental budgeting is the method by which a company sets a fixed budget based upon the expenses that were acquired during the previous quarter. Whatever funds are leftover at the end of a quarter are subtracted from the next quarter’s budget.’
What factors would you consider when planning our company’s budgeting process?
This question requires you to use critical thinking and creativity to provide a well-informed answer. Your response should show the interviewer that you understand accounting within a larger framework of events.
Example: ‘I would start by evaluating the budgeting tactics that were applied to the company during previous quarters. I would then use an incremental budgeting method to allocate an estimated amount of funds to each of the company’s departments based upon their needs in the last quarter. This way we could make sure that each department is receiving adequate funding while also making sure that we will have enough cash flow to pay off our assets at the end of the fiscal year.’
What is the difference between accounts receivable and deferred revenue?
This question can be used by an interviewer to gauge your fundamental knowledge of accounting terminology and its place within a corporation. Your answer should define each term and identify how they are distinguished from one another.
Example: ‘Deferred revenue can be seen as all cash that has been given to a company by a customer before they receive the product or service they purchased. Accounts receivable is any cash that has yet to be received by a company from a customer, for a product or service that has already been provided to them.’
If you could only use one financial statement to evaluate our company’s financial health, which would it be and why?
In asking this question, the interviewer has the opportunity to evaluate a number of factors about you and your qualifications. Your answer should reflect your familiarity with corporate financial documents and your ability to analyze data to make an educated decision.
Example: ‘If I could only employ the use of one financial statement to measure our financial health, I would use our cash flow statements. This is because unlike other financial documentation cash flow documents display the actual amount of revenue that is being generated at a given time. This is extremely important in identifying whether or not we can pay off our current liabilities.’