Ace Your Accounting Interview with these 20+ essential questions

Accounting interview questions

You want to make a great impression in your upcoming accounting job interview, but you need help figuring out where to start. 

A big part of acing any job interview is preparation. That's why we've created these model questions and answers - to help you understand what to expect and how to put your best foot forward.

Go through these questions, and you'll be well on your way to impressing your interviewer! We'll give you the top most-asked accounting interview questions you can expect and how to answer them like a pro. Good luck!

Let's start with the basics. Accounting job interview questions can cover a wide range of topics. Employers want to gauge your understanding of accounting principles, your technical skills, and your ability to handle real-world scenarios.

Common Interview Questions for Accountants

Expect questions like, "Can you explain the basic accounting equation?" or "What is the difference between cash accounting and accrual accounting?" These common interview questions are designed to assess your fundamental accounting knowledge.

Accountant Interview Preparation

Preparation is key. Research the company and its industry, review your resume, and practice your answers to common questions. Consider using the STAR method (Situation, Task, Action, Result) to structure your responses to behavioral questions.

Accounting Interview Tips

Ace your accounting interview with these tips:

• Show Your Technical Skills: Be ready for technical accounting interview questions that test your knowledge of accounting standards and principles.

• Behavioral Questions: Practice answering behavioral questions by highlighting relevant experiences and demonstrating your problem-solving abilities.

• Ask Questions: Prepare thoughtful questions to ask the interviewer. This shows your genuine interest in the role and company.

Top 20 HOT accounting interview questions

1. What is the basic accounting equation, and how does it relate to financial statements?

   • Answer: The basic accounting equation is Assets = Liabilities + Equity. It shows how a company's resources (assets) are financed, either by creditors (liabilities) or owners (equity). It underpins the balance sheet.

2. Explain the difference between cash accounting and accrual accounting.

   • Answer: Cash accounting records transactions when cash is received or paid. Accrual accounting records transactions when they occur, regardless of cash flow. Accrual accounting provides a more accurate view of financial performance.

3. How do you calculate depreciation, and what methods can be used?

   • Answer: Depreciation is calculated to allocate the cost of an asset over its useful life. Common methods include straight-line, declining balance, and units-of-production.

4. Describe the components of the income statement and their significance.

   • Answer: The income statement shows a company's profitability over a period. Key components include revenue, expenses, gross profit, operating income, and net income.

5. What is the purpose of a balance sheet, and how is it different from an income statement?

   • Answer: A balance sheet shows a company's financial position at a specific point in time, including assets, liabilities, and equity. An income statement reports financial performance over a period.

6. Can you walk me through the steps of the accounting cycle?

   • Answer: The accounting cycle includes journalizing transactions, posting to ledgers, adjusting entries, preparing financial statements, closing entries, and finally, preparing a post-closing trial balance.

7. What is the role of a trial balance in accounting?

   • Answer: A trial balance ensures that total debits equal total credits in the accounting records, providing a preliminary check of accuracy before preparing financial statements.

8. How do you handle bad debt and write-offs in accounting?

   • Answer: Bad debts are uncollectible receivables. They are written off as an expense when it becomes evident they won't be collected, impacting both the income statement and balance sheet.

9. Explain the concept of working capital and its importance.

   • Answer: Working capital is the difference between current assets and current liabilities, indicating a company's liquidity. Positive working capital ensures sort-term obligations can be met.

10. What is the difference between GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards)?

    • Answer: GAAP is used primarily in the United States, while IFRS is a global accounting framework. They have similarities but also differences in accounting treatments.

11. How do you recognize revenue in accounting, and what are the criteria for revenue recognition?

    • Answer: Revenue is recognized when it's earned and realized or realizable. The five criteria include identifying the contract, identifying the performance obligations, determining the transaction price, allocating the price to obligations, and recognizing revenue when each obligation is satisfied.

12. What are the key financial ratios, and how are they used to assess a company's financial health?

    • Answer: Key financial ratios include liquidity ratios (e.g., current ratio), profitability ratios (e.g., ROA and ROE), solvency ratios (e.g., debt-to-equity ratio), and efficiency ratios (e.g., inventory turnover). These ratios help assess a company's financial performance, risk, and efficiency.

13. Can you explain the difference between FIFO and LIFO inventory valuation methods?

    • Answer: FIFO (First-In, First-Out) assumes that the oldest inventory is sold first. LIFO (Last-In, First-Out) assumes that the newest inventory is sold first. FIFO typically results in lower cost of goods sold and higher ending inventory, while LIFO does the opposite.

14. Describe the concept of double-entry accounting.

    • Answer: Double-entry accounting is a system where every transaction has equal debits and credits, ensuring the accounting equation (Assets = Liabilities + Equity) always balances. It provides accuracy and accountability in financial recording.

15. What is the purpose of the statement of cash flows, and how is it prepared?

    • Answer: The statement of cash flows shows how a company generates and uses cash over a specific period. It is prepared by categorizing cash flows into operating, investing, and financing activities.

16. How do you handle foreign currency transactions and their impact on financial statements?

    • Answer: Foreign currency transactions are initially recorded at the exchange rate on the transaction date. Subsequently, they may require revaluation at different rates. Gains or losses are recognized in the income statement.

17. Explain the accounting treatment of leases under IFRS 16.

    • Answer: IFRS 16 requires lessees to recognize most leases on the balance sheet as a right-of-use asset and a lease liability. This changes the accounting treatment for operating leases, which were previously off-balance-sheet.

18. What are the principles of cost accounting, and how are they applied in manufacturing industries?

    • Answer: Cost accounting principles involve tracking and allocating costs to products or services. In manufacturing, these principles help determine the cost of goods sold, manage production costs, and assess profitability.

19. How do you calculate return on investment (ROI) and return on equity (ROE)?

    • Answer: ROI is calculated as (Net Profit / Initial Investment) × 100. ROE is calculated as (Net Income / Shareholders' Equity) × 100. Both ratios measure profitability and efficiency in different contexts.

20. Discuss the importance of internal controls in accounting and provide examples.

    • Answer: Internal controls ensure accuracy, compliance, and protection of assets. Examples include segregation of duties, approval processes, physical safeguards, and reconciliations.

 Pass the ACCA Diploma in IFRS exams with us in your first go