Accounting Interview Questions with Answers
Categories: Accountancy
What is the difference between ‘accounts payable (AP)’ and ‘accounts receivable (AR)’?
For this simple accounting interview question refer to the table below.
Accounts PayableAccounts Receivable
1. 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.
2. Accounts payable are liabilities.Accounts receivable are assets.
What is the difference between a trial balance and a balance sheet?
This is a basic accounting interview question. For the answer, mention that 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.
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.
What are the common mistakes in accounting?
This is one of the most frequently asked accounting interview questions.
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
What is the difference between inactive and dormant accounts?
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.
Are you familiar with the Accounting Standards? How many accounting standards are there in India?
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).
Why do you think Accounting Standards are mandatory?
Accounting Standards play an important role in preparing a good and accurate financial report. It ensures reliability and relevance in financial reports.
Every organisation’s financial documents are created as per Accounting Standards. The uniformity allows one to compare its market position against others who follow the same mandatory principles. As a common methodology exists, there remains no room for misrepresentation.
If our organization has three bank accounts for processing payments, what is the minimum number of ledgers it needs?
Three ledgers for each account for proper accounting and reconciliation processes.