20 Accounting Interview Questions And Answers For Freshers

Accounting Interview Questions: Are you ready to tackle common Accounting Interview Questions and land your dream job in finance? Whether you’re a fresher or an experienced professional, preparing for an accounting interview is essential to showcase your skills and knowledge.

In this guide, we’ll cover a wide range of basic accounting interview questions and provide accounting interview questions and answers to help you get ready for your next interview.

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Top 20 Accounting Interview Questions and Answers

From understanding accounts payable interview questions with answers to delving into more specific accounting interview questions for freshers, we will help you get a strong grasp of the topics typically discussed. This includes everything from financial statements and reconciliation to cash flow and accounting software.

Let’s get started and ensure you’re well-prepared for any question that comes your way:

Basic Accounting Interview Questions

Q1: What is accounting?

Ans: Accounting involves the systematic process of recording, summarizing, analyzing, and reporting financial transactions of a business or organization. It offers valuable insights into the financial stability and performance of the organization. Here are some of the important components of accounting:

Recording transactions
Classifying transactions
Summarizing financial data
Reporting to stakeholders

Q2: What motivated you to pursue a career in accounting?

Ans: Accounting is a field that excites me because it merges my analytical skills with my interest in managing finances. I am passionate about working with numbers and helping organizations achieve financial transparency.

For example, “I find financial management challenging and rewarding. Accounting allows me to apply my analytical skills to interpret financial data and help organizations make informed decisions.”

Q3: What are the different types of accounting?

Ans: Accounting can be categorized into several branches based on its function and purpose:

Financial Accounting: Concentrates on reporting financial information to external stakeholders.
Management Accounting: Provides internal reports to aid decision-making.
Cost Accounting: Determines the costs of production and services.
Tax Accounting: Deals with compliance and tax reporting.
Forensic Accounting: Examines financial fraud and resolves disputes.
Government Accounting: Oversees public funds and ensures compliance with government regulations.

Also Read: Introduction to Construction Accounting

Q4: What is the double entry system?

Ans: The double-entry system ensures that each transaction affects two accounts: one debit and one credit. This system ensures the accounting equation is upheld, keeping the records balanced.

Q5: What are the three golden rules of accounting?

Ans: The three golden rules form the basis for the double-entry system:

Personal Account: Debit the receiver, credit the giver.
Real Account: Debit what comes in, credit what goes out.
Nominal Account: Debit all expenses and losses, credit all incomes and gains.

Q6: What is the basic accounting equation?

Ans: The basic accounting equation forms the foundation of the double-entry system:

Assets = Liabilities + Equity.

Example: If an organization has ₹5,00,000 in assets and ₹3,00,000 in liabilities, the equity is ₹2,00,000.

Q7: What are financial statements?

Ans: Financial statements provide a formal record of the financial activities of a business. They include:

Income Statement: Displays income and expenses during a specific period.
Balance Sheet: Displays assets, liabilities, and shareholders’ equity at a specific point in time.
Cash Flow Statement: It outlines the details of cash receipts and payments.

Also Read: What Is Discounted Cash Flow?

Q8: What is GST?

Ans: GST (Goods and Services Tax) is an indirect tax that consolidates various taxes such as VAT, excise duty, and service tax into one, streamlining tax compliance and removing the issue of tax cascading.

For example, GST applies to goods and services in India, with different tax rates for various products and services.

Intermediate Accounting Interview Questions

Q9: What is depreciation and how is it calculated?

Ans: Depreciation is the allocation of the cost of a tangible fixed asset over its useful life. It represents the reduction in the value of assets due to usage and ageing.

Formula: Depreciation = (Cost – Salvage Value) / Useful Life

Example: For an asset bought at ₹1,00,000, with a salvage value of ₹10,000 and a useful life of 5 years:

Depreciation = ₹(1,00,000 – 10,000) / 5 = ₹18,000 per year.

Q10: What is a trial balance?

Ans: A trial balance is a report that lists all the balances of general ledger accounts to ensure that total debits equal total credits. Therefore, its purpose is to check the accuracy of recorded transactions before preparing financial statements.

Q11: What is a journal entry?

Ans: A journal entry is the first step in recording transactions, ensuring that every transaction is captured with corresponding debits and credits.

Example: Buying furniture for ₹20,000 on credit:

Date	Account	Debit (₹)	Credit (₹)
01/01/2024	Furniture Account	20,000
01/01/2024	Creditors Account		20,000

Q12: What are the different methods of depreciation?

Ans: There are several methods used to calculate depreciation:

Straight Line Method: The asset’s cost is equally distributed over its useful life.
Reducing Balance Method: A higher depreciation charge is applied in the earlier years.
Units of Production Method: Depreciation is based on the asset’s usage or production level.

Advanced Accounting Interview Questions

Q13: What is goodwill in accounting?

Ans: Goodwill represents intangible assets like brand reputation, customer relationships, and intellectual property, typically recorded when a company is acquired for more than the fair value of its net assets.

Example: A company acquires another for ₹50,00,000, but the fair value of the acquired company’s assets is ₹40,00,000. The ₹10,00,000 difference is recorded as goodwill.

Q14: What are trade bills?

Ans: Trade bills are documents used in business transactions to confirm the sale or purchase of goods and services.

For example, a bill of exchange is used by a supplier to demand payment from a buyer for goods delivered.

Q15: What are financial ratios and why are they important?

Ans: Financial ratios are used to evaluate a company’s financial performance, liquidity, and profitability.

Example Ratios:

Liquidity Ratio: Current Ratio = Current Assets / Current Liabilities.
Profitability Ratio: Net Profit Margin = Net Profit / Revenue.

Practical and Behavioral Accounting Interview Questions

Q16: How do you handle errors in financial records?

Ans: If an error is identified, I follow a step-by-step process to investigate the root cause, make the necessary journal entries to correct it, and ensure the updated records are accurate and compliant.

For example, If a sales entry is mistakenly recorded under the wrong account, I would reverse the entry and reclassify it correctly.

Q17: What is your experience with budgeting?

Ans: I have experience in preparing both operational and capital budgets. I analyze historical data, estimate future revenues, and expenses, and track variances to ensure the company stays within budget.

For example, In my previous role, I created a department budget for ₹10,00,000 and monitored actual vs. budgeted expenses monthly.

Q18: What is the difference between accounts payable and accounts receivable?

Ans: Accounts Payable (AP) and Accounts Receivable (AR) are two fundamental aspects of managing business finances.

Accounts Payable refers to the money a company owes to its suppliers for goods and services received but not yet paid for. It is a liability on the balance sheet.

For example, if a company purchases raw materials worth ₹50,000 on credit, it will record ₹50,000 in accounts payable until the payment is made.

Accounts Receivable refers to money owed to the company by customers for goods or services delivered but not yet paid for. It is an asset on the balance sheet.

For example, A company delivers ₹30,000 worth of goods to a customer on credit. The customer is expected to pay within 30 days, so ₹30,000 is recorded in accounts receivable.

Q19: What is the role of a financial analyst in accounting?

Ans: A Financial Analyst has a crucial role in accounting by interpreting financial data to guide decision-making, enhance financial performance, and support strategic planning. Their primary duties include:

Analyzing Financial Statements
Financial Forecasting and Budgeting
Variance Analysis

For example, A financial analyst might review quarterly financial results, calculate the profitability ratios, and provide recommendations to improve efficiency or reduce costs.

Q20: Why should we hire you for this accounting role?

Ans: With my extensive knowledge of accounting principles, my ability to analyze financial data, and my proficiency in accounting software, I am confident that I can add value to your team. I am committed to ensuring accuracy and transparency in financial reporting.

Tips & Tricks to Answer Accounting Interview Questions for Freshers

Preparing for accounting interview questions requires focus and preparation. Here are essential tips to help you succeed in accounting interview:

Review Basic Accounting Concepts: Familiarize yourself with core accounting principles, like balance sheets, income statements, and cash flow statements. This will help you answer basic accounting interview questions confidently.
Know Accounting Software: Companies use accounting software for efficiency. Be prepared to discuss your experience with tools like Tally, QuickBooks, or Excel.
Provide Practical Examples: Share real-life examples where you contributed to improving financial processes or helped reduce costs. It’s important to showcase your problem-solving abilities.
Research the Company: Understand the company’s financial operations and industry. Customize your answers to highlight how you can contribute value.
Be Clear and Concise: Practice answering common accounting interview questions for freshers, ensuring your responses are concise and on point. Avoid rambling.
Stay Current with Trends: Be aware of the latest accounting trends, such as automation and new regulations. This shows you’re proactive in learning.
Communication Skills: Practice explaining complex financial concepts in simple terms. This is important in roles like accounts payable or when dealing with clients.
Dress Professionally and Be Confident: Make a strong first impression by dressing appropriately and staying confident throughout the interview.

Also Read: How to Become a Tax Lawyer? | Step-by-step Guide

However, preparing for accounting interviews involves mastering basic accounting principles, familiarizing yourself with accounting software, and practicing common interview questions. Highlight your skills with real-life examples, stay updated on industry trends, and show enthusiasm for the role.

Therefore, with the right preparation, you’ll confidently impress employers and increase your chances of landing the job.

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Accounting Interview FAQs

What are the basic accounting interview questions?

Accounting interviews often include questions on financial statements, accounting principles, software usage, and problem-solving related to accounting processes like transactions, depreciation, and budgeting.

How to prepare for accounting interview questions for freshers?

To prepare, focus on understanding basic accounting concepts, familiarizing yourself with accounting software, practicing common interview questions, and showcasing your problem-solving skills with examples. Research the company and its industry for better insights.

What accounting software should I be familiar with for an interview?

It’s helpful to be familiar with widely used accounting software like Tally, Zoho Books, QuickBooks, and Excel. Being proficient in these tools shows you can efficiently handle accounting tasks and adapt to new systems. You can also explore the PW Skills CPFTA course to learn these tools and prepare for accounting interview questions.