If you are hiring an accountant and struggling with the critical accounting interview questions to ask the candidate – read on!
Are you looking for building up a strong team comprising of talented accounting professionals for your firm? Are you wondering what are the crucial and top accounting interview questions you must ask during recruitment?
In this article, we will provide you a complete guide on the accounting interview questions and answers. These questions will assist you in judging the accounting domain and knowledge of the candidates. They will help you to assess their familiarity with the financial statements, reports, and statutory rules and regulations.
First and foremost, the hiring manager of your company or firm must focus on the basic accounting interview questions. Then he or she must further move on to more advanced accounts questions to deduce the mastery and proficiency of the candidate on the subject matter.
Understanding the roles and responsibilities of the candidates in their prior engagements is also a vital factor in the list of interview questions for accountant.
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Best accounting interview questions
Let us now concentrate and focus our attention on the top 10 best accounting interview questions and the answers you must expect from the candidates.
1. Which are the three important financial statements of a company?
Rationale: It is one of the vital accounting interview questions that a hiring manager must ask. All companies have to generate financial statements mandatorily for sharing the yearly and quarterly results to the internal and external stakeholders.
If a company is listed on the country’s stock exchange, then it’s vital to disclose the financial statements at the stipulated time. An accountant plays a vital role in ensuring the assets, liabilities, income, expense, stakeholder’s equity, etc are properly depicted in the statements without any ambiguities and errors.
The Expected Answer: The candidate must provide you the names of the three financial statements as balance sheet, income statement, and cash flow statement. You must also seek to understand in brief the definition and content of each of these statements. For example, the balance sheet depicts the assets, liabilities, and the shareholder’s equity.
2. Define the term “working capital”?
Rationale: Working capital is a vital concept in the accounting and finance world. Hence ensure to include it in your list of interview questions on accounting. The management of a company must be aware of the money available on hand to meet the short term and current obligations.
Working capital is the one that provides the amount to pay up your current liabilities. The accountant must be aware of the formula and definition as they will be responsible for the calculations and presenting the report to the company’s management.
The Expected Answer: The candidate must provide you the definition in clear simple terms as the difference between current assets and current liabilities. You may further drill down to understand the types of current assets or current liabilities. It will help you to understand if the candidate is aware of the elements that need to be considered in the calculation.
3. What is the difference between deferred revenue and accounts receivable?
Rationale: It is one of the basic accounting questions for interview. This question basically helps a hiring manager to understand whether the candidate can distinguish between the revenue recognition principles and their implications.
Besides accountants must be aware of the accounting entry for deferred revenue and the accounts receivable/ revenue earned by a company. Both deferred revenue and accounts receivable are vital entries into the balance sheet, hence understanding the concept and their treatment is important.
The Expected Answer: Check to see whether the candidate mentions the deferred revenue as the unearned revenue. It is recorded as a liability in the company’s books till it is converted into revenue. Accounts receivable is the amount due to be earned by the company from a customer.
4. What are the different types of budgeting methods and the key differences among them?
Rationale: Budgets and forecasts assist companies in planning their expenses and revenue for the next financial year. The operational transactions can be controlled within the budget defined to prevent deficit and bankruptcy. It helps in preventing losses and over the limit expenditures.
One of the critical duties of accountants is to calculate the company’s budgets utilizing the key budgeting methods. So if you are hiring a candidate to whom you want to entrust the responsibility of foreseeing planning, forecasting and budgeting ensure it is included in your accounting job interview questions.
The Expected Answer: If the candidate mentions the four key budgeting methods – incremental, activity-based, value proposition, and zero-based, then you can consider it as a tick mark. Furthermore, ensure that the person is able to clearly articulate the difference between the methods. You can ask for some examples from the prior engagements.
5. Mention the names of some accounting software and whether you have used any of them?
Rationale: Leveraging accounting software or tools to fast track the financial calculations, reconciliations, and analysis is one of the responsibilities of an accountant. Nowadays companies are purchasing modern technologies with embedded features for drill-down, real-time reports, and dashboards. Therefore you must ensure that the candidate has adequate know-how of the accounting software, to minimize the training efforts.
The Expected Answer: The candidate must be proficient in using any of the key accounting software for example NetSuite ERP, Oracle ERP, SAP ERP, Sage Cloud, Zoho Books, MS Dynamics, Fresh Books, Tally, and Free Agent. You can ask for a small end to end transactional flow that the candidate has executed in any of the software.
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6. Specify the difference between the Trial Balance and the Balance Sheet?
Rationale: It is one of the vital finance and accounts interview questions. If the candidate is unable to answer the question, you must not consider recruiting the person. Trial Balance and Balance sheet are the two most vital reports to ensure accuracy in the financial data and the proper yearly closure of the books. Reconciliation exercise and reporting of assets and liabilities must be at the fingertips of an accountant.
The Expected Answer: If the candidate demonstrates clearly that the trial balance shows the debit and credit amounts at each balancing segment level, pointing out reconciliation errors if any, then you can consider it as correct. Regarding the balance sheet, check the candidate specifically mentions the assets, liabilities, and shareholder’s equity that are reported to determine the company’s financial position.
7. Mention the ten accounting principles of US GAAP?
Rationale: If you are hiring an experienced accountant, then consider this in your list of financial accounting interview questions. Senior accountants or financial analysts of a US-based company need to be proficient in the accounting standards and principles. They must ensure that the financial data and reports are in conjunction with the principles and policies as defined in the accounting standards like the US GAAP, IFRS, etc.
The Expected Answer: The ten accounting principles of US GAAP are Principle of Regularity, Principle of Consistency, Principle of Sincerity, Principle of Permanence of Methods, Principle of Non-Compensation, Principle of Prudence, Principle of Continuity, Principle of Periodicity, Principle of Materiality or Full Disclosure and Principle of Utmost good faith. If you receive this answer from the candidate, you are good.
8. Are you aware of the Bank Reconciliation Statements?
Rationale: It is one of the most common accounting questions for interview. Statements from the bank need to be reconciled with the accountable transactions recorded in the financial system of records. Unreconciled balances must be immediately analyzed and rectified.
This is a job of an accountant and hence you must surely check the candidate understands the concept, its implication and the method to rectify any errors.
The Expected Answer: If the candidate mentions the answer as the reconciliation between the bank records and the actual transaction balance, then you can consider it as correct. You may ask to provide an example of how the person was able to resolve unreconciled errors accurately.
9. Mention the names of the branches of accounting
Rationale: One of the important accountancy questions, hiring managers can consider evaluating a candidate. Accountants must be aware of the different branches of accounting, their significance and usage and their elements.
They are responsible to generate the reports and statements based on the types of accounting and present them to the stakeholders. Hence the question is a compulsory inclusion in the list of accounting interview questions.
The Expected Answer: You must look for the three key branches or types of accounting in the answer – Financial Accounting, Cost Accounting and Managerial Accounting. The first one focuses on the financial statements, the second one focuses on fixed and variable costs and the third one focuses on budgeting, forecasting, and analysis of data.
10. What are the basic principles of debit and credit for the different account types?
Rationale: In your list of key finance interview questions, you must consider this as it judges the fluency of the accounting concepts and terms. Accountants must be aware of the different types of accounts, their purpose and usage and their debit and credit treatments. Else they will fail to reconcile the books, rectify errors and adjust balances.
The Expected Answer: The basic principles of debit and credit for the different account types
- An asset account is debited to increase and credited to decrease
- Liability account is credited to increase and debited to decrease
- Revenue account is credited to increase and debited to decrease
- The expense account is debited to increase and credited to decrease
If the candidate is able to explain the above concept clearly, then you can consider the answer as correct.
Situational accounting interview questions
Situational accounting interview questions will help you to judge the analytical skills of the candidate. The questions will also assist in understanding the candidate’s innovative mindset and knowledge level in handling critical situations in finance and accounting.
The top 5 situational account related questions for interview are highlighted below, along with the expected answers from the job applicants,
1. Describe an accounting process that you have developed or improved
Rationale: It is one of the critical situational accounting questions in interview, enabling a hiring manager to assess the capabilities of the candidate. A company defines an accounting process but that needs constant audit and improvement through automation and adherence to the latest accounting standards and regulations.
An accountant must possess sound knowledge of the prevailing and upcoming innovations in digital finance.
The Expected Answer: As a hiring manager, ensure the candidate provides a clear example on how he or she has analyzed the accounting process of the company and introduced modifications to bring in quantifiable benefits in the financial functions.
2. As an accountant, give an example how you have assisted your company in cost reduction
Rationale: Companies seek cost reduction wherever there are opportunities in their business functions. An accountant must be proficient in analysing the end to end finance business functions, segregate the sub functions that are the greatest contributors to high expenses.
Hiring managers must ask this question to understand the experience of the candidate in dealing with activities that aids a company to reduce expenses and hence attain greater profitability.
The Expected Answer: Check if the candidate can demonstrate in ideating elimination of manual activities with automation, identify non value added activities replacing with functions that add value. You must also check if they are capable of calculating the ROI and the financial elements that contribute to ROI.
3. Elaborate a situation where you have identified a reconciliation error and resolved it within the period close timeline
Rationale: Any period close in a company, be in month end, quarter end or year end, is an important accounting activity. Accountants play a crucial role during this time, especially checking the reconciliation errors and rectifying them within the period closure timeline.
Missing the deadline and erroneous data will result in wrong representation of the company’s financial reports. Hence it is one of the crucial accountant interview questions.
The Expected Answer: Hiring managers must assess whether the candidate can explain a reconciliation error encountered and how the person drilled down to the error transaction using appropriate accounting software and reports.
4. Have you designed the accounting structure of a company
Rationale: The accounting structure defines the financial foundation of a company. The books or ledger balance, reconciliation, debit and credit match depend on the accounting structure. The balance sheet, income statement and cash flow statement are also created on its basis.
You must check whether the applicant has the experience of creating or modifying a company’s accounting structure, considering the reporting requirements.
The Expected Answer: Check if the candidate can elaborately explain the accounting structure and its segments. He or she must be able to justify the reason behind arriving at the structure.
5. How would you reach if a client requests you to create an expense record without providing the necessary documents?
Rationale: It is one of the accounts interview questions that helps to judge how the candidate can handle a potentially tough situation. You can judge the quick thinking ability of the applicant as well as his or her awareness of the legal formalities that need to be remembered in accountancy.
The Expected Answer: If the candidate says no to the creation of an expense record without the legal documents that directly link to adherence of taxation policies and statutory norms, then you know the person is experienced.
Role specific accounting interview questions
Let us now discuss the interview questions and answers for accountant that are specific to the roles and responsibilities. They will assist you in gauging the duties undertaken by the candidates in their prior engagements.
You can easily relate to the experience and expertise of the applicants and finalize your decision for recruitment. The top 5 role specific accounting interview questions are:
1. What was your role in your prior engagements as an accountant?
Rationale: It is one of the basic accounts executive interview questions that hiring managers must ask to understand the prior experience of the candidate. If the experience matches with the roles and duties of company expectations, then the person can be easily onboarded.
The Expected Answer: The candidate must be able to clearly articulate the activities and tasks performed in the past engagements as well as the roles played. If the details majorly matches with your needs then you can consider for hiring.
2. What is your role expectation from our company?
Rationale: This is one of the mandatory accounting interview questions. You can understand the ambitions and expectations of the candidate. It also helps you to visualize whether the candidate is eager to join the company and build up a strong career. A person with a clear future vision strives for growth and works hard.
The Expected Answer: If the candidate speaks on the expectations with zeal, mentioning the roles expected either a budget analyst or a financial advisor or an auditor, then you can be sure that the person can be recruited for your company.
3. Do you know what are the top skills an accountant must mandatorily possess?
Rationale: When you are hiring an accountant, you must verify whether the person is aware of the skills required to be a financial person. The skills can be accounting proficiency, interpersonal skills or analytical skills.
It is one of the general accounting questions and answers for interview that you can add on to your list during the hiring process.
The Expected Answer: You must check whether the candidate is confident on the skills required and whether he or she can relate them to prior professional experience.
4. What do you think is the biggest challenge for an accounting professional?
Rationale: If you are listing down the key accounts interview questions and answers for experienced personnel, then this is a must ask. You can understand whether the candidate is aware of the industrial challenges related to finance and accounting. Besides, it demonstrates the commitment of the person towards the profession.
The Expected Answer: If the candidate is smart to point out the trending challenges in the field of accountancy and is able to share viewpoints or thoughts on mitigating those challenges, then you can act positively in hiring the candidate.
5. Where do you find yourself 5 years down the line?
Rationale: Hiring managers must ascertain the candidate’s hunger for career growth and aspirations. A person with a clear vision of the future and crave to attain the heights, is bound to be hardworking.
Hence is must be considered in your list of your accounts and finance interview questions and answers.
The Expected Answer: You can consider the candidate as promising if he or she specifies the aspiring role and the steps to be adopted to achieve the same.
Behavioral accounting interview questions
Along with the basic accounting questions and the advanced finance queries, hiring managers must also ask behavioural related questions. It is important to understand why a person is shifting the job? Is it because of salary dissatisfaction, any conflicts with the previous employers or eagerness to work in your company? The top 5 behavioural accounting interview questions are,
1. Why do you want to work in our company?
Rationale: A candidate may submit resume and appear for an interview to check market value and may not be serious in switching over. You must judge the intention of the candidate and the seriousness in shifting the job.
The Expected Answer: If the candidate mentions about the company reputation and its values and expresses keenness in joining if recruited, then you can consider hiring the person.
2. What are your strengths and weaknesses?
Rationale: The ability to judge own strength and weakness and improving on them, is an example of honesty, truthfulness, and intellect. You can judge how smart the candidate is in analysing self-character traits.
The Expected Answer: You must check that the candidate is focusing on professional strengths and weaknesses not personal characteristics. Also the candidate must be able to illustrate on how the person is endeavouring in overcoming the weaknesses.
3. Why do you think we must hire you?
Rationale: You must potentially seek to understand the qualities and skills of the applicant that is relevant for the accountant role in your company. Any specific differentiator in the experience and expertise of the person will be an additional boon for your to hire the candidate. Therefore ensure it is included in your list of accountant interview questions and answers.
The Expected Answer: Check the candidate is focusing on accounting and finance experience, appreciations received on prior engagements, certifications and learning courses attended to enhance the competency level.
4. Why do you want to leave your current job?
Rationale: Understanding the exact reason of leaving the current job, is essential. You can judge whether the candidate had any bad reputation in the past, being forced to resign from the company or there are professional growth expectations. A company never wants to recruit a person who may in future cause unnecessary disruptions.
The Expected Answer: If a candidate hesitates to answer, then you must definitely perform a background check before deciding to recruit. But if the candidate confidently speaks about future growth, salary enhancement or eagerness to work in your company due to reputational brand, then you can consider for hiring.
5. What are your salary expectation?
Rationale: This question falls under the purview of HR department. It is important to understand the salary expectations to check the compatibility of the company pay structure. Else even if a person is technically sound, you will fail to provide the requisite role and salary leading to dissatisfaction.
The Expected Answer: You must check the per annum CTC of the candidate along with medical benefits and other employee benefit programs. Try to find similarity with the company’s compensation chart.
Accounting interview questions for freshers
The basic accounting questions asked in interview for freshers must be comprised of queries related to accounting concepts, regulations and policies. The freshers must be judged on their proficiency on accounting terms for interview.
The questions must also comprise of concepts related to recording or posting of journal entries for interview. The top 5 accounting interview questions for freshers are,
What is the difference between debit and credit in an accounting transaction?
Rationale: Debit and credit are the basic concepts that need to be at the fingertips of any accountant. Hence you must include it in your list of basic accounting questions and answers to judge that the foundation knowledge is clear for a fresher applicant.
The Expected Answer: If the applicant clearly articulates the answer as debit being an accounting entry to increase assets and decrease liabilities and credit being the opposite, then you can be rest assured that the candidate is aware of the basic accounting concepts.
2. Define real and nominal accounts with examples
Rationale: Real and nominal accounts are common accounting terms which each fresher must be aware of. Hence you must include it in your list of accounting interview questions for freshers.
The Expected Answer: If the candidate is able to relate real accounts with assets and liabilities and nominal account with income and expenses, you can put a tick mark in your evaluation sheet.
3. What do you understand by double-entry bookkeeping?
Rationale: Double-entry bookkeeping is followed by the majority of companies while recording the accounting entries of financial transactions. Unless an accountant is aware of this basic concept, he or she is not fit for the job. Hiring managers must mandatorily ask this question.
The Expected Answer: If the candidate’s answer focuses on matching debit entries to credit entries and mentions about reconciliation, then you can consider the answer as correct.
4. What is the difference between Accounts Payable and Accounts Receivable?
Rationale: Liabilities and assets are the two most important financial parameters when it comes to matching debit and credit accounting entries. Accounts Payable records liabilities and Accounts receivable records assets. Freshers must be proficient with these basic concepts.
Therefore as hiring managers, you must check whether the candidate is aware of the terms and their significance.
The Expected Answer: Check that the candidate provides the answer for Accounts Payable as liable to pay money for purchasing goods and services from vendors and Accounts Receivables as owing to customers for selling goods and services.
Tips: Be courteous and professional while asking questions. Building up a strong relationship from the beginning leads to greater employee satisfaction.