Best interview questions to test your accountant

Published:Nov 29, 202310:47
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Best interview questions to test your accountant
Best interview questions to test your accountant

Preparing for an accounting interview can be difficult. That’s because the questions pattern varies across companies. Some interviewers like to ask detailed questions like how to file gst nil return while others stick to the basic questions like what is revenue recognition. So we have decided to simplify the process for you. This article is all about the most popular accounting interview questions. These questions are selected based on the number of times they have been asked in recent interviews. Hence if you go through this article you are bound to face some of these in your next interview:

1. What are the three financial statements?

The three financial statements that you should know are: Balance Sheet, Income Statement and Cash Flow Statement. The first two will give you a snapshot of how much money you have in your bank account and how much debt you have to pay back. The last one gives you an idea of how much money is coming in and going out each month.

These three financial statements are commonly used in an accounting interview to assess the strength of an applicant’s logic and understanding of accounting system.

2.  What is working capital?

Working capital is a balance sheet item that measures how much money an organization has in its bank account to meet current operating expenses. It also includes the amount of cash that your organization has on hand to pay suppliers and make other payments. The higher your working capital, the less you'll have to borrow or rely on partners or customers for cash when it's needed. Working capital can also be called as "liquidity", which means it gives us the ability to pay off our debts with ease and pay our expenses without any problems. Thus working capital is the balance between what you owe and what you have available for paying bills.

3. What does having negative working capital mean?

Negative working capital is when your company has more expenses than the revenue it has earned. This can be caused by a variety of factors, including high expenses for marketing and new product development, or a decrease in your customer base. Either way, you want to get rid of negative working capital as quickly as possible so that you can increase your cash flow and reduce your operating costs. If you have a negative working capital, it could mean that your business is not generating enough cash to cover its expenses and debts. 

4. What’s the difference between deferred revenue and accounts receivable?

Deferred revenue is money that’s earned but not yet collected by a company, while accounts receivable is money due from customers but not yet paid to a company. Deciding how much to invest in fixed assets (such as buildings) versus investing in short-term growth strategies (such as hiring more employees) depends on these two items: deferred revenue and accounts receivable.

6. What are the first 2 digits in the GST number?

In the current GST no format the first two digits represent the state code based on the state code list of India.  For example, the digit 02 is for Jharkhand.

5. What are three examples of common budgeting methods?

There are many methods for budgeting. The most common ones that we hear about are:

  1. A traditional written budget.

This is where you write down what you want to spend on each category and how much money you have available for it. You then take these numbers, multiply them by the number of months in the year and then add up all of your expenses for the year.

  1. A spreadsheet budget

This is a great way to keep track of your income and expenses so that you know how much money you have left over at the end of each month, quarter or year. It also allows you to see how much money is coming in each month, quarter or year and what kind of expenses are recurring throughout the year (e.g., rent) or seasonal (e.g., vacations).

  1. A cash basis budgeting method 

This is where you cash flow your business based on actual transactions rather than estimated transactions or “what if” scenarios based on previous years’ data.

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