accounting generalist Interview Questions and Answers

1. What is the difference between accrual and cash accounting?

   • Answer: Accrual accounting recognizes revenue when earned and expenses when incurred, regardless of when cash changes hands. Cash accounting recognizes revenue and expenses only when cash is received or paid.

2. Explain the accounting equation.

   • Answer: The accounting equation is Assets = Liabilities + Equity. It represents the fundamental relationship between a company's assets, liabilities, and owner's equity.

3. What are the three main financial statements?

   • Answer: The three main financial statements are the balance sheet, the income statement, and the statement of cash flows.

4. What is included on a balance sheet?

   • Answer: A balance sheet shows a company's assets, liabilities, and equity at a specific point in time. Assets are what the company owns, liabilities are what it owes, and equity represents the owners' stake.

5. What is included on an income statement?

   • Answer: An income statement shows a company's revenues and expenses over a period of time, resulting in net income or net loss.

6. What is included on a statement of cash flows?

   • Answer: A statement of cash flows shows the movement of cash into and out of a company during a period of time, categorized into operating, investing, and financing activities.

7. What is depreciation and how is it calculated?

   • Answer: Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. Common methods include straight-line (cost - salvage value) / useful life, double-declining balance, and units of production.

8. What is amortization?

   • Answer: Amortization is the systematic allocation of the cost of an intangible asset over its useful life.

9. What is the difference between accounts receivable and accounts payable?

   • Answer: Accounts receivable represents money owed to a company by its customers, while accounts payable represents money a company owes to its suppliers.

10. What is working capital?

    • Answer: Working capital is the difference between a company's current assets and current liabilities. It represents the funds available for day-to-day operations.

11. What is a general ledger?

    • Answer: A general ledger is a complete record of all financial transactions for a business.

12. What is a trial balance?

    • Answer: A trial balance is a report used in accounting that demonstrates the balances of all general ledger accounts at a specific point in time. The debit balances should equal the credit balances.

13. What is a chart of accounts?

    • Answer: A chart of accounts is a list of all accounts used by a company to record its financial transactions.

14. What are adjusting journal entries?

    • Answer: Adjusting journal entries are made at the end of an accounting period to ensure that revenue and expenses are recognized in the correct period and that the balance sheet is accurate.

15. What is the closing process?

    • Answer: The closing process is the procedure at the end of an accounting period to zero out the temporary accounts (revenue, expense, and dividends) and transfer their balances to retained earnings.

16. What is the difference between debit and credit?

    • Answer: Debits increase asset, expense, and dividend accounts and decrease liability, equity, and revenue accounts. Credits increase liability, equity, and revenue accounts and decrease asset, expense, and dividend accounts.

17. What is GAAP?

    • Answer: GAAP stands for Generally Accepted Accounting Principles. These are the common standards and guidelines used in accounting.

18. What is IFRS?

    • Answer: IFRS stands for International Financial Reporting Standards. These are international accounting standards.

19. What is a journal entry?

    • Answer: A journal entry is a record of a business transaction. It shows the accounts affected and the amounts of the debits and credits.

20. What is a bank reconciliation?

    • Answer: A bank reconciliation is the process of comparing a company's bank statement to its own cash records to identify any discrepancies.

21. What is inventory?

    • Answer: Inventory is the goods a company holds for sale in the ordinary course of business.

22. Explain different inventory costing methods (FIFO, LIFO, weighted average).

    • 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. Weighted average cost method assigns an average cost to each item in inventory.

23. What is cost of goods sold (COGS)?

    • Answer: Cost of goods sold represents the direct costs attributable to the production of goods sold by a company.

24. What is gross profit?

    • Answer: Gross profit is revenue minus the cost of goods sold.

25. What is net profit?

    • Answer: Net profit is revenue minus all expenses, including cost of goods sold and operating expenses.

26. What is a prepaid expense?

    • Answer: A prepaid expense is an expense paid in advance.

27. What is an accrued expense?

    • Answer: An accrued expense is an expense that has been incurred but not yet paid.

28. What is an accrued revenue?

    • Answer: An accrued revenue is revenue that has been earned but not yet received.

29. What is a deferred revenue?

    • Answer: Deferred revenue is revenue received in advance but not yet earned.

30. What is a current asset?

    • Answer: A current asset is an asset that is expected to be converted into cash or used up within one year.

31. What is a non-current asset?

    • Answer: A non-current asset is an asset that is expected to be used for more than one year.

32. What is a current liability?

    • Answer: A current liability is a liability that is expected to be paid within one year.

33. What is a non-current liability?

    • Answer: A non-current liability is a liability that is expected to be paid in more than one year.

34. What is owner's equity?

    • Answer: Owner's equity is the residual interest in the assets of an entity after deducting all its liabilities.

35. What is retained earnings?

    • Answer: Retained earnings are the accumulated profits of a company that have not been distributed as dividends.

36. What is a fixed asset?

    • Answer: A fixed asset is a long-term asset that is not easily converted into cash.

37. What is an intangible asset?

    • Answer: An intangible asset is a non-physical asset, such as a patent or trademark.

38. What is a tangible asset?

    • Answer: A tangible asset is a physical asset, such as a building or equipment.

39. What is a liability?

    • Answer: A liability is an obligation of an entity arising from past transactions or events.

40. What is an asset?

    • Answer: An asset is a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.

41. What is a revenue?

    • Answer: Revenue is the income generated from the sale of goods or services.

42. What is an expense?

    • Answer: An expense is the cost of operations that a company incurs to generate revenue.

43. What is a dividend?

    • Answer: A dividend is a distribution of profits to shareholders.

44. What is a budget?

    • Answer: A budget is a financial plan that outlines expected revenues and expenses for a specific period.

45. What is variance analysis?

    • Answer: Variance analysis is the process of comparing budgeted amounts to actual amounts to identify any differences (variances).

46. What is internal control?

    • Answer: Internal control is a process designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.

47. What is Sarbanes-Oxley Act (SOX)?

    • Answer: The Sarbanes-Oxley Act of 2002 is a law that established stricter regulations for all U.S. public company boards, management and public accounting firms.

48. What is a tax return?

    • Answer: A tax return is a document filed with a tax authority that reports income, deductions, and taxes owed.

49. What is a payroll?

    • Answer: Payroll is the process of calculating and paying employee wages and salaries.

50. What are some common payroll deductions?

    • Answer: Common payroll deductions include federal and state income taxes, Social Security tax, Medicare tax, and health insurance premiums.

51. What is a W-2 form?

    • Answer: A W-2 form is a tax document that reports an employee's wages and withholdings to the IRS.

52. What is a 1099 form?

    • Answer: A 1099 form reports payments to independent contractors and other non-employees.

53. What is accounts payable automation?

    • Answer: Accounts payable automation is the use of software and technology to streamline and automate accounts payable processes.

54. What is receivable management?

    • Answer: Receivable management is the process of managing and collecting money owed to a company.

55. Describe your experience with different accounting software.

    • Answer: [This answer will vary based on the candidate's experience. They should list specific software such as QuickBooks, Xero, SAP, Oracle, etc., and describe their proficiency level and tasks performed within each.]

56. How do you stay up-to-date with accounting standards and regulations?

    • Answer: [The candidate should mention professional development courses, industry publications, online resources, and professional organizations they belong to.]

57. How do you handle discrepancies in accounting records?

    • Answer: [The candidate should describe a methodical approach, including reviewing source documents, comparing data from different sources, and investigating potential errors. They should emphasize accuracy and attention to detail.]

58. How do you prioritize tasks when dealing with multiple deadlines?

    • Answer: [The candidate should describe their organizational skills and ability to manage time effectively, perhaps mentioning techniques like prioritization matrices or time-blocking.]

59. Describe a time you had to deal with a challenging accounting problem.

    • Answer: [The candidate should describe a specific situation, outlining the problem, their approach to solving it, and the outcome. This demonstrates problem-solving skills and experience.]

60. How do you ensure the accuracy of your work?

    • Answer: [The candidate should highlight their attention to detail, use of double-checking procedures, and adherence to accounting principles.]

61. Are you comfortable working independently and as part of a team?

    • Answer: [The candidate should emphasize their ability to work effectively in both environments, highlighting their communication and collaboration skills.]

62. What are your salary expectations?

    • Answer: [The candidate should provide a salary range based on research and their experience.]

63. Why are you interested in this position?

    • Answer: [The candidate should express genuine interest in the company and the role, highlighting how their skills and experience align with the requirements.]

64. Why are you leaving your current job?

    • Answer: [The candidate should answer honestly and professionally, focusing on positive aspects like seeking new challenges or career growth opportunities.]

65. What are your strengths?

    • Answer: [The candidate should list relevant strengths, such as analytical skills, attention to detail, accuracy, problem-solving abilities, and teamwork skills.]

66. What are your weaknesses?

    • Answer: [The candidate should choose a genuine weakness but frame it in a positive light, emphasizing efforts to improve.]

67. What is your experience with auditing?

    • Answer: [The candidate should detail their experience with audits, if any, specifying the types of audits and their responsibilities.]

68. What is your experience with budgeting and forecasting?

    • Answer: [The candidate should describe their experience in creating, analyzing, and managing budgets and forecasts.]

69. What is your experience with financial statement analysis?

    • Answer: [The candidate should describe their experience in analyzing financial statements to assess a company's financial health and performance.]

70. What is your experience with internal controls?

    • Answer: [The candidate should describe their experience in implementing, monitoring, and improving internal controls.]

71. What is your experience with compliance?

    • Answer: [The candidate should detail their experience in ensuring compliance with relevant accounting regulations and laws.]

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