There is no scope for leaving this one out from any list of finance and accounting interview questions. The reason why you will never see depreciation being charged on land is that land has an infinite useful life. Without knowing how many years a fixed asset will last depreciation cannot be charged. Amortization is only done for Intangible assets, unlike depreciation which is for tangible assets. Reduction in value by prorating the cost of an intangible asset over multiple accounting periods is called amortization. Example — A small-sized technology company Unreal Corp.
If you may wish to deep dive into the topic here is our detailed article on Amortization with an example. This one also stands tall among top finance and accounting interview questions asked in technical rounds by hiring managers. Again, follow the i. Income Statement — It presents a summarized view of revenue, income, profit, and loss of a particular accounting period. Cash Flow Statement — It shows the movement of cash and cash equivalents for a business during an accounting period. They are written off in multiple future accounting periods. Examples — Preliminary expenses, promotional expenses of a business, discount allowed on the issue of shares, the loss incurred on issue of debentures, etc.
When a business decides to give goods in charity it also needs to account for those goods in the appropriate financial statement s , in this case, purchases are reduced with the exact cost of goods donated.
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When a business wants to advertise a new product or a new line of product it may decide to distribute free samples to the customer. The reduction in value of a tangible fixed asset due to normal usage, wear and tear, new technology or unfavourable market conditions is called Depreciation. Read more on Depreciation with examples along with types of depreciation. Contingent liabilities are those liabilities that may or may not be incurred by a business depending on the outcome of a future event.
In this case, Samsung will record the estimated amount in their books of accounts as a Contingent Liability. Another very frequently discussed topic in the list of finance and accounting interview questions is accruals. It will require an adjustment entry in the books of accounts to reflect this in the financial statements.
Similar to accrued expenses, an adjustment entry will be required in this case too. There is some more explanation on Accruals along with a couple of examples here. It is an account which is used to reduce or offset the value of an associated account. It holds the opposite sign for a particular type of account. Have a look at this complete guide to Ratio Analysis.
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Brushing up basic Excels will come in handy during the interview. Some of the formulae which one needs to know are sum, sumproduct, sumif, countif , subtotal, min, max, vlookup, hlookup, use of pivot tables , round, etc. Have a look at this. According to me, stock-in-hand can be the key to improving the working capital of the company.
Out of all the components of working capital, the stock is something which is controllable by us. We can pressurize our debtors to pay us instantly but we cannot have a direct control over them because they are separate legal entities and in the end, they are the ones who give us business. We can tend to delay payments of our suppliers but it spoils business relations and hampers the goodwill in the industry.
Plus if we delay payments, they might not supply goods in the future.
Common Accounting Interview Questions and Best Answers
Keeping liquidity in the form of funds in the bank can help the working capital flow but it comes at an opportunity cost. Keeping all this in mind, I personally believe that inventory management can go a long way in improving the working capital of the company. Excess stocking should be avoided and stock turnover ratios should be high. This answer is also generic in nature. There are industries which work on negative working capital as well such as e-commerce, telecommunication, etc.
So please do a bit of research about working capital before answering. It is very interesting to correlate the cash flow statement and the profit and loss statement of the company. What I am trying to say is, high revenue does not mean that the company has a high availability of cash. At the same, if the company has excess liquid cash, it does not mean that company has earned a profit. A cash flow basically shows how much CASH the company has generated in the given year.
Top 100 Accounting Interview Questions & Answers
It can also show if the company is in a position to pay for its operations in the near future. Earning profit is one thing but able to generate cash when the company needs to pay its debts is another thing. Operations relate to day-to-day operations which operations which help the company earn revenue. Financing activities show activities such as borrowings, shares issue, etc.
Also on a yearly basis, when depreciation is charged to the income statement, the asset will be reduced. An accountant has to coordinate with various teams such as customer supporting, marketing, procurement, treasury, taxation, business development, etc. As already mentioned, documentation plays a key role in accounting and without proper documentation an accountant will not be able to post entries in the accounting system.
I believe the accounting ERP used by your organization and Microsoft Excel will be my best friends and I will be spending maximum time with these two applications at work. The above answer is very generic. This should be fine-tuned as per the exact job description. Let us say you are applying for the position of Accounts Receivable Accountant.
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In this case, it is important for you to mention about revenue reports, follow up with customers for payment whenever due, revenue recognition, raising invoices to customers, etc. This is a tricky question and needs to be answered with carefully. It is tricky to answer this because change is acceptable to most organizations only when it leads them on the path of progress. Being the CFO is a lot of responsibility and when you directly talk about changing things in the organization you are not even part of, it can show a lot of arrogance on your part.
At the same time not wanting to change means you can be easily bent which again not a good trait is for a CFO. So the answer should be framed as follows:. Being the CFO of the company, my first task will be to understand the business, the revenue model, the processes followed at a broader level and getting acquainted with the management and the team reporting to me. I personally believe that before suggesting any changes, knowing these things is very important.
Once I spend enough time in the system, I would then be in a position to suggest changes on the basis of industry best practices, responses to the competitors and shareholder expectations. This question is not asked by interviewers to know your background. They already have your resume right in front of them which states the facts about your academic and work experience background. You should not repeat these things e. The interviewers want to know what makes you a proper fit for the given job and whether you will be able to take the responsibility associated with the job.
So, instead of mentioning these things which the interviewer already knows, use this question as an opportunity to tell them things about your work experience and your achievements. Framing this answer in a proper way is the key to cracking the accounting interview. Start with your best achievement and tell them why you love what you do and finally how you are best at your job.
Accounts and Finance Interview Questions and Answers
The accounting and finance field is under constant pressure. It is not a job which can be taken lightly which is why the interviewers ask this questions to test your composure under such stressed times. Take care to mention a genuinely stressful situation and do not crib about the work pressure you have faced on a day to day basis as no one wants to hire someone who cannot handle work pressure.
Also, please be realistic with the stressful situation you mention. It should not sound fake. The situation can be that of employee fraud, massive damages to the company on account of natural calamities, income tax scrutiny of years where you were not even a part of the organization, etc. You can also look at these other sets of interview questions for further knowledge —. Filed Under: Accounting , Accounting Careers. Your email address will not be published.
Download Colgate's Financial Model. Download Colgate Ratio Analysis Template. Accounts Receivable - Debit or Credit? Next Previous. So to ensure services have been delivered, time sheets of people who have worked on the project, the final design, or such deliverables can be used as a reference. There are statutory requirements in each country to follow either of these Accounting standards depending upon the country and their laws.