Accounting and Finance interview questions

Top 30+ Accounting And Finance Interview Questions and Answers

published on
Jul 2, 2024
4 Min REad
Table of Content

Accounting professionals ensure the smooth financial functioning of businesses across industries. With their expertise in managing and analysing financial data, accountants are highly sought-after by employers. To help you prepare for your upcoming accounting interviews, we have compiled a comprehensive list of 34 commonly-asked accounting interview questions along with sample answers.


1. What is the difference between financial accounting and managerial accounting?

Financial accounting focuses on reporting financial information to external stakeholders, while managerial accounting provides information for internal decision-making.


2. Define accrual accounting.

Accrual accounting recognises revenue and expenses when they are incurred, regardless of when cash is received or paid.


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3. What is the purpose of a balance sheet?

A balance sheet provides a snapshot of a company's financial position, showing its assets, liabilities, and equity at a specific point in time.


4. Explain the concept of depreciation.

Depreciation represents the allocation of the cost of an asset over its useful life to reflect its gradual wear and tear or obsolescence.


5. How do you calculate working capital?

Working capital is calculated by subtracting current liabilities from current assets and reflects a company's short-term liquidity.


6. What are some common financial ratios used in analysis?

Common financial ratios include liquidity ratios (such as the current ratio), profitability ratios (such as the return on equity), and leverage ratios (such as the debt-to-equity ratio).


7. Describe the steps in the accounting cycle.

The accounting cycle includes identifying transactions, recording them in journals, posting them to ledgers, preparing trial balances, making adjusting entries, preparing financial statements, closing temporary accounts, and finally preparing a post-closing trial balance.


8. How do you handle bad debts?

Bad debts are typically handled by recording an allowance for doubtful accounts to offset potential losses from customers who may not pay their debts.


9. What is the difference between gross profit and net profit?

Gross profit is the difference between revenue and the cost of goods sold, while net profit is what remains after subtracting all expenses, including operating expenses and taxes.


10. Explain the concept of double-entry bookkeeping.

Double-entry bookkeeping ensures that every transaction has equal debits and credits, maintaining the fundamental accounting equation (Assets = Liabilities + Equity) in balance.


11. How do you record an asset purchase?

An asset purchase is recorded by debiting the relevant asset account and crediting either cash or accounts payable, depending on whether payment was made immediately or on credit.


12. What are some common types of accounts?

Common types of accounts include assets (such as cash, inventory), liabilities (such as accounts payable, loans), equity (such as owner's capital), revenue (such as sales), and expenses (such as salaries).


13. How does inventory valuation impact financial statements?

Inventory valuation methods such as FIFO (first-in, first-out) or LIFO (last-in, first-out) affect a company's cost of goods sold and therefore its gross profit.


14. Explain the difference between a journal entry and a ledger entry.

A journal entry records a transaction initially, while a ledger entry summarises all related transactions for each specific account.


15. How do you calculate return on investment (ROI)?

ROI is calculated by dividing net profit by the initial investment cost and expressing it as a percentage.


16. Describe the concept of goodwill.

Goodwill represents the intangible value of a company's reputation, customer base, brand recognition, etc., which cannot be separately identified or valued.


17. What are some factors that can affect a company's cash flow?

Factors that can affect cash flow include changes in sales volume, collection periods for receivables, payment schedules for payables, capital expenditures, and financing activities.


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18. How would you handle an error discovered in financial statements?

Errors in financial statements can be corrected by issuing a prior period adjustment, which is recorded in the current year's financial statements.


19. What is the purpose of an audit trail?

An audit trail ensures that all transactions can be traced back to their original sources, providing transparency and facilitating error detection.


20. How do you calculate the straight-line depreciation of an asset?

The straight-line depreciation method calculates annual depreciation by dividing the asset's initial cost by its useful life.


21. Explain the concept of internal controls.

Internal controls are systems and procedures put in place by a company to safeguard its assets, ensure accurate financial reporting, and prevent fraud.


22. Describe the difference between accounts payable and accounts receivable.

Accounts payable represents amounts owed to suppliers for goods or services received, while accounts receivable represents amounts owed to a company by its customers.


23. What are some common types of business expenses?

Common types of business expenses include rent, utilities, salaries, advertising costs, office supplies, insurance premiums, etc.


24. How do you determine if an expense should be classified as capital expenditure or revenue expenditure?

Capital expenditures are investments in long-term assets that provide future benefits, while revenue expenditures are costs incurred to maintain normal business operations in the current period.


25. Explain the concept of working papers.

Working papers are documents used by accountants to support their work during audits or other accounting processes. They provide evidence and references for calculations and conclusions made during these processes.


26. How do you calculate the return on equity (ROE)?

ROE is calculated by dividing net income by average shareholders' equity and expressing it as a percentage.


27. What is the difference between bookkeeping and accounting?

Bookkeeping involves recording financial transactions, while accounting involves interpreting and analysing those transactions to generate meaningful insights for decision-making.


28. Describe the concept of inventory turnover ratio.

Inventory turnover ratio measures how quickly a company sells its inventory over a specific period and is calculated by dividing the cost of goods sold by the average inventory.


29. How do you handle foreign currency transactions?

Foreign currency transactions are typically recorded using the exchange rate on the transaction date, and any subsequent fluctuations are accounted for as foreign exchange gains or losses.


30. What are some common financial statements?

Common financial statements include the balance sheet, income statement, cash flow statement, and statement of changes in equity.


31. Explain the concept of a trial balance.

A trial balance is a list of all accounts and their balances at a specific point in time, used to ensure that debits equal credits before preparing financial statements.


32. How would you handle an overpayment from a customer?

An overpayment from a customer can be either refunded or applied as a credit towards future purchases, depending on the customer's preference.


33. Describe some principles of ethical accounting practices.

Ethical accounting practices include honesty, integrity, objectivity, confidentiality, and professional competence.


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34. How do you calculate diluted earnings per share (EPS)?

Diluted EPS takes into account potential dilution from stock options or convertible securities and is calculated by dividing net income minus preferred dividends by the weighted average number of shares outstanding.


Mastering Accounting Interview Questions

By practising and preparing for common interview questions, you can boost your chances of success. Remember to showcase your technical knowledge, problem-solving abilities, and communication skills. For expert guidance on upskilling courses and programmes that can help you excel in interviews, explore WiZR.



1. How much does an accounting executive earn?

Accounting executives in India earn an average annual salary of ₹7–11 lakhs, depending on factors such as experience, qualifications, and industry.

2. How can I become an accountant?

To become an accountant, you typically need a bachelor's degree in accounting or finance. Additionally, gaining professional certifications like Chartered Accountant (CA) or Certified Management Accountant (CMA) can enhance your employability.

3. Which industries have a high demand for accounting professionals?

Industries such as banking and financial services, consulting firms, manufacturing companies, healthcare organisations, and IT companies have a high demand for accounting professionals.

4. What are the most lucrative accounting jobs?

Some of the most lucrative accounting jobs include financial controller, chief financial officer (CFO), tax manager, internal auditor, and forensic accountant. These roles offer competitive salaries and growth opportunities within their respective specialisations.

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