How Do You Distinguish Between Executive And Public Accounting
It is critical to include executive and public accounting instances while responding to this issue. You can highlight the differences between the two from there.
Example
Executive accounting is a sort of accounting utilized by businesses that provide services to their customers. CPAs and audits are used in public accounting to assist organizations in analyzing their financial records and maintaining responsibility.
Public accountants frequently have experience in various industries, whereas executive accountants typically only have experience in one. Another distinction is that public accountants are required to have CPA certification, but private accountants are not.
Big 4 Accounting Technical Questions
A detailed understanding of the answers to the 15 technical questions above indicates you have a strong technical foundation to gain a competitive edge over the applicant pool. This section aims to further strengthen your technical skills by helping you tailor your interview preparation specific to the accounting firm you are applying for.
The following section features eight exclusive questions that actual interviewers asked candidates at the Big 4 Accounting Firms.
The following questions have been taken from WSO’s company database, which is sourced from the detailed experiences of more than 30,000 people with accounting interviews.
The First Accounting Interview Question
First impressions are key in interviews, and accounting is no different. Irrespective of which accounting firm you’re applying to, you can be sure that your interviewer will ask this question, as it’s a notable standard in the industry.
Anticipating this question beforehand, crafting a compelling narrative around it, and selling yourself on it will make you stand out from the pool of potential candidates.
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What Is Wacc And How Do You Calculate It
Sample Answer:WACC is the acronym for Weighted Average Cost of Capital. It is used as the discount rate in a discounted cash flow analysis to calculate the present value of a company’s cash flows and terminal value. It reflects the overall cost of a company raising new capital, which represents the riskiness of investment in the company.
WACC represents the blended cost to both debt holders and equity holders, based on the cost of debt and equity for that specific firm.
The formula below helps you calculate the WACC of a company if you are put on the spot and asked to calculate it as part of your technical interview:
where,D = Book value of debtP = Value of preferred stockKD = cost of debt KP = cost of preferred stock T = Corporate tax rate
General Financial Accounting Interview Questions
These 31 general interview questions are ideal for breaking the ice during the interview and getting a general idea of your candidates experience and knowledge.
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Who Uses Accounting Tests
To hire the most qualified candidate, most companies use accounts receivable, accounts payable, or bookkeeping tests as an important part of the recruitment process. The format of these tests, as well as the style of the questions, is unlike most exams you may have taken in the past. Many qualified candidates have been left stranded at this point in the hiring process due to unexpectedly low test results. Therefore, it’s imperative that you prepare.
Accounting tests are used by many companies to assess applicants’ accounting skills. While many financial and accounting firms utilize these tests, they areprimarily used by agencies or assessment companies .
Define Dual Aspect Term In Accounting
As the name implies, the dual aspect concept states that every transaction has two sides. For example, when you buy something, you give the cash and get the thing. Similarly, when you sell something, you lose the thing and get the money. So this getting and losing are two aspects of every transaction.
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Are You Equipped With The Skill Set To Work Remotely What Challenges Are You Most Likely To Encounter Working From Home
The professional world is fast-changing, and its increasingly common to work from home. The interviewer is looking to see if youre as effective working from home as in the office. Your answer needs to show your skill set and ability to work in several environments.
Example:Yes, Im equipped with the skills required to work remotely. In my previous role, we worked remotely for the first four months of the pandemic. I adapted quickly to the new working conditions and gathered the skill set needed to work from home. The most prominent challenge I faced when working remotely was the inability to access physical files. However, I solved the problem by working with the office administrator to digitize them for easier remote access. This was more convenient for everyone in the office.
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How Are The Three Main Financial Statements Connected
Sample Answer:Net income flows from Income Statement into the Cash Flow Statement as Cash Flow from Operations. Dividends subtracted from net income are added to retained earnings from the prior period’s Balance Sheet to come up with retained earnings as on the date of the current period’s BS. The opening cash balance on the CFS is from the prior period’s Balance Sheet, while the closing cash balance on the CFS is the balance on the current period’s Balance Sheet.
The following chart gives you a more comprehensive overview of how the three financial statements are connected to help visualize and present better for your interview:
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Explain Deferred Asset With Example
A deferred asset refers to a deferred debit or a deferred charge. An example of a deferred charge is bond issue costs. These costs involve all of the fees or charges that an organization incurs to register and issue bonds.
These fees are paid in a near time when the bonds are issued, but it will not be expensed at that time.
Explain The Term Account Payable
Account payable is referred to as the amount the company owes to its suppliers, its employees, and its partners. In other words, it is the basic cost levied on the company to run a business process that is outstanding.
Account payable for one company may be account receivable for another firm or company.
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What Is Accounting Test
The accounting test analyzes the candidates ability to maintain the proper book of accounts, i.e., bookkeeping, and includes some very basic accounting questions in the form of Multiple Choice Questions . The candidates are expected to answer by picking the correct option from the given four options in the questions.
The qualification marks are 50% of the total correct answers given. Suppose any candidate manages to clear 50% or more shall be considered fit for the next level of Advanced Accounting course. Accounting depends on practice, and then only this subject can be understood easily by any candidate. Therefore, an accounting Test is made to check the basic knowledge of the subject the candidates want to pursue their careers.
Answer: Error of Commission.
Question #8 Pick up a correct journal entry for machinery purchased.
Answer: Machinery account Debit and Bank account credit.
Question #9
Steven places an order to Peter for the supply of a certain product that was not yet manufactured. Upon receiving the order, Peter went to the market and purchased all the raw materials required, hired some employees to get the things done, completed the order, and delivered the goods to Steven. Now here, the question arises that the sale is presumed to be recorded at which event.
Answer Key With Explanations
C Running a trial balance is an intermediary step in the financial close, not a core financial statement. Core financial statements are: the income statement, the balance sheet, statement of cash flows, statement of retained earnings and the notes to the financial statements.
D All are correct. A single step income statement has a section for revenue and expenses and only requires one subtraction to arrive at net income/loss. A condensed income statement only includes summary totals. Common sized income statements add a column to show the calculation of each line item as a percentage of revenue.
A Assets, expenses and losses increase with debits. Revenue, liabilities and gains increase with credits.
A Accounts receivable is a short-term asset included in the current asset section of a balance sheet and increases by debits. They come about when customer sales are made on credit, not cash. Accounts receivable become harder to collect, and therefore less valuable, as they age.
A Cash basis accounting records revenue when paid. Accrual accounting reflects revenue when it is earned. Accounts receivable and its related bad debt are part of accrual accounting only.
B Assets, liabilities and equity are found on the balance sheet. Revenue , expenses, gains, losses and net income are income statement accounts.
A Under the accrual basis of accounting, liabilities are recorded in the fiscal period that they are incurred or committed, regardless of when paid.
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Accounting Skills Detail Report
The Detail Report for our accounting test shows a breakdown of how a test taker answered each question on the test:
- Section 1 â incorrectly answered questions
- Section 2 â correctly answered questions
Grouping the candidate’s test answers in this way not only provides you with an easy way to gauge where the candidate made mistakes but also helps you get an idea of the candidateâs areas of strength or weakness. You may want to follow up on some concepts in an interview if the candidate is selected for the next step in the hiring process.
Explain Various Methods Of Calculating Depreciation In Details
Various methods of calculating depreciation are:
- Double declining method: This method is used to calculate book value, which is multiplied by a fixed depreciation rate.
- Units of production method: It is a way of charging depreciation on assets. This method is used when the assets value is closer to the units produces then years it is in used.
- Straight-line method: It can be calculated by dividing the difference between the cost of assets and its salvage value by the expected years to be used.
- Sum of year digit method: This method is based on the assumption that the assets productivity decreases with the passage of time.
- Sinking fund method: A technique which is used when the cost of replacing asset is too high.
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About Junior Accountant Online Test
The Junior Accountant Test skill test enables employers and recruiters to identify potential hires by evaluating job readiness. For this reason, the emphasis is laid upon evaluating the knowledge of applied skills gained through real work experience rather than theoretical knowledge. Using powerful reporting, you can have a detailed analysis of the Junior Accountant quiz results to help you make a better hiring decision and predict the candidates performance.
This Junior Accountant Test is designed considering EEOC guidelines. It will help you assess & hire diverse talent without any bias.
How To Answer Accounting Interview Questions
As you can see, accounting interview questions are generally a mix of questions about accounting issues and your own accounting skills, plus behavioral questions regarding soft skills, character, and work habits.
You should never try to present a false front during a job interview because, among other issues, your interviewer might notice and decide that your lack of candor is a red flag for deeper problems.
However, you can increase your chances of interviewing well and getting hired by practicing some typical job interview questions, as well as the common questions for accountants listed above.
For the most success, use examples from your career in your responses and keep your answers well organized. You want to tell a story that’s compelling and fact-based, but dont delve too deeply into nitty-gritty details.
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List Of Commonly Asked Accounting Interview Questions:
#1 Walk me through the three financial statements.
The balance sheet shows a companys assets, liabilities, and shareholders equity. The income statement outlines the companys revenues and expenses. The cash flow statement shows the cash flows from operating, investing, and financing activities.
#2 If I had only one statement and wanted to review the overall health of a company, which statement would I use and why?
Cash is king. The cash flow statement gives a true picture of how much cash the company is generating. That being said, its important to note that all three statements truly are required to get a full picture of the health of a company. Learn more about how the three financial statements are linked.
#3 What happens on the income statement if inventory goes up by $10?
Nothing. This is a trick question. The only impact will be on the balance sheet and cash flow statement.
#4 What is working capital?
Working capital is typically defined as current assets less current liabilities. In banking, working capital is normally defined more narrowly as current assets less current liabilities .
#5 What does having negative working capital mean?
#6 If cash collected from customers is not yet recorded as revenue, what happens to it?
It usually goes into Deferred Revenue on the balance sheet as a liability if the revenue has not been earned yet.
#7 Whats the difference between deferred revenue and accounts receivable?
#9 Under what circumstances does goodwill increase?
What Is The Purpose Of The Changes In The Working Capital Section Of The Cash Flow Statement
Sample Answer:Due to accrual accounting, certain non-cash items affect the income statement and the balance sheet, like accounts payable and accounts receivable. Therefore, to reverse the effects of the non-cash items, we adjust for them in the “Changes in working capital” section.
Sample Follow-up Question: What does it mean if your change in net working capital is negative on the cash flow statement? Is negative working capital a bad thing for a company?
Sample Follow-up Answer:While negative working capital by pure definition may indicate a solvency issue for a company, or an inability to satisfy its obligations, negative working capital is not necessarily a bad thing.
Suppose a company is making a concerted effort to stretch out its payment terms with its vendors as much as possible to preserve its cash position . In that case, this will result in negative working capital .
The company still has the liquidity to satisfy its obligations, but stretching out the vendor payment provides the company with the most flexibility.
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Describe The Liabilities Items On A Balance Sheet
Sample Answer:
- Revolver: This is a line of credit, which is not fixed in size, but rather has a maximum limit. A company can borrow and then pay off the debt at any time. Think of it as a credit card for companies. A Revolver is typically secured by a company’s working capital assets, such as Accounts Receivable, Inventory, and Prepaid Assets.
- Accounts Payable: This is almost the opposite of Accounts Receivable. The company has received items but hasn’t yet paid for them. It’s an IOU to their supplier.
- Deferred Revenue: The company has collected cash from customers for services that will be delivered over time .
- Accrued Expenses: These expenses are recorded on the income statement but haven’t yet been paid in cash. These are typically recurring expenses like rent, salaries, etc.
- Deferred Tax Liability: The company has paid fewer cash taxes than it owes and will have to make it up by paying additional taxes to the government in the future.
- Long-Term Debt: Just like a car loan or a mortgage on your house, this is an amount of debt that matures in more than a year.
What Is The General Classification Of Accounts That Usually Ledger Account Involve
The general classification of accounts that usually ledger account involves are:
- Assets: cash, accounts receivable
- Operating revenues: revenues through sales
- Operating expenses: rent expense, salaries expense
- Non-operating revenues and gains: investment income, gain on disposal of equipment
- Non-operating revenues and losses: interest expense, loss on disposal of equipment
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List Things Will Not Be Included In A Bank Reconciliation Statement
Things will not be included in a bank reconciliation statement are:
- Cheques dishonored not recorded in the cash book
- Direct payments made by the bank not entered in Cashbook
- Bank Charges or Interest debited by the bank.
- Cheques deposited but not cleared.
- Wrong debits given by the bank.
- Banks direct payment not entered in Cashbook.
Things To Take Note Of
There are a few things that are especially important to know when applying for positions that require this test and while preparing for it. Often, the interview is used to supplement the test. It may even be used, partially, for administering the test. Since this is the case, review the information below to prepare better for this exam and the interview.
Some common questions that relate to the test include:
- How do you avoid errors and review your work?
- How have you ever helped reduce company costs??
- How do you evaluate risks?
- Which accounting programs are you familiar with?
Since the interview may also include the test, you need to be finished with your practice and preparation before you show up for that interview. It might be the only chance you get to prove you know what you are doing, so make the most of it. Practice until you feel confident with all levels of question difficulty to be best prepared for a surprise test.
Knowledge or at least familiarity with Quickbooks and Oracle is one thing you should make sure you have too. It will make you stand out from other, less-prepared applicants. These two programs are ones commonly used by small to middle-sized companies in the private accounting sector.
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