Accounting Interview Questio

 Common Accounting Interview Questions:

What is Working Capital?

The difference between current assets and current liabilities, representing liquidity for short-term obligations.

What is Trial Balance?

A statement listing all ledger account balances to verify that total debits equal total credits.

What are Financial Statements?

Records of financial activities, including:

Income Statement: Shows revenues and expenses.

Balance Sheet: Displays assets, liabilities, and equity.

Cash Flow Statement: Tracks cash inflows and outflows.

Difference Between Amortization and Depreciation?

Amortization: Allocates intangible asset costs over time.

Depreciation: Reduces tangible asset costs over their useful life.

What is Accrued Expense?

Expenses incurred but not yet paid (e.g., wages payable).

What is the Going Concern Concept?

Assumes a business will continue operating normally without liquidation.

What is the Matching Concept?

Matches expenses with the revenues they help generate in the same period for accurate financial reporting.

What is Double-Entry System?

A bookkeeping method where every transaction affects at least two accounts, keeping the accounting equation balanced.

What is Accrual Accounting?

Recognizes revenues and expenses when earned or incurred, not when cash is exchanged.

What is the Accounting Equation?

Assets = Liabilities + Equity, representing the relationship between resources and claims.

What is a Ledger?

The principal book where detailed accounting transactions are recorded by account.

Difference Between Accounts Payable and Receivable?

Accounts Payable: Amounts owed by the business.

Accounts Receivable: Amounts owed to the business.

What is Bank Reconciliation?

The process of matching bank statements with accounting records to identify discrepancies.

What is Deferred Revenue?

Payments received for goods or services not yet delivered, recorded as a liability.

What are Contingent Liabilities?

Potential obligations dependent on future events, recorded if likely and measurable.

Difference Between Gross and Net Profit?

Gross Profit: Revenue minus cost of goods sold.

Net Profit: Gross profit minus all expenses.

Purpose of Depreciation?

Allocates the cost of tangible assets over their useful life.

Difference Between Capital and Revenue Expenditure?

Capital Expenditure: Long-term investments in assets.

Revenue Expenditure: Day-to-day operating expenses.

What is a Provision?

Funds set aside to cover future liabilities (e.g., bad debts).

What are Intangible Assets?

Non-physical assets like patents, goodwill, and trademarks.

What is the Concept of Prudence?

Recognizes expenses and liabilitie

s early, but revenues only when certain, to avoid overstating profits.