Accounting Questions and Answers: Essential Guide to Ace Your Accounting Assessment and Interview

Are you preparing for an accounting assessment or interview? Look no further! In this comprehensive guide, we will provide you with all the essential accounting questions and answers you need to know. Whether you are tackling an accounting skills test or facing a challenging interview, we've got you covered.

What is an Accounting Assessment?

An accounting assessment is a tool used by employers to evaluate the accounting knowledge and skills of potential candidates. It typically consists of a series of multiple-choice questions and practical exercises related to various accounting topics. By assessing your abilities in areas such as accounts payable, accounts receivable, financial statements, and basic accounting terms, employers can determine your suitability for a role.

Create Your Own Assessment Prep Kit!

To excel in your accounting assessment, it's essential to have a well-rounded preparation plan. Here are some key steps to help you create your own assessment prep kit:

• Familiarize yourself with the accounting skills test topics
• Practice financial statement questions
• Sharpen your knowledge of accounts payable and accounts receivable
• Master accounting tabular and basic accounting terms

Accounting Assessment Test Questions and Answers

Now, let's dive into the heart of this guide - the accounting test questions and answers. Below, you'll find a variety of practice questions to test your knowledge and prepare you for your assessment or interview.

Financial Statement Practice Question

Question: What are the three main financial statements?
Answer: The three main financial statements are the income statement, balance sheet, and cash flow statement. They provide valuable insights into a company's financial performance and position.

Accounts Payable Practice Question

Question: What is the difference between accounts payable and accrued expenses?
Answer: Accounts payable refers to the money a company owes to its suppliers for goods or services received but not yet paid for. On the other hand, accrued expenses are costs that a company has incurred but has not yet paid.

Accounts Receivable Practice Question

Question: Walk me through the major line items of an income statement (negative numbers are shown in parentheses)?
Answer: The major line items of an income statement include revenue, cost of goods sold, gross profit (or gross loss), operating expenses, operating income (or operating loss), non-operating income (or non-operating loss), and net income (or net loss).

Accounting Tabular Practice Question

Question: Give some examples of accounting events that are typically involved in compound entries.
Answer: Examples of accounting events involved in compound entries include adjustments for prepaid expenses, unearned revenue, and depreciation.

Basic Accounting Terms Practice Question

Question: Can a company have a negative book value?
Answer: Yes, a company can have a negative book value if its liabilities exceed its assets.

Accounting Interview Questions

In addition to preparing for an assessment, it's crucial to be ready for accounting interview questions. Interviews provide employers with an opportunity to assess your technical knowledge and evaluate your fit within the organization. Here are some common accounting interview questions:

Walk me through your background/resume

Question: This question allows the interviewer to gauge your experience and understand how your background aligns with the position you're applying for. Take this opportunity to highlight your relevant educational qualifications, previous work experiences, and any notable achievements.

What are the three main financial statements?

Question: This question tests your knowledge of the fundamental financial statements - the income statement, balance sheet, and cash flow statement. Provide a concise explanation of each statement and how they are interconnected.

How are the three main financial statements connected?

Question: This question aims to assess your understanding of the relationship between the income statement, balance sheet, and cash flow statement. Explain how the net income from the income statement flows into the equity section of the balance sheet and how changes in working capital impact the cash flow statement.

Walk me through the major line items of an income statement (negative numbers are shown in parentheses)?

Question: This question evaluates your familiarity with the components of an income statement. Provide a comprehensive explanation of each line item, including revenue, cost of goods sold, gross profit, operating expenses, operating income, non-operating income, and net income.

If you could only use one financial statement to evaluate the financial state of a company, which would you choose?

Question: This question assesses your ability to identify the most informative financial statement. Justify your choice and explain how the chosen statement provides a holistic view of a company's financial health.

What is the purpose of the changes in the working capital section of the cash flow statement?

Question: This question tests your understanding of the working capital concept and its impact on cash flow. Explain that changes in working capital reflect the movement of current assets and liabilities, which directly affect a company's cash flow.

What is the difference between accounts payable and accrued expenses?

Question: This question examines your knowledge of two common accounting terms. Differentiate between accounts payable and accrued expenses, highlighting the timing of payments and the nature of the obligations.

Give some examples of accounting events that are typically involved in compound entries.

Question: This question assesses your familiarity with compound entries. Provide examples such as recognizing revenue and recording related expenses, adjusting for prepayments and accruals, and amortizing intangible assets.

Can a company have a negative book value?

Question: This question tests your understanding of a company's book value. Explain that a negative book value occurs when a company's liabilities exceed its assets, indicating a potentially risky financial situation.

What is WACC, and how do you calculate it?

Question: This question examines your knowledge of the weighted average cost of capital (WACC). Define WACC as the average rate of return a company must generate to satisfy its investors and explain the formula to calculate it.

What is goodwill?

Question: This question tests your understanding of goodwill in accounting. Define goodwill as an intangible asset that represents the value of a company's reputation, customer relationships, and other non-physical assets acquired in a business combination.

What is a deferred tax liability, and why might one be created?

Question: This question evaluates your knowledge of deferred tax liabilities. Define a deferred tax liability as the amount of taxes payable in future periods due to temporary differences between taxable income and financial statement income. Explain that they are created when expenses are recognized for financial reporting purposes before they are recognized for tax purposes.

What's the difference between enterprise value and equity value?

Question: This question assesses your understanding of enterprise value and equity value. Explain that enterprise value represents the total value of a company, including its debt and equity, while equity value represents the value of a company's equity only.

Describe the liabilities items on a balance sheet.

Question: This question examines your knowledge of balance sheet liabilities. Describe common liabilities, such as accounts payable, accrued expenses, short-term and long-term debt, deferred revenue, and pension obligations.

Describe the equity items on a balance sheet.

Question: This question tests your familiarity with balance sheet equity items. Explain equity components, including common stock, additional paid-in capital, retained earnings, treasury stock, and accumulated other comprehensive income.

What is net working capital?

Question: This question assesses your understanding of working capital. Define net working capital as the difference between current assets and current liabilities, representing a company's short-term liquidity position.

FAQ

Q: What is an accounting assessment?
A: An accounting assessment is a tool used by employers to evaluate the accounting knowledge and skills of potential candidates.

Q: How can I prepare for an accounting assessment?
A: To prepare for an accounting assessment, familiarize yourself with the accounting skills test topics, practice financial statement questions, and sharpen your knowledge of key accounting concepts.

Q: What are some common accounting interview questions?
A: Some common accounting interview questions include inquiries about your background/resume, the three main financial statements, the connection between financial statements, and the major line items of an income statement.

Helpful Accounting Links

To further enhance your accounting skills and knowledge, we've compiled a list of helpful accounting links:

• Link 1
• Link 2
• Link 3

Other JobTestPrep Assessments

Aside from accounting assessments, JobTestPrep offers a wide range of assessments to help you prepare for various job roles. Check out our other assessments and take the first step towards your dream career!

Conclusion

Mastering accounting questions and answers is crucial for acing your accounting assessment or interview. By familiarizing yourself with the key concepts and practicing with sample questions, you'll be well-prepared to showcase your accounting skills and secure your desired position. Remember to stay confident, demonstrate your knowledge, and let your passion for accounting shine through!