Accounting interview questions and model answers

How to use these accounting interview questions

Accounting interview questions fall into six groups: core technical accounting, IFRS, audit, Excel, ERP and systems, and behavioural questions. Interviewers use them to test whether you can apply knowledge, not recite it, so the model answers below lead with the direct answer, then show the reasoning or the numbers. Adapt them to your own experience rather than memorising them.

For junior roles, expect mostly technical and Excel questions; for audit roles, the audit and IFRS groups; for finance manager roles, systems and behavioural questions carry more weight. Every figure in the worked answers adds up, because interviewers check. Examples use EUR, and assume a 25% tax rate where tax matters.

Technical accounting questions

These test whether you understand how transactions move through the statements.

• Walk me through the three financial statements. The income statement shows profit for a period; profit flows into retained earnings in equity on the balance sheet; the cash flow statement starts from profit (indirect method), adjusts for non-cash items and working capital, and explains the change in the cash balance shown on the balance sheet.
• If depreciation rises by EUR 100, what happens? Profit before tax falls 100 and, at 25% tax, net profit falls 75. In the cash flow statement, net profit is 75 lower but the 100 is added back, so operating cash rises 25 from lower tax. On the balance sheet, assets fall 75 (PPE minus 100, cash plus 25) and equity falls 75.
• What is the difference between accrual and cash accounting? Accrual accounting records income when earned and expenses when incurred, whatever the payment date; cash accounting records them when cash moves. IFRS financial statements are prepared on the accrual basis, which is why receivables, payables, accruals and prepayments exist.
• How do you record a credit sale of EUR 1,000 with 20% VAT? Dr Trade receivables 1,200 / Cr Revenue 1,000 / Cr VAT payable 200. When the customer pays: Dr Bank 1,200 / Cr Trade receivables 1,200. Revenue never includes the VAT, which is owed to the tax authority.
• How do you treat a EUR 12,000 annual insurance premium paid on 1 October with a 31 December year end? Three months have been used, so expense 3,000 and carry 9,000 as a prepayment: Dr Insurance expense 3,000 / Dr Prepayments 9,000 / Cr Bank 12,000.
• What is the difference between a provision, an accrual and a contingent liability? An accrual is a liability for goods or services received but not yet invoiced, with little uncertainty. A provision under IAS 37 is a liability of uncertain timing or amount that is probable and can be reliably estimated. A contingent liability is a possible obligation, or a present one where an outflow is not probable or cannot be measured reliably, so it is disclosed, not recognised, unless an outflow is remote.
• Why can a profitable company run out of cash? Because profit is measured on accruals: growing receivables and inventory absorb cash before customers pay, while capital spending and loan repayments hit cash but not profit. Working capital, receivables plus inventory minus payables, is the usual culprit.
• What is deferred tax, briefly? Under IAS 12 it is tax on temporary differences between the carrying amount of an asset or liability and its tax base. If tax depreciation runs ahead of book depreciation, taxable profit is lower today and higher later, so a deferred tax liability is recognised.

IFRS questions

Name the standard in your answer; it signals that you know where the rule comes from.

• What are the five steps of IFRS 15? Identify the contract; identify the performance obligations; determine the transaction price; allocate the price to the obligations, normally on relative stand-alone selling prices; and recognise revenue when or as each obligation is satisfied, at a point in time or over time.
• How did IFRS 16 change lessee accounting? Lessees recognise almost all leases on the balance sheet: a right-of-use asset and a lease liability at the present value of lease payments. The expense becomes depreciation plus interest instead of a rent line. Exemptions are available for short-term leases of 12 months or less and leases of low-value assets.
• What is the simplified approach to expected credit losses? IFRS 9 lets entities measure the loss allowance on trade receivables at lifetime expected credit losses from day one, typically with a provision matrix that applies a loss rate to each ageing bucket, adjusted for forward-looking information.
• Why is LIFO not allowed under IFRS? IAS 2 permits only FIFO or weighted average cost for interchangeable items, and specific identification for items that are not interchangeable. LIFO is not permitted because it usually leaves inventory on the balance sheet at old, unrepresentative costs.
• What is the difference between functional and presentation currency? Under IAS 21 the functional currency is the currency of the primary economic environment the entity operates in, and transactions are measured in it. The presentation currency is the one the statements are presented in; translation into it goes through other comprehensive income.
• When can development costs be capitalised? Under IAS 38, only in the development phase and only when the entity can show technical feasibility, the intention and ability to complete and use or sell the asset, probable future economic benefits, adequate resources and reliable measurement. Research costs are always expensed.
• What does IFRS 18 change? It replaces IAS 1 for annual periods beginning on or after 1 January 2027. It classifies income and expenses into operating, investing and financing categories, requires subtotals for operating profit and for profit before financing and income taxes, and requires disclosure of management-defined performance measures.

Audit questions

Audit interviews reward answers that link a risk to a specific procedure.

• How is materiality set? Under ISA 320 the auditor applies a percentage to a benchmark such as profit before tax, revenue or total assets, chosen for the users of the statements. Performance materiality is set lower to reduce the risk that uncorrected and undetected misstatements together exceed materiality.
• What is the audit risk model? Audit risk is the risk of issuing the wrong opinion. It combines the risk of material misstatement, meaning inherent and control risk, which the auditor assesses, with detection risk, which the auditor controls through the nature, timing and extent of procedures. Higher assessed risk means more evidence.
• What is the difference between tests of controls and substantive procedures? Tests of controls check that a control operated effectively throughout the period, such as approval of purchase orders. Substantive procedures look for misstatement directly, through tests of details and analytical procedures. ISA 330 requires some substantive procedures for each material class of transactions, balance and disclosure.
• How would you test the completeness of trade payables? Look for unrecorded liabilities: examine payments and supplier invoices after the year end to see whether they relate to the year, reconcile supplier statements to the ledger, and review goods received notes near the year end for missing invoices. Testing from the ledger alone cannot find what is missing.
• What is cut-off testing? It checks that transactions are recorded in the right period. Take dispatch notes and goods received notes from a few days either side of the year end and trace them to invoices and ledger dates; a sale shipped on 2 January but booked in December is a cut-off error.
• What does ISA 240 require on journal entries? Because management can override controls, the auditor must test the appropriateness of journal entries and other adjustments, particularly those near the period end, review accounting estimates for bias and evaluate the business rationale of significant unusual transactions.
• What are the types of modified opinion? Under ISA 705: a qualified opinion when a misstatement or scope limitation is material but not pervasive; an adverse opinion when misstatements are material and pervasive; and a disclaimer of opinion when the auditor cannot obtain enough evidence and the possible effects are material and pervasive.

Excel questions

Many firms add a short practical test. Explain the logic aloud as you build.

• How would you reconcile two lists, such as a bank statement and the cash book? Put both in tables, add a key such as date plus amount or reference, and use COUNTIFS or XLOOKUP to flag items in one list but not the other. Unmatched items become the reconciling items, and the adjusted balances should agree to zero difference.
• Why prefer XLOOKUP or INDEX-MATCH to VLOOKUP? VLOOKUP needs the key in the first column and a hard-coded column number that breaks when columns are inserted. XLOOKUP and INDEX-MATCH look in any direction, reference the return column directly, and XLOOKUP defaults to an exact match with an optional if-not-found value.
• How would you build an aged receivables report? Calculate days outstanding as the report date minus the invoice date, then use SUMIFS with bands such as 0 to 30, 31 to 60, 61 to 90 and over 90, or a pivot table on a band column. Always check the total equals the receivables control account.
• What is a pivot table for? Summarising a large table quickly by any field, such as sales by customer and month or expenses by cost centre, without writing formulas. Refresh it after the data changes, and use the underlying table as the single source.
• What is Power Query? It is Excel's Get and Transform tool for importing and cleaning data: combining monthly files, splitting columns, changing data types and removing blank rows. Steps are recorded, so next month's file is cleaned by pressing Refresh instead of repeating the work.
• How do you make a spreadsheet reliable? Separate inputs, calculations and outputs; avoid hard-coded numbers inside formulas; add check cells, such as debits minus credits equals zero or a total that ties to the ledger; round deliberately; and have someone review it.

ERP and systems questions

Systems questions separate candidates who have only used spreadsheets from those who have worked in a real ledger.

• What is an ERP? An enterprise resource planning system runs sales, purchasing, inventory, payroll and accounting on one database, so an operational document such as an invoice creates its accounting entry automatically instead of being re-keyed into a separate ledger.
• What is a control account? A general ledger account, such as trade receivables, whose balance is the total of a subsidiary ledger of individual customers or suppliers. The subledger and the control account must agree; a difference means a posting reached one but not the other.
• How does a sale reach the general ledger in an ERP? The invoice updates the customer ledger and stock, then posts a journal: Dr Receivables, Cr Revenue, Cr VAT payable, and Dr Cost of sales, Cr Inventory at cost. The payment later posts Dr Bank, Cr Receivables. Account mapping settings decide which accounts are used.
• What is a three-way match? Before paying a supplier, the purchase order, the goods received note and the supplier invoice are compared for quantity and price. It stops payment for goods not ordered or not received.
• Why lock accounting periods after close? So nothing can be posted into a period whose figures have been reported, reconciled or audited. Late items go into the open period with a note, which keeps reported numbers stable and the audit trail clean.
• How do you correct a posted entry in a system? Not by editing or deleting it. Reverse it with a dated reversing entry and post the correct one, so the ledger shows the original, the reversal and the correction, and the audit trail records who did what and when.
• What matters most in an ERP migration? Clean master data, a chart of accounts mapped from the old system, opening balances that balance and agree subledgers to control accounts, and a parallel check of the first close. Migrating history is less important than migrating correct balances.

Behavioural questions

Use the STAR shape: situation, task, action, result. Keep the situation short and spend most of the answer on what you did and what changed.

• Tell me about a time you found an error. Describe the error, how you found it (a reconciliation that did not agree, for example), how you confirmed the cause, the correcting entry, and the control you suggested so it would not recur.
• How do you handle a month-end deadline when data arrives late? Explain how you prioritise: estimate and accrue what is known, flag the estimate, communicate the risk early, and reverse and replace the estimate when actual figures arrive.
• What would you do if asked to post an entry you believe is wrong? Ask for the support and the rationale first. If the entry still looks wrong, explain why, escalate to a more senior person if needed, and do not post it. The IESBA Code's principles of integrity and objectivity are the reference point.
• Explain a financial concept to a non-accountant. Pick one, such as why profit is not cash, and use a plain example with numbers: a customer invoiced in March who pays in May gives March profit but no March cash.
• Tell me about a process you improved. Quantify the result: a bank reconciliation cut from two days to half a day by importing statements and matching automatically, for example.
• Why this role and why this qualification? Link the employer's work to your chosen route: an audit firm for chartered training, industry for a management accounting path, and show you know the experience requirement you will need to meet.
• Do you have any questions for us? Always ask two: how the finance team closes the month and in which system, and what support the employer gives for exams and study leave.

How to prepare in the final week

Rehearse the three-statement walk-through and the depreciation question aloud until both take under two minutes. Revise one example for each major standard, IFRS 15, IFRS 16, IFRS 9 and IAS 2, and one audit procedure for each main balance: revenue, receivables, inventory, payables and cash.

Research the employer: its sector, the framework it reports under, and its systems if the job advert mentions them. Prepare four STAR stories, covering an error, a deadline, a disagreement and an improvement, and practise a timed Excel task with a lookup, a SUMIFS and a pivot table. See our guides on Excel for accountants and on how to become an accountant for the detail behind these answers.

Practising ERP answers with Skyline Nexus ERP

Several of the systems answers above can be seen at work in Skyline Nexus ERP, which makes it a useful reference when you prepare. A final sale posts Dr Accounts Receivable, Cr revenue and Cr VAT Output, and Dr Cost of Goods Sold, Cr Inventory, when sales auto-posting is switched on, with the accounts chosen in the account mapping settings. Accounts can be flagged as control accounts for receivables, payables, VAT or inventory, and the Data Verification report compares the trial balance with the underlying transactions.

Periods in Skyline Nexus are closed as Soft Close or Locked, and a posting dated in a closed period is refused rather than moved, so late items are dated into the open period by the accountant. A posted journal is corrected by reversal or by Correct Journal Entry, which reverses the original and opens a pre-filled replacement, and the Accounting Audit Trail records the user, the action and the old and new values. If you are interviewing with an employer that runs it, mention those mechanics by name.