In today's article, I'm going to cover seven frequently asked questions for a senior accountant's job interview. Senior accountants are those who have experience of between two and five years and typically those are either spent all in public accounting or maybe a mix of public and private. The first question goes-
#1 If a company has three bank accounts for processing payments what is the number of ledgers it needs?
So I'm going to give you the answer first and then I'm going to give you why the hierarchy manager is asking this question. The answer is that you need three ledgers. If you have three bank accounts you need three separate ledgers for those accounts but the reason why this question even though it's an easy question is being asked is that the hiring manager is assessing whether you worked in an actual real accounting operation because if you did you'll know that if you combine three bank accounts into one ledger you'll have tons of reconciliation issues you will never be able to reconcile the books. So you need to separate three bank accounts into three separate ledgers so that you're able to do a bank reconciliation properly and that's the answer to question number one.
#2 What methods have you used for estimating Bad debt?
So there are two scenarios here. Maybe you've done it in the past in your previous job and if you did you can talk about it and if you haven't you can tell the hiring manager that you haven't done it in the previous job but basically, you remember from school from studying accounting that there are two ways for estimating bad debt. It's either a percentage of accounts receivable or a percentage of sales. The most common method is going to be a percentage of accounts receivable because usually what you do is you look at the aging of receivables and for each bucket, you assign a percentage of that bucket as an allowance for doubtful accounts. So basically the two main methods are going to be a percentage of our sales or percentage of accounts receivable that's the answer to question number two.
#3 Can you give me an example of how you would explain a complex accounting process or financial data to someone in HR, Tech support, or another team?
Basically, the hiring manager is trying to judge your ability to break down an accounting concept for someone who's not in finance, someone in HR, or in Sales or Tech-support or any other team. So you have to prepare for this before the interview so that you're not having to come up with this story on the fly.
In my case, I'll bring up an example of explaining to the HR team accrued vacation or accrued benefits or how that is booked under financial statements. I have to explain that to them so I can get from them the data that I need for accrued vacation or accrued benefits.
Another example is talking to the sales team, maybe about different revenue recognition rules. So basically you have to explain to them how revenue is being recognized based on ASC 606 or revenue recognition standards that's another example. So come up with this answer before the interview and play it in your head, so that you're not having to come up with it during the interview itself and that's basically question number three.
#4 When you buy a piece of equipment for a company what is the impact on the three financial statements?
Here, you're buying a piece of equipment and the first impact obviously is cash. Cash is being reduced because you purchase a piece of equipment but also on the balance sheet the PP&E or property plant and equipment will go up. So a reduction in cash and an increase on PP&E. Then the second financial statement is the income statement. The impact here is in the depreciation line, so as you depreciate the PP&E or the piece of equipment, you're recording the depreciation on the P&L each month. Then the final financial statement is going to be a statement of cash flow. If you remember it has three sections, cash flow from operating activity, investing activity, and financing activity. This is going to be in the investing activity section.
When you're investing in the company's future by buying a piece of equipment, cash is going to be going out. So it's an outflow of cash because you're spending on a piece of equipment.
#5 What's the difference between a trial balance and a balance sheet?
Obviously, as you can see the two expressions here have the word balance in them. A trail balance and a balance sheet have their balance in them, so the hiring manager is trying to see if you're confused by these two concepts and so the answer to that is that a trial balance is a summary of all of the balances in the general ledger, while the balance sheet is a statement of position of the company showing the assets liabilities on owner's equity. So this is the basic answer.
Then you can go a step beyond and explain that the process of creating the financial statements or the balance sheet, in particular, begins from booking journal entries and then taking that into a ledger and then summarizing the ledger balances into a trial balance and from a trial balance you produce the balance sheet. So this shows your expertise shows your knowledge that you understand how the data flows from journal entries to the general ledger, trial balance, and then balance sheet. This is how you can demonstrate your experience or your knowledge and this is question number five on my list.
#6 What happens to the cash which is collected from the customers but it's not recorded as revenue?
The hiring manager here is gauging your knowledge of revenue recognition rules and deferred revenue. So the answer here basically is that if the cash is collected it's not revenue that's not related to a service or product that's delivered in a period most likely it means it's related to deferred revenue or revenue that's going to be recognized in the future as we deliver the goods and services. So that's the answer to question number six on deferred revenue. Is that not all the cash that's being collected going to be related to revenue in the period, some of it might be related to future service or product that's gonna be delivered to the customer, and that's gonna be recorded as deferred revenue. That's the answer to question number six.
#7 Can you describe an accounting process that you helped improve?
For this one here, I want you before going into any job interview to come up with this answer beforehand, what accounting process have you improved in the past. So think of it, play it in your head, so that when you're going in you're not thinking of it for the first time.
In my example here when I went to work for one of the companies in the past, we employees were submitting expenses to a platform which was Expensify. Then expenses are recorded manually into the accounting package or QuickBooks. What I did is I created a link or an API connection or an automatic connection between Expensify and QuickBooks, so this way all of the expenses are flowing correctly into QuickBooks. It eliminates errors and also it reduces the number or the amount of time needed for the books to be closed.
So think of this answer beforehand come up with something that you improved in the past and speak to it and play it in your head this way you can answer this question during an interview.
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