Basic accounting interview questions test whether you can explain what a transaction changes, record both sides correctly, trace the result into statements, and investigate a mismatch. This practice page gives worked answers for entry-level accounting and finance operations roles. Its fictional case is a learning exercise, not a record from an employer or a prediction of interview questions.
How to answer a technical accounting question
Start with the economic event, name the accounts affected, state the debit and credit, then explain the resulting balance and the evidence you would check. If a fact is missing, say which document or policy you would inspect before deciding. A balanced entry is a necessary arithmetic check, but it does not prove the account, date, or treatment is correct.
Basic accounting interview questions and short answers
What is the accounting equation?
Assets = Liabilities + Equity. It describes the relationship between what an entity controls and the claims on those resources. Income and expenses affect equity through the period’s result; in a real interview, explain the transaction rather than reciting only the formula.
What does double-entry bookkeeping mean?
A transaction affects at least two accounts so that total debits equal total credits for the entry. The debit and credit depend on the account types and the actual event. For example, a cash contribution by an owner increases Bank (debit) and Capital (credit).
Is a debit always money received?
No. Debit and credit are accounting sides, not synonyms for cash in and cash out. A debit can increase an asset or expense; a credit can increase a liability, equity, or income. Identify the account and its change before choosing the side.
When a customer is invoiced, is cash already received?
Usually not in an ordinary credit-sale example. A valid invoice for services already provided creates a receivable and revenue in this simplified exercise; Bank changes only when the customer pays. Real revenue recognition and tax treatment depend on the contract and applicable policies.
What does a trial balance prove?
Equal debit and credit totals show that the ledger balances are arithmetically in balance. They do not prove that every transaction was captured, entered in the correct account, supported by evidence, or recorded in the right period.
How do profit and the balance sheet connect?
In the simplified case below, service revenue less rent and bank charges gives the period’s profit. That result increases closing equity. The balance sheet then shows Bank plus Receivables equal to Capital plus retained profit, assuming no other transactions or drawings.
What do you do if the bank statement and cash book differ?
First confirm the account, cut-off date, opening position, transaction references, and amounts. Separate timing items from missing or incorrect entries, retain the source evidence, and follow the authorised posting or escalation procedure. Never edit a source record only to force a match.
Try a complete fictional transaction exercise
The case below uses one small service business, four source events, and a bank fee discovered at period end. Work through the entries and balances before reading the answer key. Taxes, opening balances, depreciation, drawings, and other transactions are excluded to keep the arithmetic inspectable.
Fictional practice case
Aster Services: five-step accounting interview case
Try the first four entries, prepare a trial balance, and explain the bank difference. All events and amounts are invented for this exercise.
Source events
- Owner pays ₹20,000 into the business bank account.
- Business pays ₹3,000 rent from the bank account.
- Business invoices a customer ₹7,000 for services already provided; payment is due later.
- Customer pays ₹5,000 against that invoice into the bank account.
Bank statement clue: At the same cut-off, the bank statement shows a ₹200 service fee absent from the cash book.
Answer key: journal entries
The fee entry follows confirmation of the statement and the organisation’s authorised posting process.
| Event | Debit | Credit | Amount |
|---|---|---|---|
| 1 | Bank | Capital | ₹20,000 |
| 2 | Rent expense | Bank | ₹3,000 |
| 3 | Trade receivables | Service revenue | ₹7,000 |
| 4 | Bank | Trade receivables | ₹5,000 |
| 5 | Bank charges expense | Bank | ₹200 |
Answer key: closing trial balance
| Account | Debit | Credit |
|---|---|---|
| Bank | ₹21,800 | — |
| Trade receivables | ₹2,000 | — |
| Rent expense | ₹3,000 | — |
| Bank charges expense | ₹200 | — |
| Capital | — | ₹20,000 |
| Service revenue | — | ₹7,000 |
| Total | ₹27,000 | ₹27,000 |
Service revenue of ₹7,000 less rent of ₹3,000 and bank charges of ₹200 gives ₹3,800 profit. Bank of ₹21,800 plus trade receivables of ₹2,000 gives ₹23,800 assets, equal to capital of ₹20,000 plus profit. Before the fee is posted, the cash book shows ₹22,000 and the statement shows ₹21,800; explain and evidence that ₹200 difference before requesting the authorised entry.
Self-check rubric
Score one point for each item you can explain without reading the answer key:
- Identify the event and evidence before naming accounts.
- Choose the correct debit and credit for each event.
- Show a balanced ₹27,000 trial balance after the fee.
- Explain ₹3,800 profit and ₹23,800 closing assets/equity.
- Investigate the bank difference and request an authorised fee posting; retain an audit trail.
This is a study aid, not an employer’s interview or assessment rubric.
For formal study of journals, ledgers, trial balances, and bank reconciliation, use ICAI study material. The case above is an original simplified teaching example; actual accounting treatment follows the entity’s policies and applicable standards.
This resource provides general educational information. Verify current requirements with the relevant regulator, payment-system operator, employer, or provider before making decisions.