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Accounting Interview
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30 Questions and Answers by Bobbi Witt

Updated January 22nd, 2019 | Bobbi has been a finance manager for over 15 years, with direct recruiting and hiring experience in her field.
Question 1 of 30
In what instance would you use LIFO compared to FIFO?
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How to Answer
This is an inventory-based question. LIFO, or Last In First Out compared to FIFO, First In First Out.

If you have personal experience, always draw on that for an answer. If you don't have personal experience, then provide an analogy that would help explain not only the difference, but the importance. Understanding various industry inventory methods is important for this. A food service business will always want to use FIFO, whereas a manufacturing company that doesn't have products that expire will use whatever is most convenient. The Accounting method changes based on the inventory method. While not a lot of companies use LIFO due to the government's indecision on whether to accept it and the additional documentation it requires, the tax implications are less compared to FIFO.
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Top 30 Accounting Interview Questions with Full Content
1.
In what instance would you use LIFO compared to FIFO?
This is an inventory-based question. LIFO, or Last In First Out compared to FIFO, First In First Out.

If you have personal experience, always draw on that for an answer. If you don't have personal experience, then provide an analogy that would help explain not only the difference, but the importance. Understanding various industry inventory methods is important for this. A food service business will always want to use FIFO, whereas a manufacturing company that doesn't have products that expire will use whatever is most convenient. The Accounting method changes based on the inventory method. While not a lot of companies use LIFO due to the government's indecision on whether to accept it and the additional documentation it requires, the tax implications are less compared to FIFO.

Bobbi's Answer #1
"Inventory methods all depend on the type of inventory method used and how the inventory is managed. In food service or most hospitality fields, you'd use First In First Out to ensure nothing expires and is counted as waste. Whereas in a manufacturing company's inventory where nothing expires and all raw materials are the same life expectancy, you'd be able to use Last In First Out. So looking at your company, it all depends on the type of inventory method you have in place and the type of goods."
Bobbi's Answer #2
"I've never personally used Last In First Out, but have taken courses regarding the different inventory methods. There are certain industries that have to use FIFO, like the food service industry. They need to ensure their product doesn't expire and is counted as waste. This ensures higher profits for the amount of product you have. If you have a manufacturing company where nothing expires, then the inventory method can change."

As far as accounting goes FIFO generally has higher tax implications because costs generally go up over time so you are being taxed at the current rate of inventory costs not when the inventory was bought. If you use LIFO you will be taxed at the rate you purchased the most recent inventory. This will lessen the tax implication for the inventory."
2.
Give an example of when internal controls needed to be changed or updated and how you handled the change.
This is a SOX related question. SOX compliance is critical for publicly traded companies because controls are constantly evolving as the company grows and change.

If you have no experience with this, be honest and use your ability to learn quickly and adapt well to change. Mention how compliance changed drastically after ENRON and WorldCom.

If you have experience, then describe the exact change that occurred unless you're prohibited from revealing details due to an NDA agreement.

Bobbi's Answer #1
"At my previous company, we grew too quickly and had a lot of controls created that partially hit a lot of different issues at the time. As the company got better at handling the bigger client load, confidential data, and money coming in, we were able to adjust or reword a lot of controls that made others redundant. When I first started, there were at least ten different controls that all dealt with terminations. After reviewing them, we assembled a team to tackle the controls and limit them for less confusion. After that team devised only three controls to cover all terminations, we retrained the staff in proper control methods and how to successfully audit them."
Bobbi's Answer #2
"As a recent college grad, I haven't had the privilege of updating the controls myself but in my current position, the company I work for just changed a few controls. I can't go into much detail because of the NDA I signed, but we've streamlined the process of training people on the active controls to ensure that the most up-to-date controls are followed, and also gave a detailed explanation to the auditors about the transition to new controls to eliminate questions."
3.
Give me an example of how your strengths help you in Accounting.
This is a subjective question and one that will be asked (maybe in a different way), but this is the strength vs. weakness question. I'd focus on about 2-4 strengths and give an example. Common list of strengths to choose from are:

1) Organizational and planning skills.
2) Perseverance.
3) Persuasive ability.
4) Communication skills.
5) Leadership ability.
6) Stress tolerance.
7) Ability to learn and apply new information and skills.
8) Flexibility.
9) Trustworthiness.
10) Detailed oriented.
11) Reliable.
12) Unwavering.
13) Ethical.

Always try to give an example of how you've used your strengths to improve your performance or your company in some way.

Bobbi's Answer #1
"I'm a highly organized person. I live off of my planner and always carry it with me. I do bi-weekly budgets for myself so that I can continuously pay off my student loans. Due to my organizational skills, I'm great with time management, which allows me extra time to help other departments in my current role. I'm known for always completing my tasks on time, if not early. They know they can turn to me if they have extra work that they can't complete because I'll almost always help out unless it's not possible, then I'm direct and honest about my time constraints."
Bobbi's Answer #2
"I'm very detail oriented. I have the ability to catch small errors that are overlooked by most and have proven this in college when I was an aide to one of my professors and constantly caught errors he missed. He told me that I helped keep him honest, which is why he offered me this letter of recommendation. He's also listed as a reference if you should like to speak with him regarding my detail-oriented abilities."
4.
Tell me about the financial forecasting you've been responsible for.
To answer this question, you have to understand what forecasting is. It's not just making a budget for yourself. You can make a budget for yourself at the pay rate you have right now for the next year. Do you take into account if you're going to get a raise? Do you project how much of a raise? Probably not. Forecasting takes into account the busy seasons and basically alters the budget for the year by the time of the year before it ever happens.

If you have no experience forecasting, then explain how you'd handle forecasting by demonstrating your knowledge of it.

Bobbi's Answer #1
"I helped my manager forecast the accounting budget for the next year by reviewing the budget from the previous year, noting the busy seasons, and also noting when the company had influxes of revenue due to high sales for the past five years. By finding the busy times of the year when sales consistently increased, we could increase our budget following that time period. This ensured we could hire two more employees immediately after the busy sales season for to have enough help to assist with year-end close out."
Bobbi's Answer #2
"Although I haven't had any work experience with forecasting, I do budgets for my family as well as myself to ensure everyone stays on top of their finances. I would, however, love to forecast for a company, and the way I'd do that is by reviewing the financials and budgets from the last five years of the company. By noting when the company has high cash influx and low cash influx, I'd be able to make a budget by quarter or even by month to keep the company profitable. By monitoring the budgets monthly over the first year of my forecast, not only could we stay on budget, but also make real-time decisions on saving money to become more profitable overall."
5.
Give an example of something you'd put on a sub-ledger that wouldn't be included on the General Ledger.
Sub-ledger is the subset of General ledger in accounting terms. The relation between sub-ledger to the general ledger is many to one. There can be multiple sub-ledger accounts linked to the same general ledger account. Posting from sub-ledger to general ledger is a process in which entries from the general journal are periodically transferred to ledger accounts (also known as T-accounts).

This is the second step of the accounting cycle because business transactions are first recorded in the sub-ledger, and then they're posted to respective ledger accounts in the general ledger. The type of accounts found on the sub-ledger would be Accounts Receivable, Accounts Payable, and Fixed Assets. These are then rolled up in summary form to the general ledger.

Bobbi's Answer #1
"Fixed assets and accounts receivable would be some of the accounts not listed individually on the general ledger. The General ledger would have an assets or liabilities section."
Bobbi's Answer #2
"The key difference between general ledger and sub-ledger is that while general ledger is the set of master accounts where transactions are recorded, sub-ledger is an intermediary set of accounts linked to the general ledger. The relationship between these two is that multiple sub-ledgers are attached to the general ledger."

The sub-ledger is also referred to as 'subsidiary ledger', which is a detailed subset of accounts that contains transaction information. This account is referred to as the 'Control account', and account types that generally have a high activity level are recorded here. Subsidiary ledgers can include: purchases, payables, receivables, production cost, payroll, and any other account types.

The general ledger is the principal set of accounts where all transactions conducted within the financial year are recorded. The information for general ledger is derived from the general journal which is an initial book for entering transactions as two sided entries known as the debit and credit: assets, liability, owner's equity, income, and expenses. "
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