30 Bookkeeper Interview Questions & Answers
Below is a list of our Bookkeeper interview questions. Click on any interview question to view our answer advice and answer examples. You may view 5 answer examples before our paywall loads. Afterwards, you'll be asked to upgrade to view the rest of our answers.
Behavioral
1. What have you done recently to become a better bookkeeper?
How to Answer
This question allows the interviewer to gauge how motivated you are to learn new skills. They will most likely be looking for a candidate that takes initiative to learn, so be sure to call out recent examples where you have acquired new skills.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Bookkeeping is truly my passion. I enjoy the work I do so I am always trying to learn new skills. Once a year I attend an accounting seminar to learn new laws and procedures. In my spare time I use an app called Becker CPA. It keeps me updated with random accounting facts throughout the day.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"I am always looking for ways to learn more about my profession and acquire new skills. As an example, I recently took a two week online course called Advanced Bookkeeping where I learned new skills related to inventory accounting. Since your organization is a retailer, I believe I could use the knowledge obtained from this course in the bookkeeper role. Once in the role, I would also seek out continuing education that allows me to apply skills acquired to help the organization."
Written by Brian Schuchart on December 20th, 2020
Anonymous Interview Answers with Professional Feedback
Anonymous Answer
Cindy's Feedback
Behavioral
2. How do you mitigate and manage stress?
How to Answer
The life of a bookkeeper can be stressful, especially during busier times like monthly close and the annual audit. The interviewer wants to gain insight into how you react to stressful situations.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Bookkeepers tend to have a lot of pressure on them because they are working with the business financials. I make sure to prioritize my tasks to prevent unnecessary stress. I work better under pressure and deadlines, so it is very hard to be stressed. I am motivated by the intensity that comes with being a bookkeeper. I am able to manage stress very well because I am motivated by the intensity that comes with being a bookkeeper.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Due to tight deadlines and the demands of the bookkeeper role, stress is inevitable. However, there are steps I take to help mitigate stress. First, I try to be as organized as possible. I am constantly prioritizing my workload to make sure time-sensitive tasks are handled before they are due. Next, I try to leave work at work. When not at work, I enjoy hiking, cooking, and traveling. Being able to enjoy these activities makes me feel calmer and rejuvenated at work."
Written by Brian Schuchart on December 20th, 2020
Behavioral
3. Are you willing to work extra hours if needed during busier times?
How to Answer
The life of a bookkeeper is tied to the month-end close calendar, which could result in a schedule that is 'lumpy' and not a typical 9-5. The candidate should expect there to be some additional time worked during busier times and should highlight that they are flexible.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Yes, I am willing to work as many hours as needed. My career is my passion. My schedule is flexible and working additional hours would not be a problem.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Yes, I am willing to work extra hours as needed. I understand that the work required ramps up during month-end close, tax filings and other busier times. I am happy to be flexible and work as needed to make sure the job gets done."
Written by Brian Schuchart on December 20th, 2020
Behavioral
4. What have you done at your previous job to reduce costs or save time?
How to Answer
The interviewer wants to know if you have the ability to improve processes. Speak to a specific action you took that resulted in reduced costs, saved time or gained better insights.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
In my experience, I have learned that one of the best ways to be efficient in your work is to create procedures. Procedures allow everyone in the office to be on the same page. Procedures not only save time but reduce the probability of errors. I, personally, create a checklist every morning. This to-do list allows me to stay on task and be sure all my duties are done for the day.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"My last role was bookkeeper for a small, established company. However, my predecessor did not have established procedures in place, and it sounded like he had made constant mistakes. One of the first things I did when I started was I made a monthly checklist that detailed all the steps I took during the monthly close. Included in these steps were checks I performed to self review my work. The checklist served as a cover sheet that I would hand off to my manager so that she would know exactly what steps I completed. This led to increased efficiency as we estimated it saved 4-6 hours a month in error corrections."
Written by Brian Schuchart on December 20th, 2020
Behavioral
5. What do you do when you don't know the answer to something?
How to Answer
There is no shame in being stumped - it happens to everyone at all levels of an organization. This question is an opportunity to highlight your ability to be independent and resourceful.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
I pride myself in my research abilities. Research has always been a strong suite of mine and if I don't know the answer to something I can promise you I will in about thirty minutes. I cross reference many resources, including asking a senior accountant, and learn everything there is to know about the subject. I try my best to become an expert in everything I do.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"I have no problem seeking solutions to questions I encounter. If I am unsure about the accounting treatment for a certain transaction, I can reach out to our external auditors for advice on the appropriate accounting treatment. I am good at researching online and following examples if it's something technical, such as using a new Excel formula."
Written by Brian Schuchart on December 20th, 2020
Anonymous Interview Answers with Professional Feedback
Anonymous Answer
Normally, I would contact support if I did not know the answer, but if the issue was not related to software, I would search the Internet first.
I usually find the answer to accounting and tax questions on several newsletters and websites that I subscribe to.
I would contact the CPA or external controller as a last resort."
Marcie's Feedback
Behavioral
6. What are some methods you use to self-review your work?
How to Answer
The interviewer is trying to evaluate your ability to check your own work and, as a result, save your manager precious time by catching mistakes before they reach his or her desk. Give specific examples of procedures you have implemented in previous roles to catch mistakes.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
I take my work very seriously. I am a perfectionist. I pay high attention to detail, so I review my work periodically as I complete the task and then once again when the task is complete. I know it may seem a bit time-consuming to do things that way, but I believe accuracy is most important.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Being able to self-review my work and catch mistakes is something I take very seriously. A bookkeeper spends a lot of time in the details, so it is sometimes difficult to catch errors. Given this, I implement checklists that require me to tie out balances, subtotal transactions, and other to-dos before I move forward in the close process. In a way, I am auditing my work to catch any mistakes or errors. This not only saves me time in the long run, but also saves my manager time as there is less back and forth resolving issues."
Written by Brian Schuchart on December 20th, 2020
Anonymous Interview Answers with Professional Feedback
Anonymous Answer
With a process in place, I have been able to identify errors when preparing financial statements.
Accounting is primarily concerned with ensuring accurate financial statements."
Marcie's Feedback
Behavioral
7. What is your comfort level with interacting and communicating with senior leadership?
How to Answer
A bookkeeper role is staff level but is unique in that the role interacts regularly with senior leadership. Highlight that you not only have experience presenting in front of leadership, but also that you are comfortable doing it. Be specific with what you presented. For example, monthly results, pitches for new initiatives, etc.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
I have extensive experience in communicating and working with my leadership team. I do not get nervous during meetings with the team nor do I feel scared. I don't speak on what I don't know. Our meeting is either to inform them on a topic or learn from them. I take each meeting to heart and do my best to know my role at that time and perform accordingly.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"I have ample experience getting in front of leadership and presenting. In my previous role, I would present to the CEO, CFO and other senior leaders during our monthly Finance Review meetings. I always felt the need to prepare in advance for any questions that might arise, and would often circle back promptly on follow-ups that developed during those meetings."
Written by Brian Schuchart on December 20th, 2020
Behavioral
8. How do you manage your manager? In other words, what steps do you take to make sure you get what you need from your boss and make both your lives easier?
How to Answer
Also known as 'managing up', 'managing your manager' is a soft skill that can be developed over time. It essentially means doing whatever is necessary to make your manager's job easier. Some clear-cut benefits of managing up include increased productivity and better working relationships between boss and employee.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Managing my manager makes not only her job easier but mine as well. I do my best to complete the tasks that are priority as well as assist my manager in any overflow she may have. I have learned that when I perform my duties to my manager's standard the workflow is smooth, and the possibility of error minimizes. Although my manager is the authority, we are still a team, and we work best when we work together.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"I am a firm believer in the benefits of managing my manager. At the end of the day, I want to make the audit engagements we work on together run as smoothly as possible. One area where I really focus on is communicating and prioritizing workload on a regular basis. This ensures that I'm always working on the highest-priority items. Another thing that is crucial is understanding my manager's style. For example, do they like regular check-ins by email throughout the day, scheduled catch-up meetings, etc. Then, I tailor my communication to their style."
Written by Brian Schuchart on December 20th, 2020
Behavioral
9. Do you have experience explaining complex accounting concepts to non-financial personnel?
How to Answer
Bookkeepers will frequently interact with other departments within the company. Many times, the employees in these departments do not have extensive knowledge of accounting concepts and terminology. This question is an opportunity to highlight your communication skills.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Yes, I do. In my internship it was my responsibility to communicate accounting reports with each department. I remember my first day in Accounting 1 class. I didn't understand any of the terminologies and spent the next week confused. That experience made me more conscious of the way I speak to other departments not familiar with accounting principles. I break accounting terms down into common knowledge words that everyone can understand.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Yes, in my previous role I was able to interact with non-finance personnel when I would meet with the marketing team to review their results each month. They didn’t have a strong understanding of accounting principles, so I tried to ‘speak their language’ as much as possible when discussing their department’s results vs budget. I believe I have the ability to communicate effectively with all personnel in an organization."
Written by Brian Schuchart on December 20th, 2020
Behavioral
10. How would you handle working in an increasingly remote work environment?
How to Answer
This is a question to gauge if you are disciplined enough to work from home. Be sure to touch on how you would stay focused and communicate with team members. Even after things return to normal, remote work may continue to be more common across many industries including accounting.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
COVID hit hard when I was an accounting student in college. My professor had to learn new ways to teach our lectures. He did this by using Zoom video. Working remotely became second nature to me. We were even able to intern at an accounting firm using different video platforms. I would say working remotely is exactly what I like.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"I have experience working remotely. At my internship, we were able to work from home on Fridays in the summer. I enjoyed working from home and was able to stay on task and communicate effectively with my team members. There were some ground rules I implemented, such as maintaining regular hours, keeping my morning routine as if I was going to the office, and scheduling breaks to take care of non-work related tasks. I also had a standing meeting with my manager and team members every morning to discuss priorities for the day."
Written by Brian Schuchart on December 20th, 2020
Anonymous Interview Answers with Professional Feedback
Anonymous Answer
Amanda's Feedback
Behavioral
11. Are you a detail-oriented person?
How to Answer
The bookkeeper position requires great attention to detail, as the role is in charge of producing and maintaining meticulous financial records. It is expected that the bookkeeper can catch mistakes before reporting is provided to leaders of the organization.
Written by Tabatha Lee on October 31st, 2022
Entry Level Example
Yes, I am highly detail oriented. As a bookkeeper, I must pay close attention to detail to avoid any errors. At the end each day, I check my work. I realize my position is very critical to the finance department, so I take extra measures to ensure accuracy.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Yes, I am extremely detail oriented. Part of what makes me a great bookkeeper is my organization skills and ability to self-review my work. I know that providing financial information containing errors creates doubt among leadership that the financial records are accurate. Therefore, I implement systems that allow me to check the details, such as monthly checklists and reviews."
Written by Brian Schuchart on December 20th, 2020
Anonymous Interview Answers with Professional Feedback
Anonymous Answer
Cindy's Feedback
Career Goals
12. Why did you want to become a bookkeeper?
How to Answer
This question is a way for the interviewer to find out a little bit about what makes you tick. Be honest and direct - don't give a phony answer that the interviewer will see through.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
When I was a child, I realized that math always comes easy to me. I remember being advanced in my studies and having to take math classes with the other students. I have always loved working with numbers. When I discovered there was a way to work with numbers and make an income, I knew bookkeeping was the job for me.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Since I was young, I have always liked math and have been good with numbers. I took an accounting class in high school and really enjoyed it - the concepts came naturally to me. I also aspire to be a key contributor to an organization, and I know that the bookkeeper role is visible to leadership."
Written by Brian Schuchart on December 20th, 2020
Anonymous Interview Answers with Professional Feedback
Anonymous Answer
In my senior year of high school, it was obvious to me that I wanted to work in a field where I could utilize my math skills.
Although there were other areas I could have pursued, I made the right decision by becoming a bookkeeper."
Marcie's Feedback
Technical
13. Do you have any experience with invoicing vendors?
How to Answer
A common responsibility of a bookkeeper is to invoice vendors and ensure that balances are paid timely. In your response, be sure to highlight that you know the steps of the invoicing process and possess the qualities needed to perform the duties.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Yes, I have extensive experience with invoicing vendors. Growing up, my grandfather owned a small country store in town. I started invoicing his vendors at the age of ten. I helped him do this until I left for college at the age of 18. In my adult life, I recently work for a company that required me to check vendors in and out. I was responsible for creating invoices and closing out payments. So, I would say I have experience with invoicing vendors.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Yes, in my previous role, I was responsible for managing the accounts receivable process from start to finish. First, I would produce an invoice each time a service was performed and record the sale to the general ledger. Next I would send out the invoices to the clients. At my previous company, clients were invoiced both electronically and by mail. When payments were made, I would apply the payments against the client's outstanding invoices. Finally, I would follow up with customers who had not paid their invoices timely. I am very detail oriented and organized, which I believe are necessary to perform the invoicing process effectively."
Written by Brian Schuchart on December 20th, 2020
Technical
14. What is depreciation expense, and how is it recognized?
How to Answer
Depreciation is the gradual expensing of the cost of a fixed asset over its useful life. Depreciation expense aligns with the accrual method of accounting, as the total cost of the asset is spread over a period of time, rather than expensed in full when purchased. Most companies use straight-line depreciation, which spreads the cost evenly over the asset's useful life.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
A depreciation expense is the cost of an asset over time and is a calculation that helps businesses determine and forecast financial status for budgeting purposes. Depreciation expense is recognized on the income statement as a non-cash expense that reduces the company's net income. For accounting purposes, the depreciation expense is debited, and the accumulated depreciation is credited. It is considered a non-cash expense because the recurring monthly depreciation entry does not involve a cash transaction.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Depreciation expense is the portion of a fixed asset cost that is being used up during the current period. When a fixed asset is purchased, the cost is capitalized on the balance sheet. Each period, depreciation expense is recognized which reduces the asset balance. While there are many ways to depreciate an asset, most companies use the straight-line method of depreciation."
Written by Brian Schuchart on December 20th, 2020
Technical
15. What are some examples of internal controls that impact the bookkeeper role?
How to Answer
Internal controls are rules or procedures that are put in place to protect financial and accounting information and prevent fraud. Some are required by laws and regulations, while others are implemented to protect the company. There are many examples of internal controls that can impact the bookkeeper role, including preventative controls (segregation of duties, chains of approval, physical control of assets (locks on doors), training programs) and detective controls (monthly reconciliations, budget to actual comparisons, inventory counts).
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
There are many examples of internal controls that can impact the bookkeeper role, including preventative controls (segregation of duties, chains of approval, physical control of assets (locks on doors), training programs) and detective controls (monthly reconciliations, budget to actual comparisons, inventory counts).
Written by Tabatha Lee on October 31st, 2022
Answer Example
"There are many examples of internal controls that would impact my role. Preventative controls like segregation of duties and approval requirements will limit the activities I can perform. I will also be involved in detective internal control procedures, such as monthly reconciliations of balance sheet accounts and budget to actual comparisons."
Written by Brian Schuchart on December 20th, 2020
Technical
16. Imagine that you are producing a month-end report and notice the ledger is off. What would you do to rectify this situation?
How to Answer
This question is being asked to assess your self-review skills, as well as your problem solving skills. First discuss how you would discover the error during your review. Then, cover the steps you would take to resolve.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
An accounting ledger is considered to be the single source of truth when it comes to finances. It is vital to keep up with all transactions of the business. If I were to find an error in the account badger, I would first be sure I calculated all my formulas correctly. If that was correct, then I would proceed to check my data entry. I would make sure that all data was entered into the report correctly. I do many reviews on my work so the chance of this happening is very unlikely but if it were to occur, I would be able to handle the issue easily.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"I pride myself on self-reviewing my work. During month-end, I follow a checklist that helps catch errors. If I discovered an error during my review, I would first check formulas to make sure the report itself is footing correctly. If there is nothing wrong with the report itself, I would then drill down to the account level by searching for the amount of the error. If the error was not in the account ledger, I would then drill down to the source document level. I enjoy problem solving and would find the issue efficiently."
Written by Brian Schuchart on December 20th, 2020
Technical
17. What are Days Payable Outstanding, and what is indicated when days outstanding grows?
How to Answer
This question gauges whether you understand metrics and can use them to catch trends in the business. Days Payable Outstanding is a metric that measures the health of accounts payable. A high or growing metric indicates that you can pay your vendors on increasingly favorable terms, which is beneficial to cash flow management.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Days payable outstanding (DPO) computes the average number of days a company needs to pay its bills and obligations.
Companies that have a high DPO can delay making payments and use the available cash for short-term investments as well as to increase their working capital and free cash flow. However, higher values of DPO, though desirable, may not always be a positive for the business as it may signal a cash shortfall and inability to pay.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Days Payable Outstanding is an important metric that measures the health of accounts payable. The metric indicates how many days of expenses are hung up in accounts payable at any given time. A low number of days indicates that the company is paying their bills quickly. A growing number of days indicates that the company is taking advantage of favorable vendor terms, which helps with cash flow management. As long as bills are not overdue, it is a sound strategy to have longer payment terms with vendors."
Written by Brian Schuchart on December 20th, 2020
Technical
18. Which statements or reports would you prepare as part of your month-end close package?
How to Answer
A bookkeeper is often responsible for producing month-end reports. An income statement and balance sheet are almost always produced, as well as a statement of cash flows. Additionally, there may be specific reports that a company can use, such as key performance indicators (KPIs), and customer/vendor detail.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
The month-end close process includes reviewing the company's balance sheet, intercompany trades, journal entries, and other documents (like bank statements, income, and expenses) and reconciling them. Month-end close is a systematic process of maintaining a record of the business's financial activities.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Month-End Reporting should give leadership the information they need to see how the business is performing. To achieve this visibility, there are some core reports I would include in the reporting package each month. First and foremost, I would include a balance sheet, income statement and statement of cash flows. For supplemental schedules, I would include a summary of key performance indicators, as well as a sales breakdown. Are there any other schedules that leadership at this company would like to see each month?"
Written by Brian Schuchart on December 20th, 2020
Technical
19. Are you proficient in Excel?
How to Answer
Excel proficiency is a must for not only a bookkeeper but any role in accounting. At a minimum, a bookkeeper should be able to sort through large amounts of data and analyze that data using pivot tables.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Yes, I am proficient in Excel. In my previous junior accounting role, I was required to use Excel on a daily basis. Through that, I have become an expert in the program. I am very familiar with all the necessary functions needed to complete my work.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Yes, I am proficient in Excel. I have used Excel extensively throughout my time in school, as well as in my previous role. For example, I used data sorting and filtering, as well as pivot tables to organize large amounts of data. Additionally, I have experience using V-Lookups and H-Lookups to pull together analysis for our external auditors. I have even dipped my toes into data visualization software such as Tableau, but that is a skill I would like to continue to nurture."
Written by Brian Schuchart on December 20th, 2020
Technical
20. True or False: For vendor invoices, it is always best to pay the bill as soon as possible.
How to Answer
This is a bit of a trick question and tests your understanding of cash flow. As a general rule of thumb, it is almost always better to receive cash from customers as quickly as possible and pay vendors as slowly as possible (while still adhering to the payment terms). The goal of doing this is to maximize cash on hand which provides flexibility for the company.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
That is false. It is not always best to pay vendor invoices as soon as you receive them unless there is a deduction associated with closing the invoice early. It is best to utilize the invoice payment terms because it allows us to maintain an average cash flow. By paying early, you risk the chance of tying up cash that is needed elsewhere. That is my opinion on paying vendor invoice payments early.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"That statement is false. When it comes to Accounts Payable and the payment of invoices, it is better to use the vendor payment terms to our advantage. If we pay bills as soon as they are received, that ties up cash that could have been used for other purposes. The only time it may be advantageous to pay sooner than the due date is if there is a discount for paying earlier."
Written by Brian Schuchart on December 20th, 2020
Technical
21. What are Days Inventory on Hand, and what is indicated when days on hand grows?
How to Answer
This is a question that gauges whether you understand metrics and can use them to catch trends in the business. Days Inventory on Hand is a metric that measures the health of the inventory asset. A high or growing metric indicates that there are problems selling through inventory.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Days Inventory on Hand is how many days of cost of goods sold are hung up in inventory at any given time. A low number of days indicates that the company is efficiently selling through inventory. A growing number of days indicates that there may be some issues with selling. If DOH is growing, then the method of sales should be evaluated for changes.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Days Inventory on Hand is an important metric that measures the health of Inventory. The metric indicates how many days of cost of goods sold are hung up in inventory at any given time. A low number of days indicates that the company is efficiently selling through inventory. A growing number of days indicates that there may be some issues with sell-through, which could lead to obsolescence issues in the future. Given this, sales strategy should be adjusted if Inventory DOH is growing."
Written by Tabatha Lee on October 31st, 2022
Technical
22. What accounting software are you familiar with?
How to Answer
Speak specifically to the accounting systems you have used and some of the functions you performed. Many job descriptions specifically state which accounting software the company uses. If any event, make sure to highlight that you are quick to learn new software systems.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
I am familiar with many different accounting software. Although I have experience in QuickBooks, FreshBooks, Wave, and Xero; I can adapt to any software quickly.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"In my last role, I used SAP to book journal entries and run queries. As an independent contractor, I also used Quickbooks to complete monthly bookkeeping for various clients. I used that software to book journal entries, complete bank reconciliations, run monthly reports, and invoice customers. Since I have an underlying understanding of accounting, I am easily able to learn new software packages."
Written by Brian Schuchart on December 20th, 2020
Technical
23. What are the different inventory valuation methods?
How to Answer
The goal of inventory valuation is to assign a monetary value to inventory the company owns that has not yet been sold. There are generally four accepted inventory valuation methods: Specific Identification, First In, First Out (FIFO), Last In, First Out (LIFO) and Weighted Average Cost. Each has its own advantages and disadvantages, so be prepared to briefly speak to each.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
The three most widely used methods for inventory valuation in accounting are First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and Weighted Average Cost. FIFO means that the goods should be sold in the order they were purchased. LIFO is the opposite of FIFO. Simply put, the goods purchased recently should be sold first while the goods purchased first should be sold last. WAC is the total cost of goods in inventory divided by the total units of goods
Written by Tabatha Lee on October 31st, 2022
Answer Example
"There are four widely accepted inventory valuation methods. The most clear cut is specific identification, where the cost of every item in inventory is specifically tracked. This method is best used when the company sells a low volume of high value items (such as rare cars). Next is First-In, First-Out, which presumes the first inventory purchased by the company is the first sold to the customer. Most companies use FIFO to value their inventory. Last-In, First-Out assumes the newest inventory in stock is the first sold. Finally, there's weighted average cost, which takes the cost of all products in inventory divided by the number of units. This method is used when the products a company sells are very similar."
Written by Brian Schuchart on December 20th, 2020
Technical
24. What are Days Sales Outstanding, and what is indicated when days outstanding grows?
How to Answer
This is a question that gauges whether you understand metrics and can use them to catch trends in the business. Days Sales Outstanding is a metric that measures the health of Accounts Receivable. A high or growing balance indicates that there is a collections problem.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Days sales outstanding (DSO) is a measure of the average number of days that it takes a company to collect payment for a sale. A growing balance indicates that there may be some issues with collections, which could lead to cash flow problems.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Days Sales Outstanding is an important metric that measures the health of Accounts Receivable. The metric indicates how many days of sales are hung up in accounts receivable at any given time. A growing balance indicates that there may be some issues with collections, which could lead to cash flow problems in the near future. Given this, collections should be monitored closely and adjusted accordingly, if DSO is growing."
Written by Brian Schuchart on December 20th, 2020
Technical
25. What are the steps involved in the accounting close process?
How to Answer
This question is used to assess whether your understanding of the accounting close process aligns with the organization's. Don't go into too much detail - rather, just hit the key steps and then ask how it compares or differs from the organization's process.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
The basic sequence of closing entries is as follows: First, debit all revenue accounts and credit the income summary account, clearing out the balances in the revenue accounts. Second, credit all expense accounts and debit the income summary account, clearing out the balances in all expense accounts. Lastly, close the income summary account to the retained earnings account. If there was a profit in the period, this entry is a debit to the income summary account and a credit to the retained earnings account. If there was a loss in the period, this entry is a credit to the income summary account and a debit to the retained earnings account.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"First and foremost, there needs to be a closing calendar so that deadlines are set for all departments. Next, all data must be gathered. This includes departments such as payroll and accounts payable preparing reports needed for journal entries. Next, all journal entries are booked. After journal entries are booked and reviewed, financial statements are prepared and balance sheet reconciliations are completed. Finally, the results are reviewed with leadership. Is there anything I described that differs from the process here at XYZ Corporation?"
Written by Brian Schuchart on December 20th, 2020
Technical
26. Do you have experience working with external auditors?
How to Answer
A key responsibility of a bookkeeper is to interact with and assist the external auditors. You may be asked to assist with walkthroughs, which are interviews where the auditor documents the processes you follow each month, as part of their assessment of internal controls. You may also be asked to either provide existing schedules (bank reconciliations, debt schedules, etc) or prepare schedules for the audit.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
My previous role required me to work with external auditors often. I would always cooperate and provide them with whatever information they needed. I would show them my process and reviews my reports with them. I would say I have a lot of experience with external audits.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Yes, in my last role I interacted with our external auditors frequently in a variety of ways. First, as part of their assessment of internal controls, I would sit down with them to complete walkthroughs of the processes I follow each month. Additionally, I would prepare schedules that they would test as part of their audit. Examples of these schedules include balance sheet reconciliations and amortization schedules for our intangible assets. Finally, I would prepare draft footnote schedules for the audited financial statements. I believe it's very important to have a good working relationship with the organization's auditors."
Written by Brian Schuchart on December 20th, 2020
Technical
27. Give some examples of non-cash expenses.
How to Answer
This is a technical question that tests whether you are able to identify non-cash expenses. Non-cash expenses are items that reduce profitability even though there isn't cash being paid in the period. A good example is depreciation expense, where the asset is purchased and then expense is recognized over its useful life.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
Non-cash expenses are expenses that are not related to cash. Even if they're reported in the income statement, they have nothing to do with cash payments. The most common form of non-cash expenses is depreciation. Other examples are amortization, stock-based compensation, and unrealized gains and losses.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"Depreciation expense is the most common non-cash expense, as the cash is spent upfront and then expense is recognized over the life of the asset. Amortization expense is another example, and it is most commonly associated with items such as software, intangible assets and long-term contracts. It's important for a bookkeeper to be familiar with these items, as they are added back to net income on the statement of cash flows."
Written by Brian Schuchart on December 20th, 2020
Technical
28. What are the three main financial statements and what do they indicate about an organization's financial position?
How to Answer
The three main financial statements are the income statement, balance sheet, and statement of cash flows. A bookkeeper should know the statements in detail, as they will likely be preparing all three each month.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
1. Balance sheet: A balance sheet identifies a business's present finances, including current assets and debts or liabilities owed.
2. Income statement: The income statement, sometimes called a profit and loss statement, illustrates profitability over a specific accounting period.
3. Cash flow statement: A cash flow statement shows how much cash enters and leaves your business over time
Each is vital to ensuring healthy financial practices for a successful business,
Written by Tabatha Lee on October 31st, 2022
Answer Example
"The income statement shows profitability over a period of time by showing revenue less expenses. The balance sheet summarizes a company's assets, liabilities, and equity at a point in time. And a cash flow statement shows the net cash inflows and outflows over a period of time. Each statement is essential in order to gain insights into the financial health of an organization."
Written by Brian Schuchart on December 20th, 2020
Technical
29. What are the differences between accrual accounting and cash accounting?
How to Answer
Accrual basis accounting and cash basis accounting are the two most commonly used accounting methodologies. A bookkeeper should understand the differences between the two methodologies, and understand that most companies use accrual accounting as it presents a clearer picture of financial health.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
The key difference between the two approaches is timing. Cash-basis accounting documents earnings when you receive them and expenses when you pay them. However, the accrual method accounts for earnings the moment they are owed to you and expenses the moment you owe them; it does not matter when your money enters or leaves your account. That is important, as receiving or sending payment is not always immediate.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"The main difference between accrual accounting and cash accounting is when revenue and expenses are recognized. Under cash basis accounting, revenue and expenses are recognized when cash is received and paid. Under accrual accounting, revenue is recognized in the period it is earned and expenses are recognized in the period they are incurred. While cash basis accounting is easier to implement, accrual accounting is used by most businesses and presents a clearer picture of a company’s overall financial health."
Written by Brian Schuchart on December 20th, 2020
Technical
30. What are the steps involved in the bank reconciliation process?
How to Answer
Bank reconciliations are a key responsibility of any bookkeeper role. These days, most accounting software packages (such as Quickbooks) make the process easy. However, a bookkeeper should know the steps that are involved.
Written by Brian Schuchart on December 20th, 2020
Entry Level Example
The process of completing a bank reconciliation is simple. First, you need to obtain all the bank activity for the period in question. Second, enter the ending bank balance into your software. Next, all the transactions need to be verified. If the reconciliation matches the bank balance, it is complete. If it doesn't match, the differences need to be investigated further.
Written by Tabatha Lee on October 31st, 2022
Answer Example
"In order to complete a bank reconciliation, a bank statement or export file of bank activity needs to be obtained for the prior month. The bookkeeper should enter the ending bank balance in the accounting software. Next, the bookkeeper should check off the transactions that have cleared the bank. There may be some transactions that need to be added to the general ledger, such as bank charges. If the reconciliation ties out to the bank balance, the reconciliation is complete. If not, differences should be investigated."
Written by Brian Schuchart on December 20th, 2020