Finance & Accounting: interview questions and learning guide

Accounting basics

Accounting is the scoreboard of a business.

Every transaction affects at least two accounts, so debits equal credits. Assets are what a business owns, liabilities what it owes, and equity what remains for owners. Accrual accounting records items when earned or incurred.

Interview tip: Remember the equation: Assets = Liabilities + Equity.

Financial statements

Three reports tell the whole story: what you have, what you earned, and where the cash went.

The balance sheet is a snapshot of assets, liabilities and equity. The profit and loss statement shows performance over a period. The cash flow statement shows real cash movement, which can differ from profit.

Interview tip: Explain the difference between profit and cash with one example.

Tax, audit & banking

Rules, checks and plans that keep money honest.

Finance teams file taxes on time, reconcile accounts with the bank, prepare budgets and compare them with actual results. Audits check that controls work and records are reliable.

Interview tip: Mention deadlines and controls: they show you take accuracy seriously.

Cost accounting and budgeting

Costing tells you what each thing really costs, and a budget tells you what you plan to spend.

Cost accounting splits spending into material, labour and overheads and links it to each product or service. This shows true unit cost and helps set prices. A budget is a plan of income and spending for a period. Each month the team compares actual results with the plan and studies the gaps. Good managers fix causes, not just numbers.

Interview tip: Use a simple break-even example to show you can turn cost data into a pricing decision.

GST and indirect tax basics

Indirect tax is collected by a business from customers and passed on to the government.

GST is a destination-based tax on supply of goods and services. A registered business charges tax on sales and can claim credit for tax paid on purchases. It files periodic returns that report sales, purchases and tax payable. Credit is allowed only when documents match and rules are met. Rates, limits and due dates change, so always check the latest official notices.

Interview tip: Say that you verify the latest rules on the official portal rather than quoting rates from memory.

Accounts payable, receivable and reconciliations

Payable is what you owe, receivable is what you are owed, and reconciliation proves both are right.

Accounts payable handles supplier bills from receipt to payment. Accounts receivable raises invoices and chases customers. Both must match records on the other side. Teams use ageing reports to see late items. Regular reconciliations of bank, vendor and customer balances catch errors and fraud early. Clear approval steps keep control strong.

Interview tip: Describe the three-way match and why it prevents paying for goods you never received.

Financial analysis and ratios

Ratios turn long statements into a quick health check.

Financial analysis reads the statements to judge profit, safety and efficiency. Ratios compare one figure with another so firms of different size can be compared. Liquidity ratios show short-term safety. Leverage ratios show debt load. Profitability and efficiency ratios show how well assets are used. A ratio alone means little, so compare it with past years and peers.

Interview tip: Never quote a ratio alone; always add the trend and a peer comparison.

Tally, ERP and Excel for finance

Tools do the arithmetic, but the accountant must still know what is right.

Accounting packages like Tally record vouchers and build ledgers and reports. Larger firms use ERP systems where purchase, stock and finance link together. Excel fills the gaps for analysis, checks and reports. Key skills are voucher entry, ledger grouping, lookups, pivot tables and clean formulas. Always keep backups and controlled access.

Interview tip: Name one Excel function you use daily and describe a real task it solved.

Profit includes items earned or incurred, while cash flow shows real money moving. Late customer payments can make a profitable company short of cash.

Match the ledger to the bank statement, identify differences such as timing items, adjust errors and report the reconciled balance.

Personal account: debit the receiver, credit the giver. Real account: debit what comes in, credit what goes out. Nominal account: debit expenses and losses, credit incomes and gains.

Accrual records income and expense when earned or incurred. Cash records them when money moves.

A statement that matches the cash book with the bank statement and explains differences such as uncleared cheques and bank charges.

Input tax credit lets a business reduce the GST it pays on sales by the GST it paid on eligible purchases, if conditions and matching are met.

Tax deducted at source. The payer deducts a percentage on specified payments like salary and professional fees, and deposits it with the government.

The profit and loss statement, the balance sheet and the cash flow statement.

Current assets minus current liabilities. It shows whether a business can pay short-term obligations.

Post all entries, accruals and provisions, reconcile bank and ledgers, review variances, finalise reports and lock the period.

Every entry has two sides. Debits and credits must be equal. Assets and expenses increase with debits, while liabilities, income and equity increase with credits.

Comparing your cash book with the bank statement to find and explain differences such as cheques not yet cleared.

The Goods and Services Tax is an indirect tax on supply of goods and services in India, with input tax credit for tax paid on purchases. Check current rates and rules.

Tax deducted at source. The payer deducts tax at specified rates when making certain payments and deposits it with the government.

Verify totals, look for posting or transposition errors, compare ledgers, check missed entries and use a suspense account only temporarily.