Accounting interview preparation: the practical tests and how to pass them

Most accounting interviews for junior and mid-level roles have three parts: a conversation about you and the role, technical questions, and — increasingly — a practical test done on a laptop or on paper, often timed. Candidates prepare for the first two and are caught out by the third. This guide covers all three, with the emphasis on the practical work, because that's where offers are won and lost.

What employers are trying to find out

• Can you do the core work accurately? Journals, reconciliations, accruals, a trial balance, a set of statements.
• Do you understand why, not just how? Can you explain why an entry is right and what happens if it's wrong?
• How do you handle what you don't know? Do you make sensible assumptions, state them and move on — or freeze?
• Are you careful and organised? Labelled workings, totals that cross-check, a clear answer.
• Will you be good to work with? Communication, ownership of mistakes, and judgement about when to escalate.

The practical tests employers set

1. Journal entry test

A list of 10–20 transactions to record: credit sales, supplier bills, payroll with deductions, prepayments, accruals, depreciation, a loan repayment split between interest and principal, perhaps VAT or a foreign-currency invoice. Marks are lost for the wrong account, the wrong side and missed lines in compound entries. The journal entries guide has a dependable method.

2. Reconciliation test

Usually a bank reconciliation, sometimes a supplier statement or a control account against a sub-ledger. You're given both sides, must identify timing differences and book-side items, and post the entries the books need. Work through the bank reconciliation guide and the bank reconciliation workstation.

3. Statements from a trial balance

You receive a trial balance and a list of period-end adjustments, and must produce an income statement and a statement of financial position — sometimes a cash flow statement too. The traps are the adjustments: an accrual missed, depreciation calculated on cost when the policy is reducing balance, or closing inventory not brought in.

4. Spreadsheet task

A data set to clean and summarise: aging a receivables list, a SUMIFS-based summary by account, a lookup between a GL export and a mapping table, or a pivot table of expenses by cost centre. Expect to be asked to explain your formulas.

5. Analysis or case question

For analyst and senior roles: compute a few ratios, explain a variance, or write a short note recommending a decision. Clear conclusions beat long lists of numbers.

A mini practical, with answers

Try these before reading the answers. The company has a 31 December year-end.

1. On 1 November the company paid 6,000 for six months' insurance and debited Insurance expense. Record the 31 December adjustment.
2. December electricity of 820 has been used but not billed.
3. A 1,000 customer deposit received in December for January delivery was credited to Sales.
4. Equipment costing 24,000 (no residual value, five-year life) was bought on 1 July. No depreciation has been recorded. The policy is straight-line, monthly.

Answers.

1. Two of the six months are used (November and December), so 4,000 is still prepaid. Debit Prepaid insurance 4,000, credit Insurance expense 4,000.
2. Debit Electricity expense 820, credit Accrued expenses 820.
3. The deposit is a liability until delivery. Debit Sales 1,000, credit Unearned revenue (contract liability) 1,000.
4. 24,000 ÷ 5 = 4,800 a year; six months = 2,400. Debit Depreciation expense 2,400, credit Accumulated depreciation 2,400.

Combined effect on profit: +4,000 − 820 − 1,000 − 2,400 = −220. Being able to state the net profit effect of your adjustments quickly is exactly what a reviewer — and an interviewer — looks for.

Common technical questions, with model answers

Walk me through the three financial statements.

"The income statement shows performance over a period — revenue less expenses gives profit. Profit flows into retained earnings in equity, on the balance sheet, which shows assets, liabilities and equity at the period end. The cash flow statement starts from profit, adjusts for non-cash items and working-capital movements to get operating cash flow, then adds investing and financing flows; the closing cash agrees to the balance sheet."

If depreciation increases by 100, what happens to the statements? Assume a 25% tax rate.

"Income statement: profit before tax falls 100, tax falls 25, profit falls 75. Cash flow: profit is down 75, but depreciation of 100 is added back, so operating cash flow is up 25 because less tax is paid. Balance sheet: property, plant and equipment is down 100, cash is up 25, so assets are down 75; retained earnings are down 75. It balances." (This assumes the depreciation is deductible for tax; mention that if you're unsure.)

What's the difference between an accrual and a prepayment?

"An accrual is an expense incurred but not yet paid — a liability. A prepayment is cash paid before the expense is incurred — an asset. Both make the income statement reflect the period's actual costs."

How would you investigate a bank reconciliation that doesn't agree?

"Match items on both sides, list unmatched book items as timing differences and unmatched bank items as entries to post. If a difference remains, check for transpositions — a difference divisible by 9 — items recorded twice, and amounts on the wrong side, which show up as twice the item. I wouldn't post an unexplained balancing figure."

Why can a profitable company run out of cash?

"Because profit includes revenue not yet collected and excludes cash spent on inventory, equipment and debt repayments. Rapid growth makes it worse: receivables and stock build up before customers pay."

What's the difference between a provision and a contingent liability?

"Under IAS 37, a provision is recognised when there's a present obligation from a past event, an outflow is probable and the amount can be estimated reliably. A contingent liability is a possible obligation, or one that fails the probability or measurement test; it's disclosed, not recognised, unless the outflow is remote."

What does the month-end close involve?

"Cut-off and posting of all transactions, accruals and prepayments, depreciation, reconciliations of bank and key balance sheet accounts, intercompany matching, review of the trial balance and variance analysis against budget and prior period, then the management pack — usually to a timetable with a checklist."

What are the main differences between IFRS and US GAAP?

Pick two or three you can explain well: LIFO is allowed under US GAAP but prohibited under IFRS; IFRS allows revaluation of property, plant and equipment; IFRS allows reversal of some impairment losses, US GAAP doesn't; lessee accounting uses a single model under IFRS 16 but finance and operating categories under US GAAP. The IFRS fundamentals guide covers these.

Tell me about a mistake you made.

Choose a real, modest example. Describe what happened, how you found it, what you did to fix it and what you changed so it wouldn't happen again. Interviewers are testing ownership and controls thinking, not perfection.

A two-week preparation plan

On the day

• Read the whole test first and divide your time by marks.
• State assumptions where the question is unclear, in writing.
• Label workings so a marker can follow them and give method marks.
• Cross-check — debits equal credits, the balance sheet balances, the cash flow ties to cash.
• Don't leave blanks. A reasoned partial answer scores more than nothing.

Practise it

The career preparation track is built around these tests: start with accounting interview questions, then the timed-style journal entry assessment, account reconciliation test, financial reporting test and junior accountant practical. Analyst candidates should add the financial analyst accounting assessment; close-focused roles, the month-end close practical exam.

The Interview preparation pathway puts these in order with the Northstar Trading case and The 90-Day Challenge, and finishes with the timed Interview readiness assessment on the exams page. There's also an overview on the interview preparation hub.