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By Ebookkeeper
Most people in the business world who do not work in Accounting may have difficulty interviewing Accountants and Bookkeepers. This is mainly due to the fact that their knowledge of the subject is limited. Furthermore, the subject of Bookkeeping and Accounting alone can put some people asleep faster then some cold medicines.
This article will help you get through some basics of interviewing for these types of bookkeeping positions. We will jump right into the meat and potatoes of the subject and assume you already know the other basics of interviewing candidates.
Bookkeeping and Accounting can cover a large range of experience and skills. So to simplify these interview questions for bookkeepers, there are two different interviewing groups we will focus on.
The two groups are:
A. Standard Bookkeeper
B. Advanced Bookkeeper
What to ask the standard bookkeeper in an interview. First let’s define what a standard bookkeeper is.
A. Definition of a Standard Bookkeeper: A person who has a general understanding of paper and record flow in a business. For example this person should understand customer invoicing and how that relates to accounts receivable. They should also understand how the company purchases from vendors and the importance of coding invoices into the accounts payable system. Lastly, the Standard Bookkeeper should work under the guidance of a more experienced Accountant which could even be your outside CPA firm. Typically, the Standard Bookkeeper is not responsible for setting up your chart of accounts, preparing financial statements, or handling major financial matters. This person should be viewed as a processor of information.
Five Interview questions for a Standard Bookkeeper: ( Please note: sometimes there could be different answers to the same question. It helps if you understand what you are asking as well. If a potential bookkeeper gives a different answer then what you expected, just ask if they could explain more.)
1. What is an Asset and what is a Liability?
Answer: An Asset is something of value to benefit a company. Some examples of an Asset would be Cash, Accounts Receivable, Inventory, and Fixed Assets. Liabilities are what are owed by a business. Some examples of Liabilities would be Accounts Payable, Bank Loans, and Accrued Accounts.
2. What is a Journal Entry?
Answer: A journal entry records the accounting information for a business transaction. The entry is made in a journal and then usually posted to the general ledger.
3. In Accounts Receivable, how would you handle a customer who disputes they received a shipment or service from the company and therefore shows no amount is owed?
Answer: Of course answers could vary, but typically the bookkeeper should verify that the shipment or service took place and provide supporting backup to the customer that could include a Bill of Lading showing the shipment was delivered to the company, or a signed service contract with the work performed in detail, and a copy of the invoices in question.
4. In Accounts Payable when the company makes a purchase and receives an invoice, what should be verified before making the payment to the vendor?
Answer: Generally, a company purchase order is matched up against a receiving document or packing slip and lastly verified against the invoice for the correct quantities and pricing received and agreed upon.
5. If you are collecting on Accounts Receivable and you realize that there is no record of a customer’s phone number around, how would you proceed to get in contact with the customer about the open receivable?
Answer: Again answers can vary on this question, but the person should be able to track down a number by using the internet or calling an information directory for the listing with the address the product shipped to. With modern day’s ease of obtaining information the last thing you want is a person who just does not do anything.
What to ask the advanced bookkeeper in an interview. First let’s define what an advanced bookkeeper is.
B. Definition of an Advanced Bookkeeper: A person who has a good understanding of paper and record flow in a business. This person should be able to easily understand Accounting processes and procedures in an organization. They usually have at least some college experience or an Associates / Bachelors degree in Accounting. However, years of experience doing bookkeeping could qualify for not having a degree. An advanced bookkeeper should also be able to understand more about financial statements, computer systems, and the general ledger then the standard bookkeeper. In some cases an advanced bookkeeper is capable of running all of the accounting functions of a company. Professional Bookkeepers can also be CPA’s, Accounting Managers, Controllers, and CFO’s.
Five Interview questions for an Advanced Bookkeeper: (Please note: sometimes there could be different answers to the same question. It helps if you understand what you are asking as well. If a potential bookkeeper gives a different answer then what you expected, just ask if they could explain more.)
1. What is the difference between a Profit and Loss Statement and a Balance Sheet Statement?
Answer: A Profit and Loss Statement (or Income Statement) is used to measure how a company performed financially over a set period of time, such as a month, quarter, or year. A Balance Sheet Statement reflects the companies overall financial health in terms of what the company has in resources (assets) and what the company owes (liabilities).
2. Under the accrual basis of accounting (which most companies use) when are expenses recognized?
Answer: Expenses are recognized when they happen in accrual basis accounting. For example: When a purchase is made with net 30 day terms,that purchase/expense is recorded at the time of obtaining the goods or service.
3. What is Depreciation?
Answer: Depreciation is the process that spreads out the cost of an asset over its useful life as determined by the IRS. So instead of all the cost of the asset being expenses in one year it could be spread out over several years. There are several different types of depreciation used by companies but the most common is the straight line method which simply divides the cost by the useful years of the asset.
4. The General Ledger Chart of Accounts can be summarized into five main account groupings. What are these accounts?
Answer: *Income (Sales) *Expenses (Cost of Sales) *Assets
*Liabilities *Owners Equity or Net Worth.
5. What does the inventory methods FIFO and LIFO stand for?
Answer: FIFO = First In First Out. LIFO = Last In First Out.
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