Real-life interview questions for a Junior Accountant role in the UAE

Technical Questions

• Can you explain the difference between cash accounting and accrual accounting?

Answer: “Cash accounting recognizes revenue and expenses when cash is actually received or paid, which is simpler and often used by small businesses. In contrast, accrual accounting recognizes transactions when they occur, regardless of when cash changes hands. This method provides a more accurate picture of a business’s financial position and performance over time, as it matches revenues with the expenses incurred to generate those revenues.”

• What is a journal entry, and can you give an example?

Answer: “A journal entry is the recording of financial transactions in the general ledger of an accounting system. It includes details like the date, accounts involved, debit amount, and credit amount. For example, if a company buys office supplies for 500 AED on credit, the journal entry would be:

Debit: Office Supplies Expense 500 AED

Credit: Accounts Payable 500 AED

This entry recognizes the expense and increases the liability for future payment.”

• How do you prepare a bank reconciliation statement?

Answer: “To prepare a bank reconciliation statement, I start by comparing the bank statement balance with the company’s records (cash book). Then, I make adjustments for any discrepancies, such as outstanding deposits and checks, bank errors, or transactions not recorded in either record. The goal is to reconcile the two balances, ensuring they match. The final adjusted balance represents the accurate cash balance in the company’s books.”

• What is the importance of the trial balance, and how is it prepared?

Answer: “The trial balance is important because it helps to ensure that the total debits equal the total credits in the ledger, which is a check for the accuracy of the double-entry accounting system. To prepare a trial balance, I list all the account balances from the ledger, both debit and credit, and then total each column. If the totals match, it indicates that the entries are in balance. If not, it signals an error in recording transactions that needs to be corrected.”

• Describe the process of closing the books at the end of the financial year.

Answer: “Closing the books involves several steps: first, I review all accounts to ensure all transactions have been recorded. Then, I make adjusting entries for accrued income, prepaid expenses, depreciation, and other necessary adjustments. Next, I close temporary accounts like income, expenses, and dividends by transferring their balances to retained earnings. Finally, I prepare the adjusted trial balance and the financial statements (income statement, balance sheet, cash flow statement). This process ensures that the company’s books are ready for the new fiscal year.”

• Explain the concept of depreciation and the different methods used to calculate it.

Answer: “Depreciation is the allocation of the cost of a tangible asset over its useful life. It represents the decrease in value of the asset due to wear and tear, obsolescence, or aging. Common methods to calculate depreciation include:

Straight-line method: Depreciation is calculated evenly over the asset’s useful life. For example, if an asset costs 10,000 AED with a useful life of 5 years, the annual depreciation expense would be 2,000 AED.

Declining balance method: Depreciation is calculated using a fixed percentage of the asset’s book value each year. This method accelerates the depreciation expense in the early years.

Units of production method: Depreciation is calculated based on the asset’s usage, with the expense reflecting how much the asset has been used.”

• How do you handle adjusting entries for prepaid expenses and accrued income?

Answer: “Adjusting entries for prepaid expenses involve recognizing the portion of the expense that has been used up by the end of the accounting period. For example, if rent has been prepaid for three months, one-third of the payment is recorded as an expense for each month. For accrued income, entries are made to recognize revenue that has been earned but not yet received. For example, if a company provides services on credit, revenue is accrued in the period it was earned, even though the payment is expected later.”

• What are the key components of a balance sheet, and how do they relate to each other?

Answer: “A balance sheet consists of three main components: assets, liabilities, and equity.

Assets represent what the company owns, such as cash, accounts receivable, inventory, and property. They are categorized as current (expected to be used or converted to cash within a year) and non-current (long-term investments or fixed assets).

Liabilities represent what the company owes, like loans, accounts payable, and other debts. These are also categorized as current (due within a year) and non-current (long-term debt).

Equity represents the owner’s stake in the business, calculated as assets minus liabilities. It includes common stock, retained earnings, and other equity accounts. The balance sheet equation (Assets = Liabilities + Equity) must always be true, ensuring that a company’s assets are financed by its liabilities and equity.”

• How do you ensure compliance with VAT regulations when recording transactions?

Answer: “To ensure compliance with VAT regulations, I follow several steps: first, I carefully verify that all transactions are correctly documented, including the VAT rate applied. I maintain separate records for input and output VAT to accurately calculate VAT payable and receivable. I also keep an eye on VAT return deadlines, ensuring that filings are submitted in a timely manner. Regularly reviewing updates to VAT laws and guidelines from the Federal Tax Authority (FTA) helps keep the process aligned with regulatory requirements.”

• What is the process for preparing financial statements, and what documents are typically included?

Answer: “The process of preparing financial statements involves several steps: first, I gather all relevant financial data from journals, ledgers, and sub-ledgers. Then, I prepare the income statement, detailing revenues and expenses to calculate net income. Next, I prepare the balance sheet, detailing assets, liabilities, and equity. The cash flow statement is also prepared to show cash inflows and outflows from operating, investing, and financing activities. These statements are interrelated, providing a comprehensive view of the company’s financial health.”

Behavioral Questions

• Describe a time when you had to meet a tight deadline for an important financial report. How did you manage it?

Answer: “In my previous role, I was required to prepare a quarterly financial report under a tight deadline. I managed the pressure by prioritizing tasks, setting clear goals for each section of the report, and breaking down the tasks into smaller, manageable parts. I maintained open communication with my supervisor, regularly updating them on my progress. By working late hours and utilizing my skills in Excel for data analysis, I was able to complete the report on time without compromising accuracy.”

• Tell me about a situation where you had to resolve a significant error in financial records. How did you handle it?

Answer: “I once discovered a discrepancy between the accounts payable ledger and the bank reconciliation statement. It involved a mismatch in recorded payments. I traced the error back through the transaction history, identified that the error was due to a miskeyed amount, and made the necessary adjustment entries. I also implemented a double-check process for data entry to prevent such errors in the future. Communication with the concerned department was crucial to ensure corrective actions were taken promptly.”

• How do you handle conflicts with colleagues or supervisors when working on accounting projects?

Answer: “I believe in open communication and addressing issues directly. When conflicts arise, I listen to all perspectives, try to understand their concerns, and offer constructive solutions. For example, during a disagreement over accounting methods, I facilitated a discussion to clarify misunderstandings and find a compromise that was mutually agreeable. This approach helps in maintaining a collaborative work environment and ensures that projects progress smoothly.”

• Give an example of a challenging accounting task you faced and how you tackled it.

Answer: “One challenging task was handling the year-end audit preparation for a large portfolio of properties. The sheer volume of transactions and complex reconciliations required meticulous attention to detail. I tackled this by creating a checklist to organize my work, breaking down the audit into smaller, more manageable tasks, and setting deadlines for each. Regular meetings with the audit team helped in resolving issues quickly and ensuring all documentation was ready for review.”

• How do you prioritize your tasks when dealing with multiple deadlines and responsibilities?

Answer: “I prioritize tasks by assessing the urgency and impact on the business. For example, during month-end close, I ensure that high-priority tasks like bank reconciliations and financial reports are completed first. I use tools like Gantt charts and to-do lists to track deadlines and allocate my time effectively. Regularly updating my supervisor on my progress also helps in re-prioritizing tasks when necessary.”

• Explain how you stay updated with changes in accounting standards and regulations.

Answer: “I stay updated by subscribing to industry publications, attending webinars, and participating in online courses that focus on updates in accounting standards and regulations. I also follow professional bodies like the Association of Chartered Accountants (ACCA) and the Institute of Chartered Accountants in England and Wales (ICAEW) for updates and guidelines. This ensures that I am aware of any changes that could impact the financial reporting process.”

• What motivates you to work in accounting, and what do you find most challenging about this field?

Answer: “What motivates me is the ability to contribute to the financial stability and growth of an organization by providing accurate and insightful data. I find the challenge of staying updated with new regulations and adapting to changes in financial reporting standards to be the most challenging aspect. However, it’s also what keeps me engaged and motivated, as it requires continuous learning and development.”

• How do you handle stressful situations, especially during busy periods like month-end or year-end close?

Answer: “During busy periods, I maintain a structured approach to managing my workload. I break down tasks into smaller, achievable steps and set realistic deadlines for each. Taking short breaks to recharge and staying organized with a clear workspace helps me stay focused. Additionally, I communicate openly with my team to share workload and keep the team coordinated.”

• Describe your experience with ERP systems and which ones you are familiar with.

Answer: “I have experience with several ERP systems, including SAP, Oracle, and QuickBooks. My preference is for QuickBooks due to its user-friendliness and integration capabilities with other financial applications. I am comfortable handling tasks like journal entries, invoice management, and financial reporting within these systems. I have also participated in training sessions to understand the latest updates and functionalities in these systems.”

• What are your strategies for continuing professional development in the field of accounting?

Answer: “To continue professional development, I regularly attend workshops, webinars, and training sessions offered by industry bodies and companies. I also set aside time for self-study using online courses that cover advanced accounting topics, new technologies, and regulatory changes. Networking with peers and joining professional forums helps me stay informed about best practices and emerging trends in the field.”