Accountant interview questions and answers

• What are the golden rules of accounting? — Personal account: debit the receiver, credit the giver. Real account: debit what comes in, credit what goes out. Nominal account: debit all expenses and losses, credit all incomes and gains.
• What is the accounting equation? — Assets = Liabilities + Equity.
• What is the difference between accounts payable and receivable? — Payable is what the business owes its suppliers; receivable is what customers owe the business.
• What is depreciation, and which methods do you know? — The spreading of an asset’s cost over its useful life. Straight-line charges the same amount each year; the diminishing balance method charges a fixed percentage on the reduced value. Tax depreciation in Nepal uses pools of assets with fixed rates on the diminishing balance.
• What is a bank reconciliation statement? — A statement that explains the difference between the bank balance in the books and the balance in the bank statement: cheques issued but not presented, deposits not yet credited, bank charges and interest not yet recorded.
• What is the difference between accrual and cash accounting? — Accrual records income when earned and expenses when incurred; cash accounting records them when money moves.
• What are prepaid and outstanding expenses? — Prepaid is paid in advance for a later period, shown as an asset. Outstanding is due but not yet paid, shown as a liability.
• What is a trial balance, and does it prove the books are right? — A list of all ledger balances to check that debits equal credits. It does not catch an entry posted to the wrong account, an entry left out, or two errors that cancel.

These are from the Inland Revenue Department’s sheet of advance tax deduction rates under sections 87 to 89 of the Income Tax Act 2058 for 2083/84.

• What are the income tax slabs for an individual in 2083/84? — 1% up to Rs 10 lakh, 10% from 10 to 15 lakh, 20% from 15 to 25 lakh, 27% from 25 to 40 lakh and 29% above Rs 40 lakh. The slabs are now the same for a single person and a couple.
• What is the 1% in the first slab? — Social security tax. It is not charged to someone contributing to the contribution-based Social Security Fund or a pension fund.
• What is the fiscal year in Nepal? — 1 Shrawan to the end of Ashad. The income tax return is due within three months of the year end, by the end of Ashoj, and can be extended on application.
• What is PAN? — The Permanent Account Number issued by the Inland Revenue Department. Every taxpayer and every salaried employee needs one.
• How do you deposit TDS? — Deduct at the time of payment, deposit it by the due date in the following month, and file the e-TDS return in the department’s system so the payee gets credit.

• Which accounting standards apply in Nepal? — Nepal Financial Reporting Standards (NFRS) for entities with public accountability, NFRS for SMEs for those without, and Nepal Accounting Standards for Micro Entities for the smallest. They are issued through the Institute of Chartered Accountants of Nepal.
• What is a micro entity? — One that meets all four limits: turnover of Rs 10 crore or less, borrowings of Rs 5 crore or less, total assets of Rs 10 crore or less, and fiduciary assets of Rs 5 crore or less.
• Does every company need an audit? — Yes. Under the Companies Act 2063 every company appoints a licensed auditor, whatever its size.
• What do you prepare for the auditor? — Trial balance and ledgers, bank statements and reconciliations, fixed asset register, stock records, VAT and TDS returns with payment vouchers, payroll and loan confirmations.

• Which accounting software have you used? — Vacancy notices in Nepal most often name Tally (Tally Prime) and Swastik. Say which, for how long, and what you did in it: voucher entry, VAT reports, stock, payroll.
• How do you pass a purchase entry with VAT in Tally? — Through a purchase voucher, selecting the supplier ledger, the purchase ledger and the input VAT ledger so that the VAT is recorded separately.
• Which Excel functions do you use? — SUM and SUMIF, VLOOKUP or XLOOKUP for matching ledgers, pivot tables for summaries, IF for conditions, and filters for reconciliation.
• How do you make sure your entries are correct? — “I check each entry against its bill, reconcile the bank every week, and compare VAT in the books with the return before filing.”

• The owner asks you to record a personal expense as a business expense. What do you do? — “I explain that it would not be allowed as a deduction and could create a tax problem, and suggest recording it as drawings. If I am still told to do it, I ask for the instruction in writing.”
• You find a mistake in a VAT return already filed. What do you do? — “I report it to my supervisor immediately and correct it through the procedure the department allows, paying any difference with interest. Leaving it is worse.”
• Petty cash is short. What do you do? — “I recount, check the vouchers against the register, and report the difference the same day.”
• A supplier sends a bill without a PAN. Do you book it? — “I ask for a proper invoice. A bill that does not meet the requirements can be disallowed as an expense.”
• How do you handle month-end pressure? — “I keep entries current during the month so that closing is checking and reconciling, not catching up.”

A fresher is usually asked to pass three or four journal entries on paper and to explain VAT and TDS in simple words. Practise entries for credit purchase with VAT, salary paid with TDS, depreciation, and rent paid with TDS. Bring your certificates, citizenship copy, PAN card if you have one, and any software training certificate.