5 Bookkeeping Questions Every Business Owner Must Be Able To Answer

The responses you get will help you understand what kind of relationship the potential client needs and wants with you. Basic accounting questions focus on topics concerning the financial statements and how transactions are recorded. Modified cash-basis accounting is a mixture of both cash-basis and accrual accounting. You can use modified cash basis if you want to use the same types of accounts as accrual but only record income and expenses when paid. Accounting software to manage your books is a good middle ground between recording transactions by hand and having an accountant do it all.

This person is your point of contact for any bookkeeping related issues. They can also direct you to the correct staff member to help you with any other questions that may arise such as tax or business matters. If you run a small business, it can be difficult to find a good bookkeeper when you have an open position. Many other small business owners find themselves in the same predicament as you.

Learn More About Their Current Bookkeeping Situation

It also demonstrates to your potential client that you’re thorough and professional when assessing your prospects. Attracting new clients and onboarding them properly is essential to the success of any accounting or bookkeeping firm. To increase profits, it’s necessary to demonstrate your expertise and provide value to your clients. The difference between cash and accrual methods of accounting lies in when income and expenses are recorded. We’ll try to answer them (and more) by going over 18 common accounting questions and answers. Working capital is typically defined as current assets less current liabilities.

Get to the bottom of the problem to know how your firm can help. This will also show that you care about their happiness and satisfaction and that you intend to deliver top-notch service. If their response is related to crunching numbers and doing taxes, then you have work to do explaining the pivotal role you can play in the growth and success of their business. Learning what challenge is the most troubling for them can help you brainstorm actionable ways to work towards a solution through your role as an accountant. All postings should have corresponding credits and debits, the amounts on either side should always balance.

What are the five basic accounting principles?

This question will help you assess how independent a candidate is, and how much initiative they will take in their new role. Look for an answer that describes how a candidate will go about learning how your company functions and getting familiar with the operational side of things. The interviewee might say they would review the business accounts or check the company’s profit and loss statements. When you are booking new bookkeeping clients, I recommend an initial half-hour interview where you can get to know each other. Some of the things I ask potential clients about is their business size, payroll, financial systems, communication style, and current bookkeeping systems. The first thing you want to know about the client is the name of their company, address, and what it does.

It’s great to get a feel for what the pain points are in their business and see if you can help. Bookkeeping is a great way to alleviate the financial and organizational stress for business owners and frees them up to focus on the content of their business. Yes, we can sign you up with the Department of Revenue and prepare and file your sales tax returns. You can also submit an expense report (see the first tip) for your business miles, usage of your cell phone for business, and home internet if you work from home. Find the Expense Claims section in your accounting software and click Add Receipt.

What is the balance sheet equation?

Accounting interview questions often include knowledge-based and technical questions designed to ensure you have the skills needed to succeed as an accountant. To get you interview-ready, we’ve gathered some of the most common accounting questions and answers for interviews. If they are looking for a bookkeeper, they need help with something. Is it data entry, billing customers, recording payments, reconciliations, or payroll management? Keep in mind that while a client might be looking for bookkeeping services, they may also need other accounting services. In addition to their financial statements, you can help them keep track of their capital asset activity, vehicle log, and other important documents for reporting sales tax.

Different types of business entities affect the business’s bookkeeping, accounting, and tax reporting structures. Therefore, it is essential to know whether the new client’s company operates as a sole-proprietorship, partnership, an LLC, C-Corp, or S-Corp. If you have a separate business banking account and are just getting started so you have more expenses than revenue, you’ll need to add funds to your business.

What are basic accounting questions?

Additionally, you can discuss the key areas to pay attention to, such as invoices, receipts, and tax documents. If the company will use the purchase for more than a year or two, such as a company car or a new piece of machinery, it should be capitalized. Immediate expenses, like employee salaries or paper for the office printer, should be expensed. Generally speaking, expensing is used if the company will consume the purchase immediately — it’s not an investment.

Keep an eye out for candidates who can explain their thought processes clearly and concisely. It’s also a good sign when candidates contribute smart, spontaneous questions of their own to your conversation. Know of any other accounting or bookkeeping client questions that can help firms show their value to prospective clients? Tax laws change frequently and few business owners can keep up with it all. So based on that, this question should be on your new client questionnaire. Bookkeeping firms need to be aware of how their clients handle their taxes since they can impact every aspect of bookkeeping.

Get up and running with free payroll setup, and enjoy free expert support. You can shop around for different vendors to find better deals on supplies, inventory, and equipment. Or, you could look for expenses that you can reduce or cut out altogether.

If you follow the system I’m sharing about today, it will help you communicate effectively with your potential client so you can see if you’d be a good fit to do their bookkeeping for them. We utilize SurePayroll, which is a Paychex product specifically for Accountants. Remember, you need to be sure a candidate is a good fit for your small business.

For fill-in-the-blank questions, press or click on the blank space provided. Receiving an audit doesn’t necessarily mean that you’ve done anything illegal. And sometimes, the IRS audits a business if its small business tax returns look suspicious. An audit is an examination of your business’s financial records.

Expenses You Can’t Claim As Business Deductions

Accounting basics include how to value business transactions, how to record activity in a company’s books and how to report business results using financial statements. Keeping up with your bookkeeping can be a hard task, especially if you’re a small business owner and wear many hats. From crafting monthly operating statements to balance sheets, budgets, and financial Bookkeeping questions graphs, having a qualified accounting firm to assist you with your bookkeeping can make all the difference. Thank you for reading CFI’s guide to accounting interview questions. If you want to land the accounting job of your dreams then interview prep is key. That’s why we’ve designed special guides to help you prepare with practice questions and answers.

• Most companies want to build a solid, dedicated team to drive success.
• Take your learning and productivity to the next level with our Premium Templates.
• You can ask these insightful bookkeeper interview questions to find the right fit.
• Authorize Expense Claim will pop up at the bottom and you’ll need to add a date by when you intend to make your payment and the date you want it reported.
• You’ll need to have a handle on their accounts payable and receivable, so you can work with their account and bank statements to ultimately help their small business flourish.

In a real interview you’ll never know what’s coming, and that’s what makes interviews so stressful. Start today by requesting a demo or posting a job for free to discover how Workable can help you find and hire great people. According to an Accountemps survey, two of the most common misconceptions about accountants is that they only do taxes and only focus on crunching numbers. Your prospective client might be surprised by what resources, services, and tools you have available to help them with a wide variety of business issues. This question can be a great ice-breaker that leads to a more informal discussion of their goals, ideals, and challenges.