Common Accounting Questions and Answers [2024]
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Accountants and analysts are in high demand across various industries, including banks, Civil Service, and firms such as Robert Half, Amazon, and TEKSystems. To secure these roles, candidates must excel in various assessments, such as the IKM Accounting Assessment and the Kenexa Prove It Accounting Tests.
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Businesses and accounting firms are looking for bookkeepers and accountants who pay close attention to detail in their work. The accounting exam is designed to measure your ability to process and analyze numerical data and solve problems using logical reasoning.
Each accounting position tests for various accounting skills, including:
Additionally, you should prove proficiency in the following platforms:
Employers across industries are now looking for the individual qualities of their candidates, not just technical skills. Be prepared to face Situational Judgment behavioral questions and personality tests.
Let's practice sample questions for these types.
Basic accounting exam questions generally cover three main areas: Accounting Concepts, Statements, and Analysis. The very foundation of accounting is dealing with changing data elements and their sources. You will have to prove proficiency in recording, classifying, and presenting financial information and compiling it all into statements, which are further analyzed for meaningful insights. Let's see some examples.
A company has a Current Ratio of greater than one and a Quick Ratio of less than one. What would be the impact on the Current Ratio and Quick Ratio if the company pays accrued interest with cash?
A. Both ratios will increase. B. Both ratios will remain the same. C. The current ratio will decrease, and the quick ratio will increase. D. The current ratio will increase, and the quick ratio will decrease. View ExplanationThe correct answer is D.
Accrued Interest is a current liability and cash is a current asset. Both Current Ratio (Current Assets / Current Liabilities) and Quick Ratio <(Current Assets – Inventory – Prepayments) / Current Liabilities>include the cash and accrued interest. By paying accrued interest with cash, you reduce the numerator and denominator of both the ratios by an equal amount. If you reduce the numerator and denominator by the same amount, it will increase a ratio that is greater than one and decrease a ratio that is less than one.
An additional set of ledger accounts kept outside the General Ledger for recording individual transactions for each individual debtor or creditor is known as ______ ?
A. Subsidiary Ledger B. Control Ledger C. Summary Ledger D. Monitoring Ledger View ExplanationThe correct answer is A.
Every organization keeps an additional set of subsidiary ledgers by the name of Debtors (Subsidiary) Ledger and Creditors (Subsidiary) Ledger. These ledgers contain separate accounts for each individual debtor and creditor, respectively. A General Ledger only contains summary accounts for all the debtors and creditors by the name of Debtors Control Account and Creditors Control Account, respectively. Additional details are provided in the Subsidiary Ledgers.
ABC Corp.'s cash account has a Cash Book balance of $1,200 as of December 31. The bank statement for this account shows a balance of $1,800 as of December 31. There are outstanding checks of $960 and a deposit in transit of $200. The bank statement shows interest earned of $40; a customer returned a check of $150, and service charges of $50. After preparing the bank reconciliation statement, the reconciled balance that will appear on the company’s balance sheet on December 31 is:
View ExplanationThe correct answer is (D).
A bank reconciliation statement is prepared by following the two steps mentioned below.
Step 1: Adjust the balance as per the Bank Statement.
| Balance as per Bank Statement as of December 31 | 1800$ |
| Add: Deposit in transit | 200$ |
| Less: Outstanding Checks | 960$ |
| Adjusted Balance as per Bank | 1040$ |
Step 2: Adjust the balance as per Cash Book.
| Balance as per Company's Cash Book as of December 31 | 1200$ |
| Add: Interest earned | 40$ |
| Less: Checks returned by customers | 150$ |
| Less: Service Charges | 50$ |
| Adjusted Cash Book Balance | 1040$ |
What impact will the increased days payable outstanding have on cash flow from operating activities, assuming other things stand equal?
A. A decrease in cash inflow from operating activities B. An increase in cash outflow from operating activities C. No impact D. An increase in cash inflow from operating activities View ExplanationThe correct answer is D.
An increase in days payable outstanding means that the business is not paying its bills quickly, and thus cash inflow from operating activities will increase.
ABC Corp. issues $10 million in 7% annual pay, 4 year bonds, when the market rate is 7.25%. The initial balance sheet liability and liability one year from the date of issue are closest to:
A. 10,000,000$ initial liability and 9,934,690$ liability one year later B. 10,000,000$ initial liability and 10,725,000$ liability one year later C. 9,915,795$ initial liability and 10,615,795$ liability one year later D. 9,915,795$ initial liability and 9,934,690$ liability one year later View ExplanationThe correct answer is D.
The face value of the bond = $10,000,000. Annual Interest Payment = $10,000,000 * 7% = $700,000
Present value of the bond Principal = $10,000,000 (1+0.0725) ^-4 = $7,558,068
Present value of Annual Interest payment using the annuity formula =
$700,000 <[1-(1+0.0725) ^-4] ÷ 0.0725>= 2,357,727
Bond present value = $7,558,068 (Principal) + $2,357,727 (Annual Interest) = $9,915,795
Interest expense = $9,915,795 * 0.0725 = $718,895
Year-end adjustment = $718,895 - $700,000 = $18,895
Year-end debt balance = $9,915,795 + $18,895 = $9,934,690
How were these questions? Did you manage to answer correctly on most of them? or do you need more practice? These questions are out of our Accounting Assessment Practice PrepPack, which includes hundreds of additional questions to get you all set for your upcoming tests.
What else does the Accounting Assessment Practice PrepPack include?
Ledger posting questions assess your ability to process and interpret information within a general ledger, record and categorize financial transactions accurately, and ensure that debits and credits are correctly applied.
Account: Accounts Payable | Account Number: 701
| Date | Ref | Debit | Credit | Balance |
| Jan 1 | 1000 | |||
| Jan 10 | 45-86-7 | 250 | 1250 | |
| Feb 1 | 46-08-6 | 125 | 1125 | |
| Feb 23 | 46-64-1 | 500 | 625 | |
| Mar 3 | 46-77-3 | 110 | ? | |
| Mar 14 | 46-79-7 | 110 | 625 | |
| Mar 29 | 46-99-3 | 375 | 250 |
Note: Figures are in thousands of dollars
If this account were credited, which account might be debited?
B. Accounts Receivable C. Sales Revenue D. Merchandise View ExplanationThe correct answer is D.
Accounts Payable will be credited when the liability increases. This would happen when an entity makes a purchase on credit.
If the entity purchases merchandise on credit they would debit Merchandise, as it is an asset which is increasing, and credit Accounts Payable.
Account: Inventory | Account Number: 702
| Date | Ref | Debit | Credit | Balance |
| Nov 1 | 0 | |||
| Nov 10 | 847-26-J | 150 | 150 | |
| Nov 20 | 312-33-H | 25 | 125 | |
| Dec 1 | 312-25-P | 50 | 175 | |
| Dec 10 | 847-38-K | 140 | 35 |
Note: Figures are in thousands of dollars
What type of account is this?
A. Fixed Asset B. Liability D. Current Asset View ExplanationThe correct answer is D.
Current assets will reasonably be converted into cash within one year. Inventory is, therefore, a current asset.
Account: Interest Payable | Account Number: 704
| Date | Ref | Debit | Credit | Balance |
| Oct 1 | 350 | |||
| Oct 23 | 85-LO-O | 200 | 550 | |
| Nov 1 | 74-IP-K | 100 | 450 | |
| Nov 13 | 34-WR-A | 50 | 500 | |
| Nov 30 | 25-JS-M | 75 | 575 | |
| Dec 14 | 13-BM-Z | 200 | 375 | |
| Dec 31 | 50-AL-S | 20 | 395 |
Which of the following occurred on November 1st?
A. The company received a loan B. The company gave a loan C. The company received an interest payment for merchandise bought on account D. The company paid back the interest they owed on a bank loan View ExplanationThe correct answer is D.
Interest Payable is a liability account which represents the amount of money an entity owes in interest fees. Since liability accounts have normal credit balances, a credit to this account will increase its balance and a debit to this account will decrease its balance.
On November 1st we see the account is debited and the balance decreases. This can happen when a company pays back interest they owed on a loan.
Accounting tabular questions are designed to evaluate your proficiency in financial tables, deducing underlying mathematical equations presented, and identifying patterns. Understanding and interpreting visualized data is an absolute necessity for accountants. Thus, such questions make up a big chunk of the overall test.
From the sample, how many fewer patients suffered from Bipolar disorder in 2005 than in 2000?
In 2000, 15% of the sample (2500) suffered from Bipolar disorder= 2500 x 0.15 = 375 patients.
In 2005, 5% of the sample (2500) suffered from Bipolar disorder = 2500 x 0.05 = 125 patients.
• 375-125=250 fewer patients suffered from Bipolar disorder in 2005 than in 2000.
An additional way to do the math is simply look at the graph and note the difference in percentages between 2005 and 2000 which is 10% (15-5).
• 10% of the entire sample (2500) is 250 – and we can calculate this without making use of a calculator.
The answer is C
The following chart describes the price ranges of different types of cars, as published in a January 2009 price list.
Which two cars cannot be purchased at the same price?
A. A Japanese car and an executive American Car B. A European car and a compact Japanese car C. An American car and a compact Japanese car D. An American car and a European car E. Cannot Say View ExplanationAnswer A: Not correct since you can buy both kinds for $130 thousand.
Answer B: Not correct since you can buy both kinds for $70 thousand.
Answer C: The most expensive compact Japanese car costs $70 thousand and the least expensive American car costs $90 thousand, so there can be no overlap.
Answer D: Not correct since you can buy both kinds for any number between $140 - 170 thousand.
Yearly Production Across All Products
| No. of market-worthy units (excluding defective ones) | % of defective units from total production | Total work hours per year | |
| Product A | 6347 | 36% | 5462 |
| Product B | 2380 | 24% | 5736 |
| Product C | 2849 | 23% | 4270 |
| Product D | 5467 | 29% | 3055 |
| Product E | 3620 | 25% | 4380 |
*Products are examined for quality post-production.
Which product has the lowest defective units to total work hours ratio?
A. Product A B. Product B C. Product C D. Product D E. Product E View ExplanationThe correct answer is Product B
This question can be solved without any calculations, using the estimation technique.
The lower the numerator and the higher the denominator, the lower the ratio will be. In this case, the numerator is the number of defective units, and the denominator is the number of work hours. Therefore, you need to look for a product with a low number of defective units and a high number of work hours.
Product B has the highest number of work hours. Now look for the number of defective units:
The data in the table shows the percentage of defective units, not the absolute figures. Product B has one of the two lowest percentages, but a low percentage does not necessarily mean a low absolute number. However, we do have the absolute figures of the market-worthy units, and the smallest number does belong to Product B. Therefore, we can estimate that Product B has the lowest total number of units, which means we may assume that the low percentage of defective units also means a low absolute number.
The full calculation for Product B is as follows:
% of defective units: 24%
% of market-worthy units: 100%-24% = 76%
Number of market-worthy units: 2,380
If 2,380 are 76% of the units, the total number of units is:
2,380/0.76 = 3,131.58
Defective units are 24% of the total:
3,131.58*0.24 = 751.58
Finally, the total work hours per year is 5,736. Therefore, the ratio of defective units per total work hours is 751.58/5,736 = 0.131
The same can be done with other products. Eventually, you will see that Product B has the lowest number of defective units and the lowest ratio.
How will Accounting Assessment Practice improve your Tabular reasoning skills?
These accounting questions include a wide range of topics meant to test your bookkeeping practices. From classifications and relationships of accounts through working with asset transactions and end-period adjustments. You will also be asked about different bookkeeping functions, such as inventory costing under FIFO and LIFO methods, entries for bond liabilities, and many more.
Bookkeeping demands extensive knowledge and precision, as it is an essential part of every company.
Which of the following is not needed in the calculation of depreciation under the units-of-production method?
