Accounting and finance interview questions, worked through line by line.

Accounting interviews often start with a question on how the financial statements connect, then move to a real month-end problem. Here’s one of each, fully worked.

Free question 1 (technical): Depreciation through the three statements

Depreciation expense goes up by $10,000. Walk me through what happens on the income statement, the cash flow statement and the balance sheet. Assume a 25% tax rate.

Model answer

Income statement. Depreciation is an expense, so pre-tax income falls by $10,000. Taxes fall by 25% of that, or $2,500. Net income falls by $7,500.

Cash flow statement. Start with net income, down $7,500. Add back depreciation, because it isn’t a cash expense: +$10,000. Cash from operations goes up by $2,500. That $2,500 is the tax you saved.

Balance sheet.

Side	Line	Change
Assets	Cash	+$2,500
Assets	Property, plant and equipment (net)	−$10,000
Assets	Total	−$7,500
Equity	Retained earnings	−$7,500

Both sides fall by $7,500, so it balances.

The detail that sets you apart in Canada: this assumes tax depreciation moves with book depreciation. In Canada, tax depreciation is capital cost allowance (CCA), which follows its own rates. If only book depreciation changes, cash taxes don’t change that year, and the difference shows up as a deferred tax item instead. Mention it in one sentence, especially for a tax or audit role.

What interviewers listen for: you start with the income statement, you explain why cash goes up, and you show the balance sheet balances.

Free question 2 (month-end scenario): The bank reconciliation is off by $1,350

It’s month-end. Your bank reconciliation is off by $1,350 and the close is due tomorrow. How do you find it?

Model answer

1. Start with timing items. List cheques you’ve recorded that haven’t cleared the bank (outstanding cheques), and deposits you’ve recorded that the bank hasn’t posted yet (deposits in transit). These are the most common cause and need no entry.

2. Find bank items you haven’t recorded. Look for bank fees, interest, NSF (returned) cheques, pre-authorized debits and e-transfer fees. These need a journal entry on your books.

3. Use the number itself as a clue.

• Divide by 9. $1,350 ÷ 9 = 150, a whole number. That points to a transposition or a slipped decimal, for example $1,500 entered as $150.
• Divide by 2. $1,350 ÷ 2 = $675. Look for a $675 item posted to the wrong side, a debit entered as a credit.
• Search for the exact amount. Look for a $1,350 transaction recorded twice or missed.

4. Compare line by line. Match the bank statement to the general ledger for the month, ticking off each item. Spreadsheet matching or your accounting software’s matching tool speeds this up.

5. Never force it. Don’t post the difference to a “miscellaneous” account to make it balance. If you can’t find it by the deadline, tell your manager the amount, what you’ve ruled out and when you expect to resolve it.

6. Record and prevent. Post the correcting entries, keep support for each one, and note the cause so you can stop it next month, for example by adding a second review on large manual entries.

What interviewers listen for: a clear order of checks, the “divide by 9” and “divide by 2” tricks, and honesty about not plugging the difference.