Financial Accounting&Financial Statement Analysis Interview Questions & Answers

  1. Question 1. What Is Financial Accounting?

    Answer :

    Financial accounting (or financial accountancy) is the field of accounting concerned with the summary, analysis and reporting of financial transactions pertaining to a business. This involves the preparation of financial statements available for public consumption.

  2. Question 2. What Is The Purpose Of Accounting And Finance?

    Answer :

    The purpose of accounting is to provide the information that is needed for sound economic decision making. The main purpose of financial accounting is to prepare financial reports that provide information about a firm’s performance to external parties such as investors, creditors, and tax authorities.

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  4. Question 3. What Is A Financial Accountant?

    Answer :

    Financial accounting is a specialized branch of accounting that keeps track of a company’s financial transactions. Using standardized guidelines, the transactions are recorded, summarized, and presented in a financial report or financial statement such as an income statement or a balance sheet.

  5. Question 4. What Is The Purpose Of An Accountant?

    Answer :

    The purpose of accounting is to accumulate and report on financial information about the performance, financial position, and cash flows of a business. This information is then used to reach decisions about how to manage the business, or invest in it, or lend money to it.

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  7. Question 5. Why Financial Accounting Is Important For A Business?

    Answer :

    Financial accounting is important because it provides an organization’s stakeholders with business statements, allowing them to know if the organization is making or losing money. This information is essential in determining if a company is able to maintain profitability, according to Accounting.

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  9. Question 6. What Is Financial Statement Analysis?

    Answer :

    Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a company’s financial statements to make better economic decisions. These statements include the income statement, balance sheet, statement of cash flows, and a statement of changes in equity.

  10. Question 7. What Is The Financial Data?

    Answer :

    Financial data consists of pieces or sets of information related to the financial health of a business. The pieces of data are used by internal management to analyze business performance and determine whether tactics and strategies must be altered.

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    Business Management for Financial Advisers Interview Questions

  12. Question 8. What Do You Mean By Financial Statement?

    Answer :

    A financial statement (or financial report) is a formal record of the financial activities and position of a business, person, or other entity. A balance sheet, also referred to as a statement of financial position, reports on a company’s assets, liabilities, and owners equity at a given point in time.

  13. Question 9. What Is The Purpose Of The Financial Analysis?

    Answer :

    The purpose of financial statement analysis is to examine past and current financial data so that a company’s performance and financial position can be evaluated and future risks and potential can be estimated.

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  15. Question 10. What Is The Use Of Financial Statements?

    Answer :

    The most common financial statements include the balance sheet, the income statement, the statement of changes of financial position and the statement of retained earnings. These statements are used by management, labor, investors, creditors and government regulatory agencies, primarily.

  16. Question 11. Which Is The Most Important Financial Statement?

    Answer :

    The key components of the financial statements are the income statement, balance sheet, and statement of cash flows. These statements are designed to be taken as a whole, to present a complete picture of the financial condition and results of a business.

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  18. Question 12. What Are The Three Key Financial Statements Of A Business?

    Answer :

    There are four main financial statements. They are:

    1. Balance sheets.
    2. Income statements.
    3. Cash flow statements.
    4. Statements of shareholders’ equity.

    Balance sheets show what a company owns and what it owes at a fixed point in time.

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  20. Question 13. Why Is The Income Statement So Important?

    Answer :

    We will use income statement and profit and loss statement throughout this explanation. The income statement is important because it shows the profitability of a company during the time interval specified in its heading. The period of time that the statement covers is chosen by the business and will vary.

  21. Question 14. What Are The Most Important Personal Financial Statements To Have?

    Answer :

    There are two types of personal financial statements: The personal cash flow statement. The personal balance sheet.

  22. Question 15. Why Is It Important For A Company To Have A Cash Flow Statement?

    Answer :

    One of the most important numbers that business owners and their stakeholders should know is the Company’s cash flow from operations, which is often overlooked in lieu of the income statement and balance sheet numbers. Being able to internally generate sufficient cash is key to maintaining a healthy business.

  23. Financial Statement Interview Questions

  24. Question 16. What Is A Financial Analysis Report?

    Answer :

    Financial analysis is the process of evaluating businesses, projects, budgets and other finance-related entities to determine their performance and suitability. When looking at a specific company, a financial analyst conducts analysis by focusing on the income statement, balance sheet and cash flow statement.

  25. Question 17. What Is The Financial Reporting System?

    Answer :

    Financial reporting is the process of producing statements that disclose an organization’s financial status to management, investors and the government.

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  27. Question 18. What Goes Into The Income Statement?

    Answer :

    Listed on an income statement is a company’s revenue, expenses, gains and losses for a particular period. Revenue, also called sales, includes money received for the sale of the company’s goods or services. Expenses, commonly referred to as operating expenses, are costs the company incurs related to sales.

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  29. Question 19. What Is In The Income Statement?

    Answer :

    An income statement is a financial statement that reports a company’s financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities.

  30. Question 20. What Is The Purpose Of The Income Statement?

    Answer :

    The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported. One important thing to remember about an income statement is that it represents a period of time like the cash flow statement.

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  32. Question 21. What Is A Common Size Income Statement?

    Answer :

    Common size income statement is an income statement in which each account is expressed as a percentage of the value of sales. This type of financial statement can be used to allow for easy analysis between companies or between time periods of a company.

  33. Question 22. What Is A Vertical Analysis?

    Answer :

    Vertical analysis is a method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities and equities) in a balance sheet is represented as a proportion of the total account.

  34. Question 23. How Do You Calculate Common Size Percentages?

    Answer :

    Determine the amount of total assets on your small business’s balance sheet. For example, assume your total assets are $100,000. Divide the amount of each asset on your balance sheet by the amount of total assets. Multiply each result by 100 to determine the common-size percentage of each asset.

  35. Question 24. What Is The Size Of A Balance Sheet?

    Answer :

    A common size balance sheet is a balance sheet that displays both the numeric value and relative percentage for total assets, total liabilities and equity accounts.

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  37. Question 25. How Do You Create A Common Size Balance Sheet?

    Answer :

    Common Size Balance Sheet. A common size balance sheet includes a column that notes the percentage of the total assets (for asset line items) or the percentage of total liabilities and shareholders’ equity (for liability or shareholders’ equity line items).