Finance Oct 2, 2026 · 10 min read

Finance Interview Questions: Accounting, Ratios and Valuation, With Worked Answers

Finance interviews range from accounts executive roles for B.Com graduates to analyst roles in FP&A, banking and investments. The level changes, but the core is the same: can you explain the basics clearly, get the numbers right, and be trusted with them? Here are the questions that come up most, with worked answers.

What finance interviewers are checking

Fundamentals: accounting entries, the three financial statements and how they connect.
Accuracy: small mistakes cost real money in finance, so they watch how carefully you work.
Tools: Excel almost always, plus accounting software such as Tally or SAP for many roles.
Judgment and integrity: what you'd do when the numbers don't add up, or someone asks you to make them.
Communication: explaining numbers to people who aren't in finance.

1. "What's the difference between accrual and cash accounting?"

Under cash accounting, you record income when money comes in and expenses when money goes out. Under accrual accounting, you record income when it's earned and expenses when they're incurred, whatever the timing of the payment. Companies use accrual accounting because it matches income with the costs of earning it in the same period.

Have an example ready: "If we deliver a service in March but the client pays in May, accrual accounting records the revenue in March, with a receivable until the cash arrives."

2. Journal entries

Freshers for accounts roles almost always get a few of these. Two common ones:

Goods worth ₹20,000 bought on credit from a supplier.

Debit Purchases ₹20,000; credit the supplier's account (Creditors / Accounts payable) ₹20,000. No cash has moved yet, so there's no entry to Bank.

Rent of ₹30,000 paid in advance for three months.

On payment: debit Prepaid rent ₹30,000; credit Bank ₹30,000. At the end of each month: debit Rent expense ₹10,000; credit Prepaid rent ₹10,000. The prepaid rent is an asset until each month is used up.

If you get one wrong, talk through your reasoning: interviewers care about whether you understand what's happening, not just whether you've memorised the entry.

3. "Walk me through the three financial statements."

Income statement (profit and loss): revenue minus expenses over a period, giving net profit.
Balance sheet: what the company owns (assets), owes (liabilities) and the owners' share (equity) at one point in time. Assets always equal liabilities plus equity.
Cash flow statement: actual cash in and out over the period, split into operating, investing and financing activities.

How they link: net profit from the income statement starts the cash flow statement and adds to retained earnings in equity on the balance sheet. The cash flow statement's ending cash is the cash on the balance sheet.

4. "Depreciation goes up by ₹100. Walk me through the statements."

A classic for analyst roles. Assume a 25% tax rate:

Statement	Effect
Income statement	Operating profit falls by ₹100. Tax falls by ₹25. Net profit falls by ₹75.
Cash flow statement	Net profit is ₹75 lower, but depreciation isn't a cash expense, so ₹100 is added back. Cash from operations rises by ₹25.
Balance sheet	Assets: fixed assets fall by ₹100, cash rises by ₹25, so assets are ₹75 lower. Equity: retained earnings are ₹75 lower. It balances.

The key point: depreciation reduces profit but not cash, and the tax saving means cash actually goes up.

5. Liquidity ratios

A company has current assets of ₹5,00,000, of which ₹1,50,000 is inventory, and current liabilities of ₹2,50,000. What are its current ratio and quick ratio?

Current ratio = current assets ÷ current liabilities = 5,00,000 ÷ 2,50,000 = 2.0.

Quick ratio leaves out inventory, which can take time to sell: (5,00,000 − 1,50,000) ÷ 2,50,000 = 1.4.

Add what it means: the company can cover its short-term obligations comfortably even without selling stock. And mention that a "good" ratio depends on the industry; a supermarket can run with a much lower current ratio than a manufacturer.

6. "How can a profitable company run out of cash?"

Because profit isn't cash. The usual reasons:

Customers pay late: sales are booked, but the cash is stuck in receivables.
Inventory builds up: cash is spent on stock that hasn't sold.
Heavy capital spending: buying machinery is a cash outflow now, expensed slowly through depreciation.
Loan repayments: repaying principal uses cash but isn't an expense.

This question tests whether you understand working capital, so mention it by name.

7. "What is EBITDA, and what are its limits?"

EBITDA is earnings before interest, tax, depreciation and amortisation. It's used to compare the operating performance of companies with different debt levels, tax situations and asset bases. Its limits: it ignores the cost of replacing assets (a company with heavy, ageing machinery looks better than it is), it isn't cash flow (it ignores working capital and capital spending), and it isn't defined by accounting standards, so companies can calculate it differently.

8. Net present value

A project costs ₹1,00,000 today and returns ₹60,000 at the end of each of the next two years. At a 10% discount rate, should you do it?

Discount each cash flow back to today:

Year 1: 60,000 ÷ 1.10 = ₹54,545
Year 2: 60,000 ÷ 1.10² = 60,000 ÷ 1.21 = ₹49,587

Present value of the returns = ₹1,04,132. NPV = 1,04,132 − 1,00,000 = ₹4,132.

A positive NPV means the project earns more than the 10% required return, so on these numbers you'd do it. It also tells you the IRR is above 10%. A good answer then mentions the risks: how confident are we in those ₹60,000 returns?

9. GST basics (for accounts roles in India)

A business buys goods for ₹1,00,000 plus 18% GST, and sells them for ₹1,50,000 plus 18% GST. How much GST does it pay to the government?

GST collected on the sale = ₹27,000. GST paid on the purchase = ₹18,000, which can be claimed as input tax credit. Net GST payable = 27,000 − 18,000 = ₹9,000.

You can add that input tax credit has conditions, for example the supplier must have filed their return and the invoice must be in order. Knowing that shows practical understanding.

10. Excel

Many finance interviews include a short Excel test. Be comfortable with:

Lookups: XLOOKUP or VLOOKUP/INDEX-MATCH, to pull a value from another table.
Conditional sums: SUMIFS and COUNTIFS, for totals by month, region or customer.
Pivot tables: to summarise a large dataset quickly.
Reconciliation: a common test is matching two lists, such as a bank statement against the ledger, and finding what's missing.

11. "Your manager asks you to book next month's sale this month to hit the target. What do you do?"

Integrity questions are common in finance. The answer they want: you wouldn't do it, because revenue has to be recorded when it's earned, and moving it misstates the accounts. Say you'd explain your concern to your manager first, and raise it through the right channel if they insisted. Stay calm and factual; you're not accusing anyone.

12. For investment roles: "Pitch me a stock."

Pick a company you actually follow, not the one everyone mentions. Cover what it does and how it makes money, why you think it's a good investment (growth, margins, a competitive advantage), roughly how it's valued compared with similar companies, and the main risk that could prove you wrong. Expect follow-up questions on every number you mention.

Freshers and experienced candidates

Freshers: expect basics (entries, statements, ratios, Excel). Mention internships, articleship if you're on the CA route, or any project where you worked with real numbers.
Experienced: expect questions on your actual work: month-end close, audits, budgets and forecasts, the systems you've used. Be precise about what you owned yourself and what the team did.

How to practise

Write the worked answers out by hand first, then explain them out loud as if to someone outside finance. That's the skill the interview tests. Interviewers will also ask behavioral and HR questions; see our guides to behavioral questions and the STAR method and HR questions for freshers. If your process starts with an online test, the aptitude test guide covers that round.

On SkillLynk, set Finance & Accounting as your field and the AI voice mock interview asks finance questions, follows up on your answers and gives you a report. The Practice drill in your field keeps coming back to the topics you get wrong, and Target Interview turns a real job description into questions for that role.

Explain it out loud before the interview does it for you.

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