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Hiring a Bookkeeper: 8 Accounting Interview Questions To Ask
Hiring a bookkeeper can be an overwhelming process for many small business owners. Before you start your quest, it’s important to determine what kind of experience and skills you need. Are you looking for someone to analyze the numbers for you and create a budget or do you really just need someone to enter billing and invoicing data?
If you have someone to help you make sense of the numbers, or you have a strong accounting and financial management background, getting someone who is proficient in your accounting software and whose experience and personality is a good fit for your business will probably go well. On the other hand, if you don’t have anyone verifying the numbers are correct, data entry bookkeeping is not a good idea. In this case, you want to find someone with full bookkeeping experience. That is, the ability to reconcile balances and perform monthly closings. Usually, bookkeepers don’t have the expertise to help you manage your finances beyond accurate financial reports.
After you place your ad, you will be presented with a large number of candidates. You should narrow down the candidate pile to those that meet the needs of your job description and then the interview fun will begin. You’ll want to ask questions that will ensure the bookkeeper really has the right skills and fits your business culture. Here are 8 questions to ask your potential bookkeeper:
1) Do you think accrual or cash basis reporting is better for business management?
Seek advanced bookkeeping to explain that accrual basis accounting provides better financial reporting, but cash basis is usually preferred for taxes. We can keep the books on an accrual basis for management reporting and tax accountants can make adjustments for cash based taxes. A standard bookkeeper will probably tell you what the experience is and will have no preference for it.
2) What is the accounting equation (or balance sheet equation) or describe a balance sheet.
Good bookkeeping will explain the balance sheet has assets, liabilities and equity. This is mandatory for anyone you expect to provide accurate financial reports. Ideally they will tell you the equation is: Assets = Liabilities + Equity. If they can’t explain the balance sheet, ask them to explain the asset and liability accounts. You wouldn’t want someone who doesn’t know the balance sheet responsible for month-end closing, but if someone else verifies its accuracy, just knowing how assets and liabilities are used will do just fine.
3) The bank account is down $0.72. How long will you spend looking for the problem and what steps will you take to find it?
This problem is tricky and really depends on what you want to see in the right bookkeeper. Some won’t stop looking until they find it. Of course, there may be so many things that make a difference that you want them to take the time to look into the problem. But how much time? Is spending 2 hours looking for $0.72 the best use of time? If we look at the return on investment, it really is a bad use of time. If they answer 2 hours, you need to investigate their tolerance for imperfection. If you’re in a creative field, an extreme perfectionist might drive you crazy. However, if they don’t find fault at all, their attention to detail may not be strong enough and you should keep looking.
When looking for errors, the ideal candidate will say possible transposition errors and they will start there first (transposition errors are divisible by 9). They might just say that they will check each line item against the statement, which is perfectly valid.
4) Under cash-based accounting, how would you record the $600 annual insurance premium?
The correct answer for cash basis is to debit the $600 insurance fee, credit cash or accounts payable. All bookkeepers have to do it right.
5) How would you record the annual insurance premium of $600 using accrual accounting?
The correct answer here is $600 Debit Prepaid Insurance, Credit Cash or Accounts Payable. Encourage them to know when insurance costs are recognized. Should be $50/month with Debit to Insurance Fees and Credit to Prepaid Insurance. If the candidate can’t answer this question, don’t expect them to keep your books on accrual accounting. You want to depend on other people for management reports.
6) How many gas stations (or coffee shops, etc.) do you think there are in the US?
With this question, we are looking for good critical thinking skills. It’s fine to just guess a number without an explanation or say they’ll “google” it. You want candidates to have a process for getting their guesses, no matter how far. There are many gas stations in my city, I guess there are many cities in my state….
7) Rank the following order of importance for business success: Sales, Teamwork, Quality, Integrity, Profitability, Service
There is no right or wrong answer to this question, but it will show whether the candidate is aligned with your business culture as well as demonstrates critical thinking skills. Find justification why they answered like that. Does it align with how you answered the question? For example, if they say Profitability is most important. Why is that? If they say teamwork is the least important thing, you might want to dig deeper if teamwork is your top priority.
A bookkeeper should list profitability lower because you want to know that they are considering the entire business, not just their job. You also want to see high integrity in the list. Do you really want a bookkeeper who doesn’t value integrity?
8) Tell me about a time when you disagreed with something your boss asked you to do.
The exact answer here will depend on the personality you are looking for. Do you want followers who will do what you say? Are you looking for a counselor to tell you what to do? Maybe mix is the right answer for you, someone who is confident enough to speak his mind, but willing to take direction.
There are many potential interview questions to ask when interviewing bookkeepers. The ones listed above can give you a good indication of whether the candidate is a good fit or not. For a better assessment of accounting skills, check out the AIPB bookkeeping test. Don’t forget to check references and try to talk to CPAs who have the opportunity to see their work.
Copyright (c) 2010 Kelly Totten
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