24 Essential US GAAP Interview Questions to Ace
USGAAP Interview Questions
Are you looking for a financial reporting job in US based MNC's and want to prepare for an upcoming interview?
Want to make sure you're fully prepared for any GAAP questions that may come up during your interview?
We've got you covered. In this blog, we list down 24 of the most asked GAAP Interview questions. This guide will help you ace your interview and demonstrate your understanding of GAAP principles.
Read our print our blog now and start preparing for your next interview!
If you need to exponentially increase your hiring chances, we advise adding a AICPA US GAAP certification to your resume. You can avail a 50% discount when you enrol exclusively with Eduyush.com.
Watch a video explanation of the course below before you head down to the questions.
This blog post will discuss some of the most common US GAAP interview questions and provide helpful advice on how best to answer them!
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US GAAP Interview Questions - Technical
1.What is US GAAP, and why is it important?
US GAAP is a set of accounting principles, standards, and guidelines that companies in the United States use to prepare and present their financial statements.
US GAAP is important because it provides a consistent framework for companies to follow when reporting their financial performance and position. This helps investors, creditors, and other stakeholders understand and compare different companies' financial information.
2. How does US GAAP differ from other accounting standards, such as International Financial Reporting Standards (IFRS)?
US In my experience, US GAAP and IFRS are both high-quality accounting frameworks that aim to improve the comparability and transparency of financial reporting. Both frameworks are based on a principles-based approach, which provides general guidelines and principles for financial reporting rather than specific rules and requirements.
One key difference between US GAAP and IFRS is that US GAAP is primarily used in the United States, while IFRS is used by companies worldwide.
As a result, IFRS may have a broader scope and cover a more comprehensive range of topics than US GAAP. Additionally, there may be some specific differences in the guidance provided by the two frameworks on specific topics, such as revenue recognition or the treatment of certain types of expenses.
3. Can you give an example where US GAAP requires a company to apply a different accounting treatment than it would under another framework?
An example of a situation where US GAAP might require a different accounting treatment than another framework is the case of intangible assets. Under US GAAP, intangible assets are generally required to be amortized over their useful lives, while under IFRS, some intangible assets may be recognized at fair value and not amortized.
4. Can you describe the process for updating and revising US GAAP and how companies are expected to keep up with these changes?
The process for updating and revising US GAAP is led by the Financial Accounting Standards Board (FASB), which is responsible for issuing new standards and amendments to existing standards. Companies are expected to keep up with these changes and adopt the new standards as required.
5. How do you ensure that you follow US GAAP requirements when preparing financial statements?
To ensure that I follow US GAAP requirements when preparing financial statements, I would review the relevant guidance in the FASB's Accounting Standards Codification and consult with colleagues or seek guidance from professional organizations as needed. I also stay up-to-date on any new or revised standards that the FASB issues.
6. Can you describe a situation where you had to apply your knowledge of US GAAP to resolve a complex accounting issue?
In my previous role as a financial controller at a publicly traded company, I had to apply my knowledge of US GAAP to resolve a complex accounting issue related to recognizing revenue from long-term contracts.
Under US GAAP, revenue from long-term contracts must be recognized using the percentage-of-completion method, which requires a company to estimate the total contract price, the contract's completion stage, and the estimated costs to complete the contract.
In this case, we had several long-term contracts in progress, and there were significant uncertainties around the estimated costs to complete the contracts. This made it difficult to accurately estimate the completion stage and the revenue that should be recognized.
To resolve the issue, I had to review the relevant guidance in the FASB's Accounting Standards Codification and consult with our external auditors to ensure we applied the percentage-of-completion method correctly. I also had to work closely with the project managers to gather the necessary data and make informed estimates of the costs to complete the contracts.
In the end, we resolved the issue and accurately recognized the revenue from the long-term contracts in our financial statements.
7. How do companies adopt new or amended US GAAP standards?
When the FASB issues a new or amended US GAAP standard, companies are required to follow the new standard for financial statements issued after the standard's effective date. The company's size and complexity and the standard's nature typically determine the effective date of a new or amended standard. Companies may need to change their financial reporting systems and processes to comply with the new standard and seek guidance from accountants or other experts.
8. What are the main principles that underlie US GAAP?
The main principles that underlie US GAAP are the concept of accrual accounting, the principle of going concern, and the concept of materiality. Accrual accounting requires companies to recognize revenues and expenses when earned or incurred rather than when they are received or paid.
The principle of going concern assumes that a company will continue to operate into the foreseeable future and requires that financial statements be prepared. The concept of materiality requires that companies consider the impact of financial transactions on their financial statements and only report information that is material to the overall understanding of the company's financial position and performance.
9. How do you stay up-to-date on developments in US GAAP, and how do you ensure that your team complies with the latest requirements?
As a finance controller, it is essential to stay up-to-date on developments in US GAAP, as the standards are subject to ongoing revision and update. To stay informed,
- I regularly review the FASB's website and other industry resources and attend professional development seminars and conferences as needed.
- I also ensure that my team is aware of any updates or changes to the standards and provide them with the necessary guidance and training to ensure that they are complying with the latest requirements.
10. How do you think the principles-based approach of US GAAP affects the flexibility and judgment required in financial reporting, and how do you balance this with the need for consistency and transparency?
As a finance controller, I believe that the principles-based approach of US GAAP provides a good balance between flexibility and judgment in financial reporting and the need for consistency and transparency.
- The principles-based approach allows companies to use their judgment and professional expertise when preparing financial statements, which can be particularly important in complex or evolving business environments.
- At the same time, US GAAP provides clear guidance and principles that help to ensure consistency and transparency in financial reporting.
- As a financial controller, I strive to balance these two considerations by carefully reviewing the relevant guidance, seeking guidance from external advisors as needed, and using my professional judgment to apply the principles of US GAAP in a practical and business-specific context.
11. Can you describe your experience with technical accounting issues and how you have addressed these in your previous roles?
As a finance controller, I have a strong understanding of technical accounting issues and have had experience addressing these in my previous roles. This has included reviewing contracts and transactions to ensure that they are accounted for correctly, preparing technical accounting memos to support our accounting positions, and working closely with external auditors to resolve any issues that may arise.
To address technical accounting issues,
- I follow a systematic and thorough process that includes reviewing relevant guidance, consulting with external advisors as needed, and carefully analyzing the facts and circumstances of each case.
- I also communicate clearly and effectively with my team and other stakeholders to ensure that everyone is informed and that we are working towards a resolution.
12. How does US GAAP define materiality?
Materiality in US GAAP refers to the threshold at which information is considered significant enough to affect the decisions of a reasonable person. Materiality is determined by considering the size and nature of the entity, as well as the context in which the financial statements are presented.
13. Can you describe your experience with financial statement audits and how you have worked with external auditors to ensure compliance with US GAAP?
I have extensive experience working with external auditors to ensure compliance with US GAAP. This has included preparing financial statements per US GAAP and supporting documentation, providing explanations and clarifications as needed, and addressing any issues or discrepancies that may arise during the audit process.
To work effectively with external auditors, I clearly communicate our financial reporting processes and policies and provide timely and accurate responses to any requests for information or clarification. I also work closely with my team to ensure that we meet all relevant US GAAP requirements and address any issues that may arise during the audit process.
14. How does US GAAP address the recognition and measurement of leases?
US GAAP guides on the recognition and measurement of leases in Accounting Standards Codification (ASC) Topic 842 "Leases". The guidance in ASC Topic 842 requires companies to recognize a lease asset and a lease liability for all leases, except for short-term leases and leases of low-value assets.
The lease liability is measured at the present value of the lease payments using a discount rate that reflects the company's incremental borrowing rate. The lease asset is measured at the net investment in the lease, which is the lease liability adjusted for any initial direct costs and any lease payments made at or before the commencement date.
15. How do you ensure proper conversion of IFRS financial statements to US GAAP during consolidation?
There are several steps that I would take to ensure proper conversion of IFRS financial statements to US GAAP during consolidation:
- Identify the differences between IFRS and US GAAP
- Determine the impact of the differences
- Make necessary adjustments
- Disclose the impact of the conversion
- Prepare the financial statements:
- Review and test the financial statements
16. How does US GAAP address the measurement of assets and liabilities?
US GAAP requires assets and liabilities to be measured at their fair value unless a different measurement basis is more appropriate. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
17. How does US GAAP require financial statements to be presented and disclosed?
US GAAP requires financial statements to be presented clearly and concisely, with the essential information presented first. Financial statements should include the following:
- A balance sheet.
- An income statement.
- A statement of cash flows.
- A statement of shareholders' equity.
US GAAP also requires extensive disclosure in the footnotes to the financial statements, including information about the entity's accounting policies, significant estimates and judgments, and any material transactions or events.
18. How does US GAAP address the impairment of assets?
US GAAP requires entities to assess the recoverability of their assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the carrying amount of an asset exceeds its recoverable amount, an impairment loss should be recognized in the income statement. The recoverable amount of an asset is the higher of its fair value, fewer costs to selling and its value in use.
19. How does US GAAP address the accounting for income taxes?
US GAAP requires income taxes to be recognized in the income statement, except that they relate to items recognized in other comprehensive income or directly in equity. Current taxes are recognized as an expense when the related revenue is earned. Deferred taxes are recognized using the liability method, which means that deferred tax liabilities are recognized for all temporary taxable differences, and deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.
20. How does US GAAP address the accounting for share-based payment transactions?
US GAAP requires share-based payment transactions, such as stock options and employee stock purchase plans, to be recognized as a compensation expense based on the fair value of the equity instruments granted. The fair value is determined at the grant date, and the compensation expense is recognized over the vesting period of the equity instruments. The compensation expense is based on the number of equity instruments expected to vest, with any changes in the fair value or vesting conditions affecting the compensation expense in the period of change.
US GAAP Interview Questions - Behaviourial
1. Can you describe a time when you had to correctly research and apply a specific accounting principle to record a transaction per US GAAP?
Model answer: "Yes, I recall when I had to research and apply the revenue recognition principle. We were working on a project for a client, and I wasn't sure when we should recognize the revenue from the project. I remembered that revenue should be recognized when earned and when collectability is reasonably assured. I looked up the specific guidance on revenue recognition in the FASB codification and then applied that guidance to determine when we should recognize the revenue. As a result, we could properly record the transaction and ensure that our financial statements complied with US GAAP."
2. How do you ensure that you keep up to date with the latest developments in US GAAP?
Model answer: "I regularly review updates and changes to US GAAP, including new accounting standards and guidance. I also attend professional development sessions and conferences and stay connected with other professionals in the field through membership in professional organizations. In addition, I make a point to regularly review and apply new guidance in my day-to-day work to stay current and ensure that I apply the most up-to-date principles."
3. Can you describe a situation where you had to explain a complex accounting concept to someone unfamiliar? How did you approach this task?
Model answer: "Yes, I recall a situation where I had to explain the concept of goodwill to a new hire unfamiliar with accounting. I started by explaining the definition of goodwill and how it is recognized on the balance sheet. Then, I provided a simple example to illustrate how goodwill is calculated and impacted by business acquisitions. I found that breaking the concept into smaller pieces and using an example helped the new hire understand the concept more easily."
4. Can you describe when you had to identify and resolve an accounting issue to produce accurate financial statements per US GAAP?
Model answer: "Yes, I remember when we had to identify and resolve an issue related to the classification of a certain type of expense on the income statement. We were unsure whether the expense should be classified as a cost of goods sold or as a selling, general, and administrative expense. I researched the guidance in US GAAP and determined that the expense should be classified as a cost of goods sold. This required reclassifying the expense in the financial statements and recalculating certain ratios. We resolved the issue and produced accurate financial statements as a result."
There are a few key takeaways from this blog post. First, knowing what questions to expect during an interview is essential to demonstrate insight into GAAP.
Second, taking a US GAAP certification can help you get noticed by recruiters. Finally, preparation is vital! Be sure to brush up on your GAAP knowledge and practice answering common interview questions before your following job interview.
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It's important to dress professionally for an interview. This usually means wearing a suit or dress pants and a button-down shirt for men, and a suit or a dress for women. Avoid wearing too much perfume or cologne, and make sure your clothes are clean and well-maintained.
It's best to arrive at least 15 minutes early for the interview. This allows you time to gather your thoughts and compose yourself before the interview begins. Arriving too early can also be disruptive, so it's best to arrive at the designated time or a few minutes early.
It's a good idea to bring a few key items to an interview to help you prepare and make a good impression. These might include:
- A copy of your resume and any other relevant documents, such as references or writing samples.
- A portfolio or sample of your work, if applicable.
- A list of questions to ask the interviewer.
- A notebook and pen to take notes.
- Directions to the interview location and contact information for the interviewer, in case you get lost or there is a delay.
t's generally not appropriate to bring a friend or family member to an interview, unless they have been specifically invited or are necessary for accommodation purposes.
If you are running late for an interview, it's important to let the interviewer know as soon as possible. You can try calling or emailing to let them know that you are running behind and to give an estimated arrival time.
If possible, try to give them a good reason for the delay, such as unexpected traffic or a last-minute change in your schedule. It's also a good idea to apologize for the inconvenience and to thank them for their understanding.
- It's generally a good idea to address the interviewer by their professional title and last name, unless they specify otherwise. For example, you could say "Mr./Ms. Smith" or "Dr. Jones."
Yes, it's perfectly acceptable to ask about the company's culture and benefits during the interview. In fact, it's often a good idea to ask about these things to get a better sense of whether the company is a good fit for you. Just make sure to keep the focus on the interview and not get too far off track.
It's okay to admit that you don't know the answer to a question. You can try to respond by saying something like: "I'm not sure about that specific answer, but I am familiar with the general topic and would be happy to do some research and get back to you with more information."
Alternatively, you can try to answer the question by using your own experiences or knowledge to provide context or a related example.
It's generally best to wait until you have received a job offer before discussing salary and benefits.
If the interviewer brings up the topic, you can respond by saying something like: "I'm open to discussing salary and benefits once we have established that we are a good fit for each other. Can you tell me more about the overall compensation package for this position?"
It's important to remember that employers are not allowed to ask questions that discriminate on the basis of race, religion, national origin, age, disability, sexual orientation, or other protected characteristics. If you are asked an illegal question, you can try to redirect the conversation back to your qualifications and skills for the job.
For example, you might say something like: "I'm not comfortable answering that question, but I am excited to talk more about my skills and experiences that make me a strong fit for this position."
It's okay to admit that you don't understand a question and to ask for clarification. You can try saying something like: "I'm sorry, I'm not sure I fully understand the question. Could you please clarify or provide some more context?"
At the end of the interview, thank the interviewer for their time and express your interest in the position. You can also ask about the next steps in the hiring process and when you can expect to hear back. Finally, shake the interviewer's hand and make sure to follow up with a thank-you note or email after the interview.