Bookkeeper Interview Prep Guide

Cash basis records revenue when cash is received and expenses when paid. Accrual basis records revenue when earned and expenses when incurred, regardless of cash movement. Recommend cash basis for very small businesses with simple transactions and no inventory (under $25M revenue per IRS threshold). Recommend accrual for businesses with inventory, those seeking loans (lenders prefer accrual), or businesses over the IRS threshold. Explain that GAAP requires accrual, and the IRS allows cash basis for qualifying small businesses.

Demonstrate a systematic approach: first, check for outstanding checks and deposits in transit. Then look for bank charges, interest, or NSF checks not yet recorded in the books. Review for transposition errors (digits reversed) and slide errors (decimal point misplaced). Check for duplicate entries or missing entries. Compare check amounts against the bank statement for discrepancies. Explain that you would document each reconciling item and record necessary adjusting entries. Time-stamping your investigation shows thoroughness.

This is an ethics question. Explain that you would politely but firmly decline, explaining that mixing personal and business expenses violates IRS guidelines, could trigger an audit, and compromises the accuracy of financial records. If the expense has a legitimate business component (home office, vehicle use), explain the proper way to calculate and document the business portion. Offer to set up an owners draw or distribution account for personal expenses. Show that you protect the client from future problems while maintaining professionalism.

Discuss specific practices: batch processing with control totals, daily reconciliation of bank feeds, regular review of exception reports, separation of duties where possible, and systematic review of coded transactions against chart of accounts. Mention your error rate and how you track it. Discuss how you use automation (bank feed rules, recurring transactions) to reduce manual entry errors while maintaining oversight. Explain your end-of-month review checklist.

Cover the setup process systematically: company information and fiscal year, chart of accounts customized for their industry, bank and credit card connections, customer and vendor lists, product and service items, sales tax setup if applicable, payroll configuration, and opening balances. Discuss how you customize the chart of accounts based on the business type (service vs retail vs manufacturing). Mention setting up recurring transactions, bank rules for automatic categorization, and user permissions for multi-user access.

Walk through the full AP cycle: receive invoice, verify against purchase order and receiving report (three-way match), code to correct GL account, obtain approval from authorized personnel, enter into accounting system, schedule payment according to terms (optimize for early payment discounts where beneficial), issue payment, and file documentation. Controls include: segregation of duties (different people approve and pay), dollar amount authorization limits, duplicate invoice detection, and regular vendor statement reconciliation.

Discuss your organizational system: client-specific calendars with recurring deadlines (payroll dates, sales tax filing, quarterly estimates), task management tools (practice management software), standardized workflows and checklists for each client, and regular status reviews. Mention how you prioritize when deadlines conflict and how you communicate proactively with clients about upcoming needs. Provide a specific example of managing competing deadlines successfully.

Describe a practical catch-up process: gather all available source documents (bank statements, credit card statements, receipts, invoices), connect bank feeds and download 12 months of transactions, categorize transactions systematically using bank descriptions and client input, reconcile each month sequentially, identify and record any cash transactions, prepare a draft P&L and balance sheet for client review, and resolve any discrepancies. Estimate the time and cost for the client upfront to set expectations. This scenario tests both technical skills and client management ability.