Balance Sheet Interview Questions - English

What is a balance sheet?

Explain that a balance sheet is a financial statement that provides a snapshot of a company's assets, liabilities, and equity at a specific point in time.

What are the key components of a balance sheet?

Discuss the three main sections: assets (current and non-current), liabilities (current and non-current), and equity.

How do you classify assets and liabilities on a balance sheet?

Explain the difference between current and non-current (long-term) assets and liabilities.

Can you explain the accounting equation?

The equation is Assets = Liabilities + Equity. It illustrates that a company's resources are financed by debts or owners' equity.

How do you ensure the balance sheet is balanced?

Mention that the total value of assets should equal the total value of liabilities plus equity.

What is the difference between a balance sheet and an income statement?

The balance sheet shows financial position at a specific point in time, while the income statement shows financial performance over a period.

How do you handle inventory valuation on the balance sheet?

Discuss methods such as FIFO (First In, First Out), LIFO (Last In, First Out), and weighted average.

What are some common adjustments or entries made to the balance sheet?

Examples include accruals, deferrals, and adjustments for depreciation or amortization.

How do your account for intangible assets on the balance sheet?

Explain that intangible assets are recorded at cost and may be amortized over their useful lives.

How do changes in the balance sheet affect financial ratios?

Discuss how changes in assets, liabilities, or equity impact ratios like the current ratio, quick ratio, and debt-to-equity ratio.

Can you explain the concept of working capital and how it is derived from the balance sheet?

Working capital is calculated as current assets minus current liabilities and reflects a company's short-term financial health.

How do you assess a company's financial health using the balance sheet?

Discuss analysing liquidity, solvency, and overall financial stability through various ratios and metrics.

These questions help interviewers gauge your understanding of balance sheet fundamentals and your ability to apply that knowledge in practical scenarios.