examples of problem solving scenarios in accounting

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26 Good Examples of Problem Solving (Interview Answers)

By Biron Clark

Published: November 15, 2023

Employers like to hire people who can solve problems and work well under pressure. A job rarely goes 100% according to plan, so hiring managers will be more likely to hire you if you seem like you can handle unexpected challenges while staying calm and logical in your approach.

But how do they measure this?

They’re going to ask you interview questions about these problem solving skills, and they might also look for examples of problem solving on your resume and cover letter. So coming up, I’m going to share a list of examples of problem solving, whether you’re an experienced job seeker or recent graduate.

Then I’ll share sample interview answers to, “Give an example of a time you used logic to solve a problem?”

Problem-Solving Defined

It is the ability to identify the problem, prioritize based on gravity and urgency, analyze the root cause, gather relevant information, develop and evaluate viable solutions, decide on the most effective and logical solution, and plan and execute implementation. 

Problem-solving also involves critical thinking, communication, listening, creativity, research, data gathering, risk assessment, continuous learning, decision-making, and other soft and technical skills.

Solving problems not only prevent losses or damages but also boosts self-confidence and reputation when you successfully execute it. The spotlight shines on you when people see you handle issues with ease and savvy despite the challenges. Your ability and potential to be a future leader that can take on more significant roles and tackle bigger setbacks shine through. Problem-solving is a skill you can master by learning from others and acquiring wisdom from their and your own experiences. 

It takes a village to come up with solutions, but a good problem solver can steer the team towards the best choice and implement it to achieve the desired result.

Watch: 26 Good Examples of Problem Solving

Examples of problem solving scenarios in the workplace.

• Correcting a mistake at work, whether it was made by you or someone else
• Overcoming a delay at work through problem solving and communication
• Resolving an issue with a difficult or upset customer
• Overcoming issues related to a limited budget, and still delivering good work through the use of creative problem solving
• Overcoming a scheduling/staffing shortage in the department to still deliver excellent work
• Troubleshooting and resolving technical issues
• Handling and resolving a conflict with a coworker
• Solving any problems related to money, customer billing, accounting and bookkeeping, etc.
• Taking initiative when another team member overlooked or missed something important
• Taking initiative to meet with your superior to discuss a problem before it became potentially worse
• Solving a safety issue at work or reporting the issue to those who could solve it
• Using problem solving abilities to reduce/eliminate a company expense
• Finding a way to make the company more profitable through new service or product offerings, new pricing ideas, promotion and sale ideas, etc.
• Changing how a process, team, or task is organized to make it more efficient
• Using creative thinking to come up with a solution that the company hasn’t used before
• Performing research to collect data and information to find a new solution to a problem
• Boosting a company or team’s performance by improving some aspect of communication among employees
• Finding a new piece of data that can guide a company’s decisions or strategy better in a certain area

Problem Solving Examples for Recent Grads/Entry Level Job Seekers

• Coordinating work between team members in a class project
• Reassigning a missing team member’s work to other group members in a class project
• Adjusting your workflow on a project to accommodate a tight deadline
• Speaking to your professor to get help when you were struggling or unsure about a project
• Asking classmates, peers, or professors for help in an area of struggle
• Talking to your academic advisor to brainstorm solutions to a problem you were facing
• Researching solutions to an academic problem online, via Google or other methods
• Using problem solving and creative thinking to obtain an internship or other work opportunity during school after struggling at first

You can share all of the examples above when you’re asked questions about problem solving in your interview. As you can see, even if you have no professional work experience, it’s possible to think back to problems and unexpected challenges that you faced in your studies and discuss how you solved them.

Interview Answers to “Give an Example of an Occasion When You Used Logic to Solve a Problem”

Now, let’s look at some sample interview answers to, “Give me an example of a time you used logic to solve a problem,” since you’re likely to hear this interview question in all sorts of industries.

Example Answer 1:

At my current job, I recently solved a problem where a client was upset about our software pricing. They had misunderstood the sales representative who explained pricing originally, and when their package renewed for its second month, they called to complain about the invoice. I apologized for the confusion and then spoke to our billing team to see what type of solution we could come up with. We decided that the best course of action was to offer a long-term pricing package that would provide a discount. This not only solved the problem but got the customer to agree to a longer-term contract, which means we’ll keep their business for at least one year now, and they’re happy with the pricing. I feel I got the best possible outcome and the way I chose to solve the problem was effective.

Example Answer 2:

In my last job, I had to do quite a bit of problem solving related to our shift scheduling. We had four people quit within a week and the department was severely understaffed. I coordinated a ramp-up of our hiring efforts, I got approval from the department head to offer bonuses for overtime work, and then I found eight employees who were willing to do overtime this month. I think the key problem solving skills here were taking initiative, communicating clearly, and reacting quickly to solve this problem before it became an even bigger issue.

Example Answer 3:

In my current marketing role, my manager asked me to come up with a solution to our declining social media engagement. I assessed our current strategy and recent results, analyzed what some of our top competitors were doing, and then came up with an exact blueprint we could follow this year to emulate our best competitors but also stand out and develop a unique voice as a brand. I feel this is a good example of using logic to solve a problem because it was based on analysis and observation of competitors, rather than guessing or quickly reacting to the situation without reliable data. I always use logic and data to solve problems when possible. The project turned out to be a success and we increased our social media engagement by an average of 82% by the end of the year.

Answering Questions About Problem Solving with the STAR Method

When you answer interview questions about problem solving scenarios, or if you decide to demonstrate your problem solving skills in a cover letter (which is a good idea any time the job description mention problem solving as a necessary skill), I recommend using the STAR method to tell your story.

STAR stands for:

It’s a simple way of walking the listener or reader through the story in a way that will make sense to them. So before jumping in and talking about the problem that needed solving, make sure to describe the general situation. What job/company were you working at? When was this? Then, you can describe the task at hand and the problem that needed solving. After this, describe the course of action you chose and why. Ideally, show that you evaluated all the information you could given the time you had, and made a decision based on logic and fact.

Finally, describe a positive result you got.

Whether you’re answering interview questions about problem solving or writing a cover letter, you should only choose examples where you got a positive result and successfully solved the issue.

Example answer:

Situation : We had an irate client who was a social media influencer and had impossible delivery time demands we could not meet. She spoke negatively about us in her vlog and asked her followers to boycott our products. (Task : To develop an official statement to explain our company’s side, clarify the issue, and prevent it from getting out of hand). Action : I drafted a statement that balanced empathy, understanding, and utmost customer service with facts, logic, and fairness. It was direct, simple, succinct, and phrased to highlight our brand values while addressing the issue in a logical yet sensitive way.   We also tapped our influencer partners to subtly and indirectly share their positive experiences with our brand so we could counter the negative content being shared online.  Result : We got the results we worked for through proper communication and a positive and strategic campaign. The irate client agreed to have a dialogue with us. She apologized to us, and we reaffirmed our commitment to delivering quality service to all. We assured her that she can reach out to us anytime regarding her purchases and that we’d gladly accommodate her requests whenever possible. She also retracted her negative statements in her vlog and urged her followers to keep supporting our brand.

What Are Good Outcomes of Problem Solving?

Whenever you answer interview questions about problem solving or share examples of problem solving in a cover letter, you want to be sure you’re sharing a positive outcome.

Below are good outcomes of problem solving:

• Saving the company time or money
• Making the company money
• Pleasing/keeping a customer
• Obtaining new customers
• Solving a safety issue
• Solving a staffing/scheduling issue
• Solving a logistical issue
• Solving a company hiring issue
• Solving a technical/software issue
• Making a process more efficient and faster for the company
• Creating a new business process to make the company more profitable
• Improving the company’s brand/image/reputation
• Getting the company positive reviews from customers/clients

Every employer wants to make more money, save money, and save time. If you can assess your problem solving experience and think about how you’ve helped past employers in those three areas, then that’s a great start. That’s where I recommend you begin looking for stories of times you had to solve problems.

Tips to Improve Your Problem Solving Skills

Throughout your career, you’re going to get hired for better jobs and earn more money if you can show employers that you’re a problem solver. So to improve your problem solving skills, I recommend always analyzing a problem and situation before acting. When discussing problem solving with employers, you never want to sound like you rush or make impulsive decisions. They want to see fact-based or data-based decisions when you solve problems.

Next, to get better at solving problems, analyze the outcomes of past solutions you came up with. You can recognize what works and what doesn’t. Think about how you can get better at researching and analyzing a situation, but also how you can get better at communicating, deciding the right people in the organization to talk to and “pull in” to help you if needed, etc.

Finally, practice staying calm even in stressful situations. Take a few minutes to walk outside if needed. Step away from your phone and computer to clear your head. A work problem is rarely so urgent that you cannot take five minutes to think (with the possible exception of safety problems), and you’ll get better outcomes if you solve problems by acting logically instead of rushing to react in a panic.

You can use all of the ideas above to describe your problem solving skills when asked interview questions about the topic. If you say that you do the things above, employers will be impressed when they assess your problem solving ability.

If you practice the tips above, you’ll be ready to share detailed, impressive stories and problem solving examples that will make hiring managers want to offer you the job. Every employer appreciates a problem solver, whether solving problems is a requirement listed on the job description or not. And you never know which hiring manager or interviewer will ask you about a time you solved a problem, so you should always be ready to discuss this when applying for a job.

Related interview questions & answers:

• How do you handle stress?
• How do you handle conflict?
• Tell me about a time when you failed

About the Author

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10 Accounting Problem Solving Skills and How To Improve Them

Discover 10 Accounting Problem Solving skills along with some of the best tips to help you improve these abilities.

Accounting is an important skill for anyone who wants to be financially successful. Without a basic understanding of accounting, it can be difficult to make sound financial decisions. However, even if you have a strong understanding of accounting principles, you may still encounter occasional accounting problems.

When these problems arise, it is important to have strong problem solving skills in order to find a resolution. In this guide, we will discuss some tips for solving accounting problems. We will also provide an overview of some common accounting problems so that you can be prepared in the event that one arises.

Financial Statements

Regulatory filings, revenue projections, account reconciliation, general ledger, business knowledge, problem solving.

Financial statements are important because they provide a snapshot of a company’s financial health. They can be used to make decisions about whether or not to invest in a company, and they can also be used to track a company’s performance over time. Financial statements include the balance sheet, income statement, and cash flow statement.

Payroll is an important skill for accountants because it allows them to process and manage employee compensation and benefits. Payroll processing includes calculating gross wages, deductions, and net wages; preparing payroll tax returns; and managing benefits such as health insurance, retirement plans, and paid time off.

Accountants who can effectively manage payroll can help businesses save time and money. They can also help businesses comply with federal and state tax laws and regulations.

Regulatory filings are important because they are required by law. Companies must file certain documents with government agencies in order to operate. These filings include tax returns, annual reports, and shareholder communications. Failure to file these documents can result in penalties or even the closure of a company.

Regulatory filings are important because they provide transparency. By law, companies must file certain documents with government agencies. These filings are public, which means that anyone can access them. This transparency allows investors and other stakeholders to see how a company is operating.

Revenue projections are important for businesses because they help businesses plan for future income. Revenue projections can be used to determine how much money a business will need to operate and grow. Revenue projections can also be used to help businesses raise money from investors.

Revenue projections are important because they help businesses plan for future income. Revenue projections can be used to determine how much money a business will need to operate and grow. Revenue projections can also be used to help businesses raise money from investors.

Account reconciliation is the process of ensuring that all transactions in a company’s books are accurate. This process is important because it helps ensure that the company’s financial statements are accurate and can be relied upon by investors, creditors and other stakeholders.

Account reconciliation involves comparing the company’s books with the records kept by its banks, vendors and other parties with whom it does business. If there are any differences, they need to be investigated and resolved. This process can be time-consuming, but it is important to ensure that the company’s books are accurate.

Compliance is the process of ensuring that you are in compliance with the laws and regulations that apply to your business. It is important for businesses to be compliant because it helps to protect them from penalties and fines. Compliance also helps to build trust with customers and regulators.

To be compliant, businesses need to understand the laws and regulations that apply to them and then take the necessary steps to ensure that they are following the rules. For example, businesses that sell products to consumers need to be aware of the consumer protection laws that apply to them. Businesses that operate in certain industries, such as healthcare, need to be aware of the regulations that apply to them.

General ledger is an important accounting problem solving skill because it is used to track and report financial information for a business. The general ledger is a summary of all of the accounts that make up the financial statements, and it is used to keep track of the money coming in and going out of the business. The general ledger is also used to prepare financial statements, and it is important that the information in the general ledger is accurate and up to date.

Quickbooks is an important skill for anyone in the accounting field. Quickbooks is a software program that helps accountants and business owners keep track of their finances. Quickbooks can help you track invoices, manage payroll, and create financial reports. Quickbooks is a valuable skill because it can save you time and make your job easier.

Business knowledge is important for accounting problem solving because it helps accountants understand the context of the problem they are trying to solve. It also helps them identify the root cause of the problem and develop a solution that will be effective in the real world.

Accounting problem solving often involves looking at a company’s financial statements and trying to identify where the company is spending too much money or where it is making mistakes in its accounting practices. To do this, accountants need to understand the company’s business and the industry in which it operates. They also need to be familiar with the latest accounting standards and best practices.

Problem solving is an important skill for accountants because they often have to solve complex problems. Problem solving requires the ability to identify the problem, gather information, develop a plan and implement the plan. Accountants must be able to think critically and creatively to solve problems.

Problem solving often requires good communication skills. Accountants must be able to explain the problem, gather information and develop a plan with the client. They also need to be able to follow up to make sure the plan is working and to troubleshoot if there are any issues.

How to Improve Your Accounting Problem Solving Skills

1. Understand the basics of accounting If you want to improve your accounting problem solving skills, it is important to have a strong foundation in accounting principles. You should be able to read and understand financial statements, as well as have a working knowledge of payroll, regulatory filings, revenue projections and account reconciliation.

2. Be well-versed in accounting software In order to be an effective problem solver, you need to be well-versed in accounting software. This will allow you to quickly and efficiently find solutions to accounting problems.

3. Stay up-to-date on accounting news and changes It is also important to stay up-to-date on accounting news and changes. This will help you anticipate problems and find solutions more quickly.

4. Be proactive in solving problems When you encounter an accounting problem, it is important to be proactive in solving it. This means taking the time to understand the problem and researching potential solutions.

5. Communicate effectively with your team When you are working on a team, it is important to communicate effectively. This means being clear about what you need from your team members and keeping them updated on your progress.

6. Be organized and efficient When solving accounting problems, it is important to be organized and efficient. This means having a system in place for tracking your progress and keeping your work area tidy.

7. Practice problem solving One of the best ways to improve your accounting problem solving skills is to practice. This can be done by working on practice problems or by taking on small projects in your personal life.

8. Seek out feedback When you are working on solving accounting problems, it is important to seek out feedback. This can be done by asking for feedback from your team members or by seeking out feedback from a mentor.

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Accountants as Problem Solvers

August 01, 2020

By: Linda McCann , DBA, CMA, CPA ; David Horn , CPA ; Jennifer Dosch , CMA

Managers often complain that accounting graduates aren’t prepared for today’s business environment. The complexity of our global economy and the increasing influence of, and reliance on, technology leads to practitioners and instructors questioning if undergraduate accounting programs focus on the right curriculum to prepare students for careers.

One soft skill that can help prepare accounting students for their careers is problem solving. Management accountants need to be able to work cross-functionally to solve problems and provide meaningful analyses. Many colleges, universities, and accrediting bodies in academia incorporate strategic goals requiring curriculum that facilitates problem-solving skills.

As instructors, we teach technical accounting skills by demonstrating and providing practice with accounting concepts and structured problems, which we assess via homework and exams. Teaching soft skills, such as unstructured problem solving, poses greater challenges that are more difficult to incorporate into the curriculum. How can students learn and approach unstructured problem solving?

A SLOW-THINKING APPROACH

Recent scientific discoveries into the brain reveal that humans employ fast and slow thinking to solve problems. The brain especially prefers making decisions and solving problems quickly based on recognized patterns, visual and verbal cues, prior knowledge, routines, familiar preferences, prejudices, and emotions.

In contrast, decision making and problem solving often require slow thinking to digest new information, hypothesize alternatives, employ quantitative mathematical and statistical analysis, overtly recognize and break free from cognitive biases, challenge preconceived notions, synthesize ideas, and create new knowledge. To support this kind of slow, rational thinking, accountants can learn a methodical process for problem solving (see Table 1).

Many common business models—such as Six Sigma, A3 Lean, and Appreciative Inquiry—and the Association of American Colleges and Universities value problem solving, and critical-thinking grading rubrics describe specific steps for rational (i.e., slow thinking) problem solving. Business students, however, learn and apply these models in various courses, typically with no thread that ties them specifically to the accounting profession. Students learn bits and pieces of rational thinking throughout their undergraduate coursework, but instructors often don’t teach a common framework to apply these skills in a relevant and value-added way (see “Survey of Practitioners”).

To help address this issue, we developed a problem-solving rubric for accounting students (see Table 2). The three of us are faculty members from Metropolitan State University in Minneapolis/St. Paul, Minn., and represent three different parts of the curriculum (auditing, business taxation, and management accounting), so it was important that it could be used across the entire accounting program.

The rubric assesses learning in an organized way, providing a common framework (criteria) for students to consistently approach problem solving. The criteria include problem identification, analysis, and communication of results. It guides students through a series of problem-solving steps using terms and vocabulary specific to the accounting profession. The rubric also reminds us, as instructors, to create a learning environment where problem solving can occur (see “Setting the Tone”).

STEP 1: PROBLEM IDENTIFICATION

The iterative and looping nature of problem solving confounds inexperienced accountants. Where does one begin? Students tell us using a rubric provides a starting point.

To implement the rubric, we assign students projects with unclear goals, incomplete information, and more than one possible solution. Assignment topics vary. It could have students develop a cost-benefit analysis between adding employees or adopting Lean manufacturing techniques, analyze tax outcomes of business decisions, create a risk assessment and audit response for a fictitious client, or some other accounting-related issue.

Students begin by developing one or several hypotheses as to the nature of the problem. To generate ideas, we assist students in their brainstorming discussions. The rubric leads students to consider the environment, strategy, unexpected observations, overall importance, and risk assessment. At this stage, the identified problem may change, but the original hypothesized problem gives direction for next steps. Upon completing the assignment, we assess students on how they identified the problem.

Metropolitan State University’s business taxation course used the rubric in a case study that involves assessing the implication of the Wayfair v. South Dakota U.S. Supreme Court decision on a company’s sales tax collection. Prior to Wayfair , companies operated under a physical presence nexus established in Quill v. North Dakota . The Quill decision required companies to have a physical presence in a taxing jurisdiction in order to require collection and remittance of sales taxes on transactions.

In Wayfair , the U.S. Supreme Court overturned Quill in favor of an economic nexus standard, where companies only needed to have a certain level of economic activity. For example, in South Dakota, the threshold economic activity is 200 transactions or $100,000 in sales. The change from Quill to Wayfair was a major development in how companies operate and collect sales tax. It required companies to assess all jurisdictions in which they operate and evaluate how the change in the nexus standards impact its operations.

To apply this rubric to the change, students learn about a fictitious company that sells inventory to multiple states and collects and remits sales tax under the Quill physical presence nexus standard. We give students a subledger with all sales data for the given year. The rubric leads students to ask about implications of the Wayfair decision on the company, how the ruling impacts the company’s strategic objectives, and risks to the company because of the change in the law. Using the rubric, students are guided to discover the issue at hand, which is whether the company will have a significant number of new sales tax jurisdictions requiring collections and remittance from its customers.

Students tell us that without the rubric, they often feel like they have no road map at the beginning of a project or case study; identifying the problem seems too big and undefined to tackle. Many students initially resist engaging with unstructured problem-solving assignments because they differ from past assignments. Similar to what one might find in cross-functional teams opposed to change, students show their displeasure with crossed arms and distant body language.

Many college courses still rely on testing facts and use formulas and calculations, an approach that doesn’t put the student in the decision-making role but is familiar to them. With a rubric, students see smaller doable steps, where the assignment is heading, and how they can move forward and loop backward, when necessary. The rubric breaks down the initial intimidation students feel with unstructured problems.

STEP 2: ANALYSIS

Next, the rubric guides students through analyzing the problem using accounting-specific skills they’ve acquired in each course. For example, students consider tax laws, financial reporting and audit principles, or cost accounting techniques.

Continuing the sales and use tax example, at this stage, students apply the rubric to perform a complete analysis, enabling them to form a conclusion to communicate. What are the relevant facts to determine Wayfair ’s impact? What facts are irrelevant? What primary and secondary tax authority is needed to conduct research? Are there alternatives and exceptions to applying Wayfair ? Have all states adopted an economic nexus standard? Have all states adopted South Dakota’s transactional thresholds? What’s the quantitative impact to the company? Are there financial accounting implications to the Wayfair decision? What’s the scope of the necessary research, and are there limitations, constraints, and so on? Through the rubric, students formulate and answer questions and perform analysis to solve the problem at hand.

We assess students on their ability to gather and identify relevant facts, research any applicable rules and laws, assess alternatives, and perform any needed qualitative and quantitative analyses. At this stage, students apply theories and best practices learned in specific course fields, such as management accounting, taxation, and auditing.

To encourage elaboration, the rubric uses words such as curious, skeptical, model, assumption, authoritative, best practices, relevant, and sufficient sources. Like many accountants, students want to get their work done quickly, but problem solving takes time and slow thinking. Thanks to the rubric, more students turned in papers with greater depth, less “cut and paste,” and more relevant supporting details.

As in the real world, students often discover their original hypothesis or identified problem is incorrect, incomplete, or irrelevant. They confront the iterative nature of problem solving as they work through the analysis stage and build evidence to support their hypothesis. When evidence doesn’t support an identified problem, students go back and redefine their problem, gather new evidence, explore new alternative solutions, and build a case for their conclusion.

STEP 3: COMMUNICATION

Finally, students present their results in a memorandum to a hypothetical manager or audit partner. The memorandum mirrors common styles, such as IFRAC (issues, facts, rules, analysis, and conclusion) and BLUF (bottom line up front). Students state the problem and include the conclusion (i.e., solution) up front along with a summary of relevant facts and assumptions. Supporting documentation presents additional in-depth analysis.

This format familiarizes students with a presentation style that allows management to quickly understand conclusions while also providing more depth to support the up-front conclusion. We expect students to write and present findings in a clear and concise manner as if in a professional accounting setting. The rubric grading criteria helps students solve problems using rational thinking and delivering a memorandum that directly supports management decision making.

In the Wayfair case study, students draft a memorandum to management addressing the implications of the sales tax nexus precedence change. The facts section should discuss the company’s current sales and use tax policies. Students identify the issue as the change from physical presence nexus to economic nexus. The up-front conclusion should identify new jurisdictions from which the company needs to register and collect sales tax and quantify the volume of sales tax it expects to collect. Finally, the analysis provides an in-depth discussion of the change from Quill to Wayfair . Students should discuss how they determined new jurisdictions, limitations, and further required resources for the company.

PREPARING STUDENTS FOR THEIR CAREERS

We use the rubric format for projects or cases at different stages throughout the accounting curriculum. The problem-solving rubric measures student learning and reinforces rational thinking with each assignment. The projects that use the rubric vary in length, depth, and complexity as students move from management accounting to tax and then finally to audit. We find the rubric flexible enough to adapt to an instructor’s needs, yet it provides consistent core steps—identify the problem, analyze, and communicate—to solve problems.

The rubric helps students organize their communication through the memorandum. Setting up a memorandum so the problem and solution appear “up front” highlights mismatches between the problem, evidence, and conclusion. Further, it encourages students to decide—rather than ramble and include information that isn’t relevant. We find students often get to the communication stage and realize that their analysis doesn’t support their conclusion or identified problem. Fortunately, the rubric allows them to loop back and redefine and reanalyze.

By using the same grading criteria in multiple courses, we provide students with a familiar approach to problem solving that turns fast thinking to slow, rational thinking. The process and steps become routine and less daunting for the student. While each step still requires arduous thinking, the approach itself is a recognized pattern for students.

From our point of view as accounting instructors, the rubric helps provide consistent and fair grading. We provide separate points for milestones in problem identification, analysis, and communication, which further encourages students to go through each step of the process. Metropolitan State University plans to expand the use of this rubric in the accounting curriculum. This common framework provides students with a process to identify problems, research and investigate facts, conduct analyses, and communicate results across all accounting disciplines.

This process reinforces the problem-solving skills that students will need in their professional careers. These capabilities will help them perform their roles in today’s strategic, fast-paced business environment. Solving problems is critical for today’s management accountant. Through implementing the rubric, instructors can help students systematically apply a problem-solving process that they can take with them as they move from student to management accountant.

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Mastering Accounting Practice Problems: Tips and Tricks for Success

Introduction

Are you ready to dive into the world of accounting practice problems ? Whether you’re a seasoned accountant or just starting out in your financial journey, these practice problems are an essential tool for sharpening your skills and expanding your knowledge. But don’t worry, we’ve got you covered! In this blog post, we’ll explore what accounting practice problems are all about and share some valuable tips and tricks that will help you conquer them with confidence. So grab your calculator and let’s get started on the path to mastering accounting practice problems!

What are accounting practice problems?

What are accounting practice problems ?

Accounting practice problems are exercises or scenarios that are designed to test your understanding and application of accounting principles and concepts. These problems typically involve analyzing financial data, preparing financial statements, and applying various accounting methods and techniques.

Solving accounting practice problems is an essential part of mastering the subject. They help you develop critical thinking skills, improve your problem-solving abilities, and enhance your overall understanding of accounting principles.

These problems can cover a wide range of topics, such as journal entries, adjusting entries, trial balances, income statements, balance sheets, cash flow statements , inventory valuation methods, depreciation calculations, and more. They require you to apply the rules and guidelines set forth by generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS).

By solving these practice problems regularly and effectively engaging with them through analysis and interpretation of financial data sets or case studies will enable you to gain confidence in tackling real-world accounting challenges. So don’t shy away from embracing these opportunities for growth!

Tips for solving accounting practice problems

Tips for Solving Accounting Practice Problems:

1. Understand the question: Before diving into solving accounting practice problems, it is crucial to fully comprehend what is being asked. Take your time to read and analyze the problem carefully. Look for keywords or specific instructions that can guide you in finding the appropriate solution.

2. Review relevant concepts: Accounting practice problems often require a solid understanding of fundamental accounting principles and concepts. Make sure you are familiar with topics such as balance sheets , income statements, debits and credits, and financial analysis techniques. If needed, refer back to your textbooks or online resources to refresh your knowledge.

3. Break down complex problems: Sometimes accounting practice problems may appear overwhelming due to their complexity or lengthiness. To tackle these challenges effectively, break them down into smaller manageable tasks . Identify each step required to reach the final answer and approach them one at a time.

4. Utilize real-world examples: Linking theoretical concepts with practical examples can enhance your understanding of accounting principles while solving practice problems . Try relating the given scenario with real-life situations or business operations to grasp how different transactions impact financial statements.

5. Practice regularly: The key to mastering any skill is consistent practice! Set aside dedicated study sessions where you solve various types of accounting practice problems regularly. The more exposure you have to different scenarios and calculations, the better equipped you will be during exams or when facing actual accounting challenges in professional settings.

Remember that solving accounting practice problems requires both technical knowledge and critical thinking skills. Stay patient, focused, and determined throughout the process as mastery comes through continuous efforts rather than overnight success!

Tricks for solving accounting practice problems

Tricks for Solving Accounting Practice Problems

When it comes to mastering accounting practice problems, having a few tricks up your sleeve can make all the difference. These tricks can help you approach complex scenarios with confidence and accuracy. Here are some tips to help you solve accounting practice problems more effectively .

1. Break it Down: When faced with a challenging problem, break it down into smaller, manageable parts . This will not only make the problem seem less daunting but also allow you to focus on each component individually.

2. Use Visual Aids: Sometimes, visualizing the problem can provide clarity and help identify patterns or relationships. Utilize charts, graphs, or diagrams to organize information visually and gain a better understanding of the situation at hand.

3. Apply Concepts: Always refer back to fundamental accounting concepts when solving practice problems. Understanding how different principles apply in specific scenarios will guide your decision-making process and ensure accurate solutions.

4. Practice Time Management: Time management is crucial when tackling accounting practice problems that have time constraints attached to them (such as exams). Allocate appropriate time for each question based on its complexity so that you can complete all tasks within the given timeframe.

5. Develop Problem-Solving Strategies: Over time, develop your own problem-solving strategies by analyzing past mistakes and learning from them. Identify common pitfalls or areas where you tend to get stuck and devise techniques specifically tailored to overcome these challenges.

6. Collaborate with Peers: Engaging in group study sessions or collaborating with peers who are also studying accounting can be beneficial for problem-solving skills development. Through discussions and sharing insights, you may discover alternative approaches or perspectives that enhance your abilities.

Remember that becoming proficient at solving accounting practice problems takes time and effort—there’s no substitute for regular practice! By implementing these tricks into your study routine, you’ll increase your efficiency in handling complex scenarios while building a solid foundation of knowledge in procurement accounting practices .

Resources for accounting practice problems

Resources for Accounting Practice Problems

When it comes to mastering accounting practice problems, having access to the right resources can make all the difference. Luckily, there are plenty of tools and materials available that can help you sharpen your skills and improve your problem-solving abilities. Here are a few resources worth exploring:

1. Online Tutorials: There are numerous websites and platforms that offer comprehensive tutorials on various accounting topics. These tutorials often include detailed explanations of concepts, step-by-step solutions to practice problems, and interactive quizzes to test your understanding.

2. Textbooks and Study Guides: Investing in a good accounting textbook or study guide can provide you with a wealth of practice problems. Look for books that offer clear explanations along with worked-out examples so you can learn from both correct and incorrect approaches.

3. Accounting Forums: Participating in online forums dedicated to accounting can be incredibly helpful when it comes to solving practice problems. You can post questions, seek guidance from experienced professionals or students, and engage in discussions about different problem-solving strategies.

4. Practice Exam Prep Books: Many publishers release specialized exam preparation books tailored specifically for accounting exams such as the CPA or CMA exams. These books typically include sets of practice problems designed to mimic real exam questions.

5. Educational Apps: Mobile apps have become increasingly popular tools for learning and practicing accounting concepts on-the-go. Look for apps that offer a wide range of practice problems with varying levels of difficulty.

Remember, consistently working through practice problems is essential if you want to excel in accounting . By utilizing these resources effectively , you’ll be well-equipped on your journey towards mastering accounting principles and becoming a proficient problem solver!

Mastering accounting practice problems is an essential skill for any aspiring accountant. By following the tips and tricks outlined in this article, you can improve your problem-solving abilities and gain confidence in tackling complex accounting scenarios.

Remember to start by understanding the basics of accounting principles and concepts. This foundation will provide you with a solid framework to approach any practice problem. Practice regularly using real-life examples or online resources specifically designed for accounting practice problems.

When solving these problems, be systematic and organized. Break down the question into smaller parts, identify relevant information , apply appropriate formulas or techniques, and double-check your work for accuracy. Utilize shortcuts and time-saving strategies where applicable to streamline your problem-solving process .

Additionally, take advantage of various resources available to enhance your learning experience. Online tutorials, textbooks, video lectures, and study groups can all contribute to sharpening your skills in solving accounting practice problems.

By adopting these strategies consistently over time, you will notice significant improvement in your ability to tackle even the most challenging accounting practice problems confidently.

So don’t let these problems intimidate you! Embrace them as opportunities for growth and mastery of this fundamental aspect of the field. With dedication and persistence, you’ll soon find yourself acing those tricky accounting questions with ease!

Happy problem-solving!

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• The joys of problem solving
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Many accountants enjoy problem solving more than number crunching. So what typical problems can you look forward to cracking at work? Iwona Tokc-Wilde reports

Problem solving is something that accountants and finance professionals deal with virtually every working day. In fact, a recent survey by Robert Half shows it is this part of working in the profession that they like best: 41% of accountants say solving problems gives them the most job satisfaction, compared to just 22% who prefer working with numbers.

‘Accountants are usually excellent at dealing with detail and spotting patterns, which makes them good at – and enjoy – problem solving,’ comments Andi Lonnen, founder and director of Finance Training Academy.

If you are at the beginning of your journey into the profession and enjoy tackling problems, you have a head start. Problem solving is also a skill that is one of the 10 most sought-after trainee skills globally (see 'Related links').

Why problem-solving skills are so important

‘The role of accountancy and finance has shifted from a pure focus on fiscal control to one where it has an impact on the business,’ says Phil Sheridan, managing director at Robert Half.

‘The requirement for problem-solving skills is part of this transition as, by mining data and analysing trends, accountants are now translating numbers into actionable insights for the business and are increasingly being seen as strategic partners.’ By putting their data skills and their problem-solving skills to work together, they also help uncover potential areas for concern.

It is vital for accountants in practice to correctly identify, analyse and solve problems too.

‘As trusted advisers, it’s our role to look at everything in detail to pick-up anomalies, patterns and correlations in order to advise our clients on how to take things forward,’ says Shahzad Nawaz of AA Accountants. If they fail to pick up and analyse problems correctly, the accounts could be wrong.

‘This means the business owner would be relying on incorrect data, which could have a detrimental effect on the future of the business. And, of course, if external stakeholders are relying on the data, then we could potentially be misleading them too.’

Incorrect accounts could also have other serious knock-on effects.

‘If the accounting figures are incorrect, then the tax payments relating to the company will be incorrect too. Later on, the client could find themselves with additional tax to pay – with interest,’ says Tanya Addy of BHP Chartered Accountants. 

‘Inaccurate accounting can also land businesses in serious commercial difficulties especially if, as a result, directors/owners have been taking more salary or dividends from the business than they were entitled to. In the worst case scenario, it could even lead to closure of the business.’

Problem solving at work

There are many areas where trainee and new accountants can practise solving problems, depending on the job you are doing.

‘If it’s accountancy, you’ll be looking at helping a business with cash flow, debtors and improving their record-keeping,’ says Nawaz.

At the nitty-gritty level, you will be reconciling control accounts, trying to understand why an account might not be balancing and investigating and clearing old items on reconciliations.

‘The work to balance an account involves finding out what the problem is and then resolving it, for example identifying and correcting transposition errors,’ says Lodden.

If you work in tax, you’ll be involved in advising a client on how much tax they will need to pay (and how much tax they can save) in a particular year.

‘This will require a review of the information provided by the client, such as bank statements and expenses, analysing which expenses incurred are allowable and disallowable for taxation, quantifying the results and communicating them to the client and to tax authorities,’ explains Carolyn Napier, senior ACCA tutor at London School of Business and Finance. 

You will also be dealing with tax implications, and tax cost for both employer and employee, of providing benefits.

‘You will need to ascertain which benefits are taxable and which are tax-free, and then you’ll need to "solve the problem" of which tax or taxes are due and payable, and by what date,’ says Napier.

In industry, you may be given the opportunity to help analyse projects, and communicate your findings to various parts of the business.

‘This is where new and trainee accountants will need to be prepared to utilise their problem-solving skills – noting anomalies and seeking clarification on areas of uncertainly will ensure that a clearer picture can be obtained,’ says Sheridan.

Deborah Adigun-Hameed is an accountant and junior financial analyst at BlueBay Asset Management. By utilising her problem-solving aptitude and skills, she has been involved in major decisions that shape the company she works for.

‘I’ve contributed to key strategic discussions about which market and products are profitable, what we should be selling and how we compare with our competitors,’ says Adigun-Hameed.

‘I may be newly qualified, but my informed opinions and advice are really valued by the management.’

Both in practice and in industry, accountants are also increasingly called upon to help solve technology problems – for example, when a business intends to implement new business software solutions. They help with the evaluation and selection of a solution, and with planning and execution of the implementation process. They also assist in testing the new system and facilitate going live when the system is ready.

Hone your problem-solving skills

Problem solving is about using logic and your technical expertise to assess a situation and to come up with a workable solution. It is connected to other skills such as level-headedness and resilience, analytical skills and good teamworking skills.

It also requires creativity, which is best learnt through collaboration – brainstorming with others to clarify the problem, generate ideas and create as many potential solutions as possible. When putting forward ideas, be confident in your contributions.

‘Everyone, including those newly-qualified, has something to offer,’ says Adigun-Hameed.  ‘Always think outside of the box, as cliché as that may sound. No new idea is insignificant. Innovation can be incremental; change can be small or radical.’

Improving your listening and communication skills will also make you a better problem solver.

‘Learning to communicate well is vital as you need to build rapport with clients. If you have a good rapport with someone, you are confident to ask questions, which is how you can pin down problems and find answers to those problems,’ says Nawaz.

Above all else, getting practical on-the-job experience is how you can get really good at problem solving.

‘The first control account a trainee tends to tackle and perfect is the bank control account; every trainee accountant has had to look for that 1p difference – as painful as that sounds, it certainly helps you learn,’ says Lauren Burt, client manager at EST Accountants and Tax Advisers.

"Everyone, including those newly-qualified, has something to offer. Always think outside of the box, as cliché as that may sound. No new idea is insignificant. Innovation can be incremental; change can be small or radical" Deborah Adigun-Hameed - BlueBay Asset Management

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Problem Set B

LO 14.1 You are the president of Duke Company and are leading the company through the process of incorporation. The next step is determining the type of stock the company should offer. You are relying on feedback from several key executives at Duke to help you assess the wisdom in this decision. Prepare a memo to your executive team outlining the differences between common stock and preferred stock. The memo should be complete enough to assist them with assessing differences and providing you with robust feedback.

LO 14.1 You are the president of Duke Company and are leading the company through the process of incorporation. The company has determined that common stock shares will be issued, but several key executives at Duke are not quite sure they understand the preemptive right feature associated with common shares. Prepare a memo to your executive team outlining the meaning of this right.

LO 14.2 Autumn Corporation was organized in August. It is authorized to issue 100,000 shares of $100 par value 7% preferred stock. It is also authorized to issue 500,000 shares of $5 par value common stock. During the year, the corporation had the following transactions:

Journalize the transactions.

LO 14.2 MacKenzie Mining Corporation is authorized to issue 50,000 shares of $500 par value 7% preferred stock. It is also authorized to issue 5,000,000 shares of $3 par value common stock. In its first year, the corporation has the following transactions:

LO 14.2 Paydirt Limestone, Incorporated was organized several years ago and was authorized to issue 3,000,000 shares of $40 par value 9% preferred stock. It is also authorized to issue 3,750,000 shares of $2 par value common stock. In its fifth year, the corporation has the following transactions:

LO 14.3 Tent & Tarp Corporation is a manufacturer of outdoor camping equipment. The company was incorporated ten years ago. It is authorized to issue 50,000 shares of $10 par value 5% preferred stock. It is also authorized to issue 500,000 shares of $1 par value common stock. It has issued 5,000 common shares and none of the preferred shares. Tent & Tarp has the following transactions:

Journalize these transactions.

LO 14.3 Tent & Tarp Corporation is a manufacturer of outdoor camping equipment. The company was incorporated ten years ago. It is authorized to issue 50,000 shares of $10 par value 5% preferred stock. It is also authorized to issue 500,000 shares of $1 par value common stock. It has issued 5,000 common shares and 2,000 of the preferred shares. The corporation has never declared a dividend and the preferred shares are one years in arrears. Tent & Tarp has the following transactions:

Journalize these transactions. For the stock split, show the calculation for how many shares are outstanding after the split and the par value per share after the split

LO 14.4 You are a CPA working with sole proprietors. Several of your clients are considering incorporating because they need to expand and grow. One client is curious about how her financial reports will change. She’s heard that she may need to prepare a statement of retained earnings and a statement of stockholder’s equity. She’s confused about the difference between the two and what they report. How would you explain the characteristics and functions of the two types of statements?

LO 14.4 You are a consultant for several emerging, high growth technology firms that were started locally and have been a part of a business incubator in your area. These firms start out as sole proprietorships but quickly realize the need for more capital and often incorporate. One of the common questions you get is about stockholder’s equity. Explain the key ways the companies need to view retained earnings if they want to use it as a source of capital for future expansion and growth after incorporating.

LO 14.4 You are the accountant for Trumpet and Trombone Manufacturing, Inc. and you oversee the preparation of financial statements for the year just ended 6/30/2020. You have the following information from the company’s general ledger and other financial reports (all balances are end-of-year except for those noted otherwise):

Prepare the company’s Statement of Retained Earnings

LO 14.5 You have some funds that you would like to invest and you are relying heavily on the EPS calculation to help you make your decision. Initially you are baffled about why preferred dividends are subtracted in the numerator and why a weighted average is used in the denominator, so you do some research and reflection and come to understand why. Your friend is interested in hearing about your thought process. How would you explain to your friend why it’s important to subtract preferred dividends and to use weighted averages?

LO 14.5 You are a consultant working with various companies that are considering incorporating and listing shares on a stock exchange. One of your clients asks you about the various acronyms she has been hearing in conjunction with financial analysis. Explain the following acronyms and how they measure different things but may complement each other: EPS (earnings per share), EBITDA (earnings before interest, taxes, depreciation, and amortization), and NOPAT (net operating profit after taxes).

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• Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper
• Publisher/website: OpenStax
• Book title: Principles of Accounting, Volume 1: Financial Accounting
• Publication date: Apr 11, 2019
• Location: Houston, Texas
• Book URL: https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters
• Section URL: https://openstax.org/books/principles-financial-accounting/pages/14-problem-set-b

© Dec 13, 2023 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.

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Problem Solving in Accounting

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Problem-solving in accounting is a critical skill that can always be improved upon. Master problem-solver and CFO at Musselman & Hall Contractors LLC, Adam Porter, shares his insight and experience with us in the latest episode of CFO Weekly.

What Makes a Great Problem-solver?

If you know, you know, right? Adam instinctively knew he was a problem-solver when he was younger. Something as simple as going from point A to point B became an opportunity to experiment with which route got him to his destination quicker. And his quest for discovery hasn't stopped.

“If we don’t understand the ‘why’ behind the actions we take, how do we know if we’re really doing the right thing,” Porter said.

To solve is to correct or optimize, and none of us can do that if we don’t first recognize an opportunity to get involved. Problem-solving goes hand in hand with the willingness to roll up your sleeves and get stuck in, take an active role in, and see through the potential outcome. Adam empowers each of his team members to become (and grow as) problem-solvers, by recognizing them and their contributions to identifying and solving issues.

Involving people in the problem-solving process and connecting the dots for them, showing them how they make the business a better organism, is how you create more great problem-solvers and amplify your ability to tackle problems as they appear.

Accounting Problem-solving in Action

Problem-solving is a term that gets thrown around in interviews and on resumes quite a bit. When the time comes, real problem-solvers like Adam approach things in a specific way.

System Upgrades

If you’ve navigated a system change and survived to tell the tale, some would say you have superpowers. Upgrading something like an ERP system is a mammoth task, even for a seasoned team of executives. During a project like this, you’re reviewing and possibly amending every single organizational process.

You’re also required to identify how everything you do during this project starts to affect other areas of the business: finance, accounting, HR, IT and so on.

Adam’s own experience with one such project led him through a GL restructure. At the end of a six-month series of efforts, with the support of a Controller whom he had brought it to, Adam succeeded and was able to present information back to the business, which could be used to inform business decisions.

The domino effect: once more information became available, and it was clear how it related to each portion of the business, the people in charge of those respective portions became more engaged and more curious and more willing to work with that information.

Problem-solving is just one of those skills where nobody needs to formally identify the need for it. It’s the problem-solvers who are constantly on the lookout for opportunities to apply themselves.

The result is that everybody benefits.

The Problem-solving Process in Accounting

Adam’s very first step in his problem-solving process is to absorb as much information from as many sources as he can. Whether it’s listening to the news every day or speaking with different people inside the business, there’s this ongoing effort to find out more, learn about topical challenges that others might be facing, and use that to drive questions internally about further opportunities to solve problems.

It doesn’t necessarily need to reach the state of being a ‘problem’ to receive attention for optimization. You just need to listen and pay attention to where things might be slower, costing more than usual or requiring manual input from too many people.

Once you have this information, you can gather the right people into the room to start looking at that information, gathering more of it from different sources.

One of the key components of fully resolving any issue is to understand the full scope and depth of its current and future impact: What happens if you leave it alone, or if it gets worse, or if it’s completely resolved? Who gets more time in a day when you resolve something? Whose budget gets some breathing room? Can you reduce the amount of manual input that everybody’s required to give?

Finding the Right People to Solve the Problem in Your Accounting Department

So, once you know what the problem is, you need to get the right people in to solve it.

How do you know who that is? The team behind your solution is critical. As a CFO, you have the responsibility of setting your team up for success when they’re working on solving problems. All execs have this responsibility.

In any organization, cross-functional training is the quickest way to widen perspectives when approaching any problems. If your execs are regularly making time to get down to the operational level, and understand how and why things work a certain way, it becomes so much easier to strategically recommend a resolution when one is needed.

Problem-solving isn’t a one-way road.

Solve the Problem, Not the Symptom

How do you know when you’re solving the right thing? So many times, we see something blatantly creating a bottleneck in an operation and we’ll head right toward that point to clear the blockage. Is that really solving the problem, though?

Most times, it isn’t. Once you clear the blockage, if you don’t look a little deeper or follow it upstream, it’s probably going to reappear not long after you put in all that effort.

Adam explains that sometimes, you already know what the real root cause is, of one or more bottlenecks in the business. Sometimes it’s trial and error. Always, though, it requires you to dig deeper, uncover more detail, more links and connections to other parts of the business operation or the stakeholder network.

Adam goes on to say that getting to the root of the issue can also be achieved by just getting the right people in the room with you. Musselman & Hall Contractors does a great job of this, getting executives together at least once weekly, to just help others on the team evaluate elements, ask more questions, different questions, and gain a different perspective on things that can be missed during the daily routine.

Dealing with Resistance

Resistance is natural. Inertia affects every company in the world to some degree. When problem-solving, it’s likely that this will occur too.

You need to follow the process and listen as much as you convey messages. Cultivate the mindset within your business that someone else learning about your job is a positive thing. Take the time to explain that it’s because a fresh pair of eyes and a fresh mind might ask a different question that can enable you to work faster, reduce manual input, take on more responsibility, and actually achieve a promotion.

The right mindset about problem-solving enables it to benefit everyone on the team. No matter who is working on which problem or when, another major benefit to your business is to thoroughly document your procedures and changes thereto. It enriches the context of every issue that gets identified and resolved now and in the future, creating even greater efficiency for you as time passes.

Overcoming resistance is made possible by including and involving the right people, and enabling regular two-way communication with them through the problem-solving process.

For more interviews from the CFO Weekly podcast, check us out on Apple or Spotify or your favorite podcast player.

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Culture Development

Workplace problem-solving examples: real scenarios, practical solutions.

• March 11, 2024

In today’s fast-paced and ever-changing work environment, problems are inevitable. From conflicts among employees to high levels of stress, workplace problems can significantly impact productivity and overall well-being. However, by developing the art of problem-solving and implementing practical solutions, organizations can effectively tackle these challenges and foster a positive work culture. In this article, we will delve into various workplace problem scenarios and explore strategies for resolution. By understanding common workplace problems and acquiring essential problem-solving skills, individuals and organizations can navigate these challenges with confidence and success.

Understanding Workplace Problems

Before we can effectively solve workplace problems , it is essential to gain a clear understanding of the issues at hand. Identifying common workplace problems is the first step toward finding practical solutions. By recognizing these challenges, organizations can develop targeted strategies and initiatives to address them.

Identifying Common Workplace Problems

One of the most common workplace problems is conflict. Whether it stems from differences in opinions, miscommunication, or personality clashes, conflict can disrupt collaboration and hinder productivity. It is important to note that conflict is a natural part of any workplace, as individuals with different backgrounds and perspectives come together to work towards a common goal. However, when conflict is not managed effectively, it can escalate and create a toxic work environment.

In addition to conflict, workplace stress and burnout pose significant challenges. High workloads, tight deadlines, and a lack of work-life balance can all contribute to employee stress and dissatisfaction. When employees are overwhelmed and exhausted, their performance and overall well-being are compromised. This not only affects the individuals directly, but it also has a ripple effect on the entire organization.

Another common workplace problem is poor communication. Ineffective communication can lead to misunderstandings, delays, and errors. It can also create a sense of confusion and frustration among employees. Clear and open communication is vital for successful collaboration and the smooth functioning of any organization.

The Impact of Workplace Problems on Productivity

Workplace problems can have a detrimental effect on productivity levels. When conflicts are left unresolved, they can create a tense work environment, leading to decreased employee motivation and engagement. The negative energy generated by unresolved conflicts can spread throughout the organization, affecting team dynamics and overall performance.

Similarly, high levels of stress and burnout can result in decreased productivity, as individuals may struggle to focus and perform optimally. When employees are constantly under pressure and overwhelmed, their ability to think creatively and problem-solve diminishes. This can lead to a decline in the quality of work produced and an increase in errors and inefficiencies.

Poor communication also hampers productivity. When information is not effectively shared or understood, it can lead to misunderstandings, delays, and rework. This not only wastes time and resources but also creates frustration and demotivation among employees.

Furthermore, workplace problems can negatively impact employee morale and job satisfaction. When individuals are constantly dealing with conflicts, stress, and poor communication, their overall job satisfaction and engagement suffer. This can result in higher turnover rates, as employees seek a healthier and more supportive work environment.

In conclusion, workplace problems such as conflict, stress, burnout, and poor communication can significantly hinder productivity and employee well-being. Organizations must address these issues promptly and proactively to create a positive and productive work atmosphere. By fostering open communication, providing support for stress management, and promoting conflict resolution strategies, organizations can create a work environment that encourages collaboration, innovation, and employee satisfaction.

The Art of Problem Solving in the Workplace

Now that we have a clear understanding of workplace problems, let’s explore the essential skills necessary for effective problem-solving in the workplace. By developing these skills and adopting a proactive approach, individuals can tackle problems head-on and find practical solutions.

Problem-solving in the workplace is a complex and multifaceted skill that requires a combination of analytical thinking, creativity, and effective communication. It goes beyond simply identifying problems and extends to finding innovative solutions that address the root causes.

Essential Problem-Solving Skills for the Workplace

To effectively solve workplace problems, individuals should possess a range of skills. These include strong analytical and critical thinking abilities, excellent communication and interpersonal skills, the ability to collaborate and work well in a team, and the capacity to adapt to change. By honing these skills, individuals can approach workplace problems with confidence and creativity.

Analytical and critical thinking skills are essential for problem-solving in the workplace. They involve the ability to gather and analyze relevant information, identify patterns and trends, and make logical connections. These skills enable individuals to break down complex problems into manageable components and develop effective strategies to solve them.

Effective communication and interpersonal skills are also crucial for problem-solving in the workplace. These skills enable individuals to clearly articulate their thoughts and ideas, actively listen to others, and collaborate effectively with colleagues. By fostering open and honest communication channels, individuals can better understand the root causes of problems and work towards finding practical solutions.

Collaboration and teamwork are essential for problem-solving in the workplace. By working together, individuals can leverage their diverse skills, knowledge, and perspectives to generate innovative solutions. Collaboration fosters a supportive and inclusive environment where everyone’s ideas are valued, leading to more effective problem-solving outcomes.

The ability to adapt to change is another important skill for problem-solving in the workplace. In today’s fast-paced and dynamic work environment, problems often arise due to changes in technology, processes, or market conditions. Individuals who can embrace change and adapt quickly are better equipped to find solutions that address the evolving needs of the organization.

The Role of Communication in Problem Solving

Communication is a key component of effective problem-solving in the workplace. By fostering open and honest communication channels, individuals can better understand the root causes of problems and work towards finding practical solutions. Active listening, clear and concise articulation of thoughts and ideas, and the ability to empathize are all valuable communication skills that facilitate problem-solving.

Active listening involves fully engaging with the speaker, paying attention to both verbal and non-verbal cues, and seeking clarification when necessary. By actively listening, individuals can gain a deeper understanding of the problem at hand and the perspectives of others involved. This understanding is crucial for developing comprehensive and effective solutions.

Clear and concise articulation of thoughts and ideas is essential for effective problem-solving communication. By expressing oneself clearly, individuals can ensure that their ideas are understood by others. This clarity helps to avoid misunderstandings and promotes effective collaboration.

Empathy is a valuable communication skill that plays a significant role in problem-solving. By putting oneself in the shoes of others and understanding their emotions and perspectives, individuals can build trust and rapport. This empathetic connection fosters a supportive and collaborative environment where everyone feels valued and motivated to contribute to finding solutions.

In conclusion, problem-solving in the workplace requires a combination of essential skills such as analytical thinking, effective communication, collaboration, and adaptability. By honing these skills and fostering open communication channels, individuals can approach workplace problems with confidence and creativity, leading to practical and innovative solutions.

Real Scenarios of Workplace Problems

Now, let’s explore some real scenarios of workplace problems and delve into strategies for resolution. By examining these practical examples, individuals can develop a deeper understanding of how to approach and solve workplace problems.

Conflict Resolution in the Workplace

Imagine a scenario where two team members have conflicting ideas on how to approach a project. The disagreement becomes heated, leading to a tense work environment. To resolve this conflict, it is crucial to encourage open dialogue between the team members. Facilitating a calm and respectful conversation can help uncover underlying concerns and find common ground. Collaboration and compromise are key in reaching a resolution that satisfies all parties involved.

In this particular scenario, let’s dive deeper into the dynamics between the team members. One team member, let’s call her Sarah, strongly believes that a more conservative and traditional approach is necessary for the project’s success. On the other hand, her colleague, John, advocates for a more innovative and out-of-the-box strategy. The clash between their perspectives arises from their different backgrounds and experiences.

As the conflict escalates, it is essential for a neutral party, such as a team leader or a mediator, to step in and facilitate the conversation. This person should create a safe space for both Sarah and John to express their ideas and concerns without fear of judgment or retribution. By actively listening to each other, they can gain a better understanding of the underlying motivations behind their respective approaches.

During the conversation, it may become apparent that Sarah’s conservative approach stems from a fear of taking risks and a desire for stability. On the other hand, John’s innovative mindset is driven by a passion for pushing boundaries and finding creative solutions. Recognizing these underlying motivations can help foster empathy and create a foundation for collaboration.

As the dialogue progresses, Sarah and John can begin to identify areas of overlap and potential compromise. They may realize that while Sarah’s conservative approach provides stability, John’s innovative ideas can inject fresh perspectives into the project. By combining their strengths and finding a middle ground, they can develop a hybrid strategy that incorporates both stability and innovation.

Ultimately, conflict resolution in the workplace requires effective communication, active listening, empathy, and a willingness to find common ground. By addressing conflicts head-on and fostering a collaborative environment, teams can overcome challenges and achieve their goals.

Dealing with Workplace Stress and Burnout

Workplace stress and burnout can be debilitating for individuals and organizations alike. In this scenario, an employee is consistently overwhelmed by their workload and experiencing signs of burnout. To address this issue, organizations should promote a healthy work-life balance and provide resources to manage stress effectively. Encouraging employees to take breaks, providing access to mental health support, and fostering a supportive work culture are all practical solutions to alleviate workplace stress.

In this particular scenario, let’s imagine that the employee facing stress and burnout is named Alex. Alex has been working long hours, often sacrificing personal time and rest to meet tight deadlines and demanding expectations. As a result, Alex is experiencing physical and mental exhaustion, reduced productivity, and a sense of detachment from work.

Recognizing the signs of burnout, Alex’s organization takes proactive measures to address the issue. They understand that employee well-being is crucial for maintaining a healthy and productive workforce. To promote a healthy work-life balance, the organization encourages employees to take regular breaks and prioritize self-care. They emphasize the importance of disconnecting from work during non-working hours and encourage employees to engage in activities that promote relaxation and rejuvenation.

Additionally, the organization provides access to mental health support services, such as counseling or therapy sessions. They recognize that stress and burnout can have a significant impact on an individual’s mental well-being and offer resources to help employees manage their stress effectively. By destigmatizing mental health and providing confidential support, the organization creates an environment where employees feel comfortable seeking help when needed.

Furthermore, the organization fosters a supportive work culture by promoting open communication and empathy. They encourage managers and colleagues to check in with each other regularly, offering support and understanding. Team members are encouraged to collaborate and share the workload, ensuring that no one person is overwhelmed with excessive responsibilities.

By implementing these strategies, Alex’s organization aims to alleviate workplace stress and prevent burnout. They understand that a healthy and balanced workforce is more likely to be engaged, productive, and satisfied. Through a combination of promoting work-life balance, providing mental health support, and fostering a supportive work culture, organizations can effectively address workplace stress and create an environment conducive to employee well-being.

Practical Solutions to Workplace Problems

Now that we have explored real scenarios, let’s discuss practical solutions that organizations can implement to address workplace problems. By adopting proactive strategies and establishing effective policies, organizations can create a positive work environment conducive to problem-solving and productivity.

Implementing Effective Policies for Problem Resolution

Organizations should have clear and well-defined policies in place to address workplace problems. These policies should outline procedures for conflict resolution, channels for reporting problems, and accountability measures. By ensuring that employees are aware of these policies and have easy access to them, organizations can facilitate problem-solving and prevent issues from escalating.

Promoting a Positive Workplace Culture

A positive workplace culture is vital for problem-solving. By fostering an environment of respect, collaboration, and open communication, organizations can create a space where individuals feel empowered to address and solve problems. Encouraging teamwork, recognizing and appreciating employees’ contributions, and promoting a healthy work-life balance are all ways to cultivate a positive workplace culture.

The Role of Leadership in Problem Solving

Leadership plays a crucial role in facilitating effective problem-solving within organizations. Different leadership styles can impact how problems are approached and resolved.

Leadership Styles and Their Impact on Problem-Solving

Leaders who adopt an autocratic leadership style may make decisions independently, potentially leaving their team members feeling excluded and undervalued. On the other hand, leaders who adopt a democratic leadership style involve their team members in the problem-solving process, fostering a sense of ownership and empowerment. By encouraging employee participation, organizations can leverage the diverse perspectives and expertise of their workforce to find innovative solutions to workplace problems.

Encouraging Employee Participation in Problem Solving

To harness the collective problem-solving abilities of an organization, it is crucial to encourage employee participation. Leaders can create opportunities for employees to contribute their ideas and perspectives through brainstorming sessions, team meetings, and collaborative projects. By valuing employee input and involving them in decision-making processes, organizations can foster a culture of inclusivity and drive innovative problem-solving efforts.

In today’s dynamic work environment, workplace problems are unavoidable. However, by understanding common workplace problems, developing essential problem-solving skills, and implementing practical solutions, individuals and organizations can navigate these challenges effectively. By fostering a positive work culture, implementing effective policies, and encouraging employee participation, organizations can create an environment conducive to problem-solving and productivity. With proactive problem-solving strategies in place, organizations can thrive and overcome obstacles, ensuring long-term success and growth.

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16 Biggest Accounting Challenges and Solutions in 2024

Amid concerns about inflation, rising interest rates and potential looming recession, finance leaders are winding down 2023 with cautious and measured optimism for business growth. This mixed outlook presents ongoing challenges and opportunities. Preparation, as always, is key if businesses are to excel. Here’s what finance and accounting teams need to be on top of as we head toward 2024.

16 Accounting Challenges and Their Solutions

Accounting teams that leverage technology are better able to adapt to changes and challenges, like some of the unexpected supply chain interruptions and fluctuating revenue trends seen in the past few years and so far during 2023. So what are the biggest challenges facing accountants today? Cash flow, hiring new talent, adapting to new tax and regulatory changes and continuing to adjust to remote work remain some of the most common hurdles for accounting teams.

Often when there is economic hardship or signs that one is pending, companies move quickly to ramp up liquidity by implementing cost containment, and deferring planned investments. After a period of significant investments in technology and equipment in early 2023, some businesses are beginning to pull back and refocus on improving cash flow in 2024 due to softening consumer spending.

Improving the efficiency of accounts receivable and accounts payable processes will be vital to ensuring steady cash flow. Keep an eye on metrics like expenses, past-due invoices and operating cash flow. Generating and tracking cash reports daily can help you plan for the future because you’ll see changes or fluctuations you can use to inform other decisions. In addition, get everyone in the company thinking in terms of cash flow. Management and consulting firm McKinsey & Company says that boardrooms have shifted their focus from earnings before interest and taxes (EBIT) to cash – and that has translated into responsibility for cash management at all levels of the business.

Financial Reporting for Regulatory Changes & New Accounting Standards

Managing financial disclosures continues to be a concern for companies of all sizes, especially in combination with staff shortages (see #3). For example, even though the public health emergency has ended, finance leaders are concerned about complying with reporting requirements from COVID-19-related government stimulus programs and ensuring proper documentation, recording and reporting for audits. Several new standards, amendments and changes in U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) came on board for 2023 reporting (to be completed in 2024), such as for leases, insurance contracts, tax assets and even basic disclosures about materiality and estimates. Additionally, changes that increase reporting and disclosure requirements for environmental, social and governance (ESG) and cybersecurity are challenging accounting teams , so they need to be even more mindful of the shifting regulatory landscape.

Hiring and Retaining Talent

Hiring is a continuing challenge for accounting and finance roles and is expected to become an even greater challenge. In fact, it is the No. 1 concern among CEOs, CFOs and controllers surveyed by the American Institute of Certified Public Accountants (AICPA) and Chartered Institute of Management Accountants (CIMA). Increased educational requirements, prioritizing work/life balance and a wave of retirements have caused a shortage of accountants, especially CPAs. Technology, healthcare, property management and financial services industries have an especially high demand for positions that keep cash accounts strong, such as billing, accounts receivable and collections.

Retaining top employees as competition intensifies is a key challenge. Some 8 in 10 finance and accounting managers are concerned about keeping valued employees. Two key areas of concern are low morale (see #11) and high rates of burnout because of heavy workloads – the latter being a somewhat perennial issue for accountants. Taking steps to ensure that key employee retention strategies apply to the accounting and finance department – such as continued education and training – is one place to start boosting morale. Helping accountants develop the technical and soft skills to better apply their domain knowledge to business strategy as more transactional tasks are automated will be crucial to retention in 2024 and beyond. In addition, some expect that compensation may need to be reevaluated as a motivating factor.

Automation and Artificial Intelligence

Artificial intelligence (AI) is a work in progress that accountants are watching very carefully as a potential tool for shifting their workloads and gaining efficiency. It’s a developing situation that has come a long way since 2020, when only 2% of large firms had implemented machine learning or AI. AI implementations are being tested to address labor shortages, automate labor-intensive tasks and deliver more insightful data.

As more transactional work becomes automated, accountants will need to develop different skills to apply their expertise to information and data generated from new technology and play a role in more of the business strategy. Cloud-based accounting software, budgeting, forecasting, data analytics and visualization tools are building some of the foundations for automation in accounting.

As automation increases, boosting existing skills and expertise to leverage the outputs of technology will benefit employees and your business. Focus on upskilling and learning more about cloud-based payroll and human resource information systems, enterprise resource planning (ERP) systems, data analytics and financial modeling and forecasting. In addition to technical skills, other beneficial so-called soft skills in demand will be the ability to work independently and in virtual teams, attention to detail, being comfortable with change, creativity, a desire for continual learning and written and verbal communication skills. Offering continuing education and training also has the added benefit of boosting employee morale and retention. Companies ranked highly on employee training see 53% lower attrition rates than those ranked lower.

Tax Law Changes

Applying changes in tax laws is a perennial concern for accounting teams, especially because effectively navigating the tax law changes can help you have more funds available to weather other business challenges ahead. Digitized, accurate and easy-to-access records with accounting software will make a complex tax year more manageable.

Key tax changes come from the Inflation Reduction Act, which includes a new alternative minimum tax for corporations and renewable energy credits. Additionally, accounting teams will need to watch several bills pending in Congress that aim to extend provisions of the Tax Cut and Jobs Act – specifically tax breaks for small businesses.

Expense Management

As a result of the mixed economic outlook, CFOs and their accounting teams are under pressure to deliver increased efficiency and tightly manage expenses. This means increased expense analysis for large costs, such as reducing the costs of goods sold to eke out a few more points of gross profit margin. Tighter control over smaller expenses can also add up, such as trimming travel expenses, as well as the challenges that come with remote workforces.

Updating expense policies together with stricter enforcement and lowering allowable limits are on the forefront of CFOs’ minds. Taking control of expenses likely includes checking internal controls and consider further automating the expense management process with software to increase visibility, discourage fraudulent expenses and automatically flag questionable ones.

Payroll Management

New payroll challenges from changing laws and regulations at federal and state levels are on the horizon. And managing withholdings for employees in different locations has become a significant hurdle for payroll managers. Remote work has made the management of state income taxes challenging because of the complexity of determining primary work location. Violations can trigger audits and result in costly tax penalties.

If you haven’t already, consider automating your payroll processes. Cloud-based payroll platforms help with the calculation of earnings, deductions, company contributions, taxes and paid time off, while providing support for multiple jurisdictions when it comes to taxes, forms, direct deposit and more.

Cybersecurity

It takes 204 days, on average, to identify and contain a data breach, and the average cost is $4.45 million – a 15.3% increase over $3.86 million in 2020. Because the effect on business is so significant, the Securities and Exchange Commission (SEC) issued new rules for reporting cyber incidents, beginning in December 2023 for most public companies. The new rules require disclosure of material cyber incidents within four days of identification, using an SEC Form 8-K – a significant challenge for accountants and their IT partners. The new rule also adds several additional requirements to a company’s annual SEC Form 10-K, including cybersecurity risk management, strategy and governance.

Accounting teams are well-suited to be evangelists of cybersecurity companywide — they’re already schooled in robust internal controls, access and permissions required of their roles. With these new regulations, they will also need to be knowledgeable partners with IT staff. Outdated software can increase the success rate for malware and ransomware, so make sure all systems are up to date.

Remote Work

Like many other industries, one of the top accounting trends is a desire for more flexible and remote work. More than 63% of accounting professionals looking to change jobs desire at least a hybrid position, if not fully remote. But remote work brings challenges to accounting and finance teams – who for decades have done tasks such as month-end close by means of long nights in the office. Remote work also exacerbates the risk of cyberattacks – with IBM finding that 70% of companies that have adopted telework during the pandemic saying they expect it will increase data breach costs.

Focus on making established financial controls work with a dispersed workforce. Use a classic risk assessment framework to determine which controls may open the company to risk.

Remote workforces aren’t expected to go away anytime soon, and it is even seen as a way to attract talent from afar. For most businesses, cloud-based accounting software lends obvious advantages in supporting remote accounting teams. And the technology frequently outperforms VPNs with access to premises-based software.

It’s no wonder that burnout is a common problem for those working in finance and accounting. Between juggling responsibilities, heavy workloads and a constantly shifting regulatory landscape, accounting and finance departments can easily be plagued with low morale. Another common concern is being understaffed — on average, businesses with less than $25 million in revenue employed just three people in finance roles. And even for businesses with annual revenue between $100 million and $499 million, that number is only 13 people employed in finance roles.

How can you raise morale among your accounting team? Find ways to formally recognize individual contributions on a regular basis, especially at the manager level. Managers have an enormous impact on their employees’ morale. Keep lines of communication open between your accounting and leadership teams. Listen to their input not just on financial matters, but strategic decisions as well. Give them the tools they need to collaborate, especially for hybrid teams. And automate tedious parts of their work to free up time.

Accurate Financial Forecasts

A mixed economic outlook and market volatility make accurate financial forecasting more difficult, yet more critical. Business leaders should engage in scenario planning and reexamine forecasts for sales, expenses and cash. Test and retest assumptions, model cash flow, burn rate and liquidity under multiple scenarios.

One of the top accounting tips for small businesses and startups is to use financial statements to evaluate and predict business performance. Because so much is changing so quickly, access to real-time analytics is key. That’s what will make the difference in building financial models that factor in historical trends, current conditions and best, worst and most likely scenarios.

Keeping Up With New Technology and Tools

Aside from a shifting regulatory environment and tax laws, keeping up with evolving technology can be a burden. There’s a reason skills around cloud-based accounting software are some of the most in-demand for accountants and finance professionals. Research firm Gartner recently said that by 2024, more than 45% of IT spending will shift to cloud-based technologies; in many instances that will include financial and accounting software.

The latest innovations around real-time analytics, robotic process automation (RPA) and AI will depend on having a sound, reliable, clean data infrastructure. But many companies are working with legacy, on-premises accounting systems that are outdated. Financial reporting, cash management, accounts payable and month-end closing processes are all being impacted by technology and will continue to be key components of automation and cloud-based accounting software in the near future.

Is accounting a challenging career? Absolutely. But there are also exciting new opportunities opening as more transactional tasks become automated, freeing up time for accounting professionals to turn their attention to more analytical duties — and innovation in the accounting software is abundant.

For example, consider the opportunities AI innovation can bring to the accounting industry. Some question whether AI can take the place of accountants, as evidenced by its recent passing of the CPA exam , creating a host of both practical and ethical issues. Should accountants be scared by this innovation or embrace it? Current thinking is that AI can’t pass for an accounting expert, but it can be a useful tool that can level up the experience of human accountants. For example, AI might be helpful for remembering facts (such as tax code), understanding instructional material (such as GAAP guidance) and even applying information to a situation (such as lease rules). But where it currently is inconsistently effective, according to a recent AICPA panel that tested AI in various areas of accounting, is analyzing relationships, making judgments and creativity. Most human accountants might welcome the opportunity to spend more time focused on higher-level tasks.

Globalization

As businesses continue to increase in size and complexity across the world, accounting departments will need to accommodate more and more international standards and regulations. As technology has made this easier, accountants find themselves needing to contend with rules and norms prevalent in both their country of origin and the markets they work in. Local economic instability, cybersecurity standards, and tax law changes across these countries will require adaptable accounting teams and technology that eases the challenges.

Economic instability

Implementing and continuing to enhance cloud-based accounting systems is the first step toward tackling many of the challenges 2024 will present. Top-of-the-line enterprise resource planning software integrates finance and accounting with other business software modules, such as supply chain, warehouse and order management. With a reliable source of data and increased automation of time-consuming and error-prone tasks, the accounting team has more time and better data to weigh in on the strategic decisions and even become a key partner in guiding the business strategy.

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Businesses may not have control over the economy, but with the right software, they can assume a leading role in managing their finances. NetSuite Cloud Accounting Software streamlines businesses’ often siloed financial data into a centralized platform, eliminating the need for employees to manually input and cross-post information. Repetitive, time-consuming (yet essential) accounting tasks — including recording transactions, account reconciliation, managing accounts payable and receivable, tracking income and expenses, and reporting — can all be automated, in real time and in compliance with accounting regulations. This ultimately saves businesses time, cuts operational expenses while boosting productivity, accelerates the financial close and enhances the precision of financial reporting.

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7 Examples of Problem-Solving Scenarios in the Workplace (With Solutions)

What is problem-solving anyway, problem-solving scenario #1: tight deadlines and heavy workload.

• Problem-solving Scenario #2: Handling a Product Launch

Problem-solving Scenario #3: Internal Conflicts in the Team

Problem-solving scenario #4: team not meeting targets, problem-solving scenario #5: team facing high turnover, problem-solving scenario #6: team member facing discrimination, problem-solving scenario #7: new manager unable to motivate a team, building an effective problem-solving framework, wrapping up, frequently asked questions for managers.

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Problem-Solving Scenarios for Managers

• Talk to the team members: John begins by asking what’s holding them back. Based on their responses, he realizes that he needs to delegate better. Immediately, John schedules meetings to  clarify each member’s expectations , priorities, and roles and ensure everyone is on the same page. He also makes a note to work on his delegation skills.
• Plan things: John creates a project timeline or task list that outlines the deadlines and deliverables for each team member and shares this with the team to ensure that everyone is aware of what is expected of them.
• Support the team: The team sits together to establish regular check-ins or progress updates to ensure members can ask questions or raise concerns.

Problem-solving Scenario # 2 : Handling a Product Launch

• Review and redraw plans:  Emily revisited the project plan and identified areas where the team could reduce the scope or prioritize features to meet the budget constraints.
• Go for alternatives:  The team then explored alternative resources or suppliers to find cost-effective options. Are there any underutilized resources, equipment, or personnel from other projects or departments that can be temporarily assigned to this project? Moreover, they revisited their suppliers and negotiated further.
• Outsourcing parts of the project:  Emily considered outsourcing some project functions to external contractors or freelancers. Eventually, they outsourced the marketing to another team and continued working on the core features.
• Upgrade the available capacity:  Emily and her team invested in upskilling the present workforce with additional skills. It allowed some team members to explore exciting areas and supplemented the team.
• Get both sides onboard: Taylor begins the conflict resolution process by talking to both team members. She recognizes the issue and first goes into individual discussions with both. Later, she sets up a meeting for both to share their perspectives.
• Mediation:  In the next step, the manager encourages the two team members to talk to each other and resolve the conflict independently. Taylor describes how the optimal contribution can look different for different team members. Additionally, she encourages them to be more open and collaborative so that they understand what the other one does.
• Preventing mistakes again:  The team holds a meeting to discuss the issue and allow other team members to express their thoughts and feelings. By not hiding the problem that happened in front of everyone, Taylor acknowledges the issues and shows that she cares about the things happening inside the team. Further, by discussing and sharing, they can build a healthy relationship to prevent similar issues in the future. 
• Use formal tools: Lastly, they establish clear guidelines and expectations for behavior and communication within the team to prevent future conflicts. Training and coaching are also added to help team members improve their communication and conflict-resolution skills.
• Discussions with the Sales Representatives: Donna starts by having one-on-one conversations with each team member to understand their perspectives on why the targets are not being met. After gathering insights from personal discussions, Donna calls for a team meeting. During the session, she allows team members to share their experiences, challenges, and suggestions openly. 
• Analysis of Sales Process: Donna conducts a detailed sales process analysis, from lead generation to closing deals. She identifies bottlenecks and areas where the team might be facing difficulties. This analysis helps her pinpoint specific stages that need improvement. 
• Setting Realistic Targets: Donna understands that overly ambitious targets might be demotivating. She collaborates with her team to develop more achievable yet challenging sales targets based on their current performance and market conditions. She organizes training sessions and workshops to help team members develop the necessary skills and knowledge to excel. 
• Recognition and Incentives: Donna introduces a recognition program and incentives for meeting and exceeding targets to motivate the team. This helps boost morale and encourages healthy competition within the team. She closely monitors the team’s progress toward the revised targets. 
• Conduct Exit Interviews:  As the stream of resignation continues, Neil adopts a realistic approach and starts by attempting to understand the issues his former team members face. He conducts exit interviews with the people leaving and tries to determine what’s wrong. 
• Understand the current team:  In the next step, Neil tries to learn the perspectives of staying people. Through surveys and conversations, he lists the good parts of working in his team and emphasizes them. He also finds the challenges and works on reducing them. 
• Change and adapt to employee needs:  These conversations help Neil enable a better work environment to help him contain turnover and attract top talent. Moving forward, he ensures that pay is competitive and work is aligned with the employee’s goals. He also involves stakeholders to create development and growth opportunities for his team.
• Be approachable and open: Erica first ensures she can gather all the details from the team members. She provides them with a safe space and comfort to express their concern and ensures that action will be taken. She supports the targeted team members, such as access to counselling or other resources.
• Adopt and follow an official policy: Developing and enforcing anti-discrimination policies that clearly state the organization’s commitment to diversity and inclusion is the first step to creating a safe workplace. Erica refers to the policy and takes immediate action accordingly, including a thorough investigation.
• Reiterating commitment and goals: Providing diversity and inclusion training to all team members to help them understand the impact of discrimination and how to prevent it is essential to create a safe workplace. Erica ensures that the team members are aware of the provisions, the DEI goals set by the organization, and 
• Connect with the team: Andrew starts by conducting one-on-one meetings with team members to understand their personal and professional goals, challenges, and strengths. Observing team dynamics and identifying any issues or obstacles hindering motivation and productivity also helps.
• Involving team members in the process: Seeking feedback from team members on what motivates them and what they want to see from their manager to feel more inspired.
• Enabling and empowering: Offering opportunities for growth and development, such as training, mentoring, or leadership roles, helped Andrew contribute to his team’s development. 
• Take help from Merlin: Andrew reached out to Merlin, the AI chatbot of Risely, to get tips whenever he got stuck. Merlin sought details about his issues and shared some tips to help out Andrew. Here is what it looked like: 

• Develop a problem-solving process: To get problem-solving right for multiple scenarios repeatedly, the key is to remember and set a problem-solving approach that works across the board. A wide-ranged problem-solving process that begins with identification and concludes at the resolution helps managers navigate various challenges the profession throws us. 
• Learn to identify problems: The key to solving problems is placing them at the right moment. If you let some problems pester for long, they can become more significant issues for the teams. Hence, building the understanding to identify issues is essential for managers.
• Think from multiple perspectives: As a problem-solver, you must care for various parties and stakeholders. Thus, thinking from numerous perspectives and considering ideas from a broad spectrum of people is a core skill. 
• Consistently work on skills: Like other managerial skills, problem-solving skills need constant practice and review. Over time, your skills can become more robust with the help of assessments and toolkits. Tools like Risely can help you with resources and constant guidance to overcome managerial challenges. Check out Risely today to start reaching your true potential.

Suprabha Sharma

Suprabha, a versatile professional who blends expertise in human resources and psychology, bridges the divide between people management and personal growth with her novel perspectives at Risely. Her experience as a human resource professional has empowered her to visualize practical solutions for frequent managerial challenges that form the pivot of her writings.

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Top 50 Accountant Interview Questions and Answers (Examples Included)

Mike Simpson 0 Comments

By Mike Simpson

Updated 6/11/2022.

When you’re trying to land a new accounting position, the accounting interview questions you’ll face can be doozies. While you’re going to see some classic ones – like the infamous “ Tell me about yourself ” – you’re also going to have to tackle some surprising ones.

Luckily, preparing for the unexpected isn’t as challenging as you’d think. If you want to bend those accounting interview questions to your will, here’s how to make that happen.

How to Answer Accounting Interview Questions

Before we dig into the actual accountant interview questions you’ll tee off against, let’s spend a moment on something that’s equally important. You need to know how to answer these questions properly, particularly because you could face stiff competition.

Overall, there are 1.32 million people working in accounting jobs in the US, so at least a few of the other candidates likely have strong skills. So, how do you make sure you get these questions right? By embracing a winning strategy.

To begin, consider what the hiring manager is trying to find. Trust us; they have a perfect candidate in mind. What you need to do is position yourself as close to that ideal as possible while ensuring you remain genuine and honest.

While every accounting role can be a bit different, much of what the hiring managers want to find is the same. They are looking for critical thinkers with superior math skills and strong communicators with prior experience using key pieces of software. Candidates with time management and organizational skills are always going to be favored, as well as those who can work well as part of a team but also handle their responsibilities independently. Having an understanding of relevant laws and regulations is also critical.

IMPORTANT: These are skills and qualities that are usually desirable in an accountant. But as we often discuss on this blog, you need to find out what skills and qualities your specific company/firm is looking for. The best way to do this is by going over your accountant job description with a fine-tooth comb.

Now that you have a solid idea of what the hiring manager is looking for, you have to find a way to convey those details during your interview. Plus, you have to find opportunities that let you stand out from the competition, particularly since most will have credentials similar to yours.

Usually, behavioral interview questions are where you’ll have a chance to shine. But these frequently seem like the trickiest ones to answer. You have to discuss your past experience or how you think you’d act if you encountered various scenarios. Technically, there is no right or wrong answer. However, that doesn’t mean some responses aren’t better than others.

Nailing behavioral interview questions typically requires a two-step approach. First, it’s time for the STAR method . With that approach, you can turn your interview answers into compelling stories, making them tons more engaging than your typical response.

But you can’t stop there. If you want your response to stand out like the north star in the sky, take it up a notch with the Tailoring Method . With that, you can personalize your answers and speak to the company’s or hiring manager’s needs. You are highlighting your capabilities in a way that brings them value, and that’s critical if you want to make a genuine connection.

In fact we we wanted to let you know that we created an amazing free cheat sheet that will give you word-for-word answers for some of the toughest interview questions you are going to face in your upcoming interview. After all, hiring managers will often ask you more generalized interview questions!

Click below to get your free PDF now:

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Top 3 Accounting Interview Questions

Now that you have a strategy to answer accounting interview questions, you might be feeling pretty pumped. Having a great approach feels good, no doubt about it. But that doesn’t mean a few examples won’t help.

Here are the top 3 accounting interview questions you’ll probably face and tips for answering them.

1. How do you track incoming accounting legislation and regulatory changes?

Laws and regulations that impact the accounting world change surprisingly often. With this question, the hiring manager is trying to ensure that you do your part to stay up-to-date on the latest happenings.

EXAMPLE ANSWER:

“I’ve found that using a multi-faceted approach allows me to track upcoming accounting legislation and regulatory changes effectively. First, I subscribe to several industry publications and am also a member of a professional organization that sends out newsletters regarding these topics. Second, I follow thought leaders, publications, and specific regulatory bodies on social media, all of which help me stay informed.

“Finally, I created Google Alerts that include keywords relating to these topics. That way, I receive a notification when an article is posted that aligns with the criteria, helping me catch breaking news stories quickly.”

2. How would you explain a complex accounting concept to someone who isn’t as familiar with the field or the terminology?

In many cases, accounting professionals need to convey complex concepts to stakeholders that don’t work in accounting. As a result, the hiring manager wants to know that you can do so effectively.

“Generally, I find the best approach is to use analogies if a term isn’t widely used outside of the world of accounting. I try to relate it to a topic that may feel familiar to them. For example, I may describe a ledger as a record-keeping system that’s not unlike a database, as most people are familiar with databases, at least conceptually.

“For topics that don’t translate well into other areas of expertise, I may also use examples. In my past role, I created samples of many common forms and reports that featured descriptions and definitions for various terms. That allowed me to provide handouts to those who could benefit from the information.”

3. Errors can be detrimental in accounting. How do you reduce the chance that you’ll make a mistake?

As the question suggests, making mistakes in an accounting role leads to trouble. Here, the hiring manager wants to know that you are diligent about avoiding mistakes and can check your own work with ease.

“I use a multi-step approach to help reduce my chances of making an error when inputting financial information. First, I always double-check any entries. Usually, that only takes a moment, and it allows me to catch the vast majority of typos before I complete the given task.

“Second, many accounting solutions have built-in checks that I make sure to take advantage of when there’s an opportunity. Finally, I always review any outputs caused by the information I added, as incorrect numbers may lead to calculation results that are clearly incorrect, signaling to me that there’s a mistake I need to address immediately.”

47 More Accountant Interview Questions

Here are 47 more interview questions for accountants you’ll likely cross paths with:

• How would you define the role of an accountant?
• Which skills do you think are essential for accountants?
• What accounting software solutions are you familiar with?
• Can you describe an accounting process that you helped develop or improve?
• Tell me about a time you were able to reduce the cost of a critical process or procedure?
• Can you tell me about a time when you had to work with a particularly difficult client? How did you handle the situation?
• Describe a past experience where you were faced with an incredibly tight deadline. What did you do to make sure you could hand over the deliverable on time?
• Tell me about a time when you had to discuss a complex accounting concept with someone who wasn’t familiar with it. How did you make sure they understood?
• Please define and describe the three kinds of financial statements and what they contain.
• If you spot an error in another accounting professional’s work, what do you do?
• Can you tell me about a time when you made a mistake? What did you do once it was spotted?
• What is the difference between public and private accounting?
• What impact do you think AI and automation will have on accounting?
• Do you have prior experience with ERP systems? If so, which ones?
• Describe one of the biggest challenges in the accounting field and how you strive to overcome it.
• Please describe your experience with Microsoft Excel.
• Why did you choose accounting as a career?
• What is the difference between accounts payable and accounts receivable?
• Do you have any certifications? Do you plan to get any in the near future?
• When tax season arrives, are you open to working long hours?
• Which accounting skill do you like using the most? What about the least?
• Describe your experience with developing business metrics.
• Can you tell me about a time you and another accountant did not see eye to eye? How did you handle the situation?
• In your previous positions, what processes have you used to estimate bad debt?
• Describe your auditing and fraud analysis experience.
• What are two types of special journals?
• With double-ledger accounting, what ledger elements need to be equal?
• What is the minimum number of ledgers a company needs if it has four bank accounts for payment processing?
• Why is fraud easier to perpetrate with journal entries instead of ledgers?
• What role do you think blockchain will play in the future of the accounting field?
• Why is compliance vital in accounting?
• Describe your business metrics monitoring experience.
• How does a major equipment purchase impact a company’s financial statements?
• How can accounting professionals benefit from big data knowledge?
• Describe the difference between accounting and auditing.
• How do you determine the reliability of accounting information that’s given to you by an outside party?
• How do you stay on top of emerging trends in accounting?
• Do you believe you work best when you’re on-site, or is remote work a better fit?
• What attracted you to this firm?
• Did you learn anything unexpected while studying accounting in college?
• If you weren’t working in accounting, what field would you pursue instead?
• What about accounting do you enjoy most?
• Do you dislike anything about accounting?
• If you saw a colleague intentionally alter a client’s books to reflect inaccurate information, what would you do?
• What kind of management style helps you stay motivated?
• Which do you prefer, formal training or a mentor/mentee approach to learning?
• If you had a chance to acquire any accounting skill that you don’t currently have, what would it be and why?

5 Good Questions to Ask at the End of an Accounting Interview

As your interview begins to draw to a close, you should get a chance to ask the hiring manager a few questions. Make sure you are ready for this. It’s a great opportunity to learn more about the job and if it’s actually right for you.

Plus, as Indeed puts it, “Having your questions prepared shows the interviewer that you researched the company and the position.” That makes you seem more enthusiastic about the role, and that matters.

If you can’t figure out what to ask, here are some questions that can work in most situations.

• Can you describe a typical day in this accounting role?
• How will this accounting job change over the next 12 months? What about three years?
• What trait do you think is essential for those who want to succeed in this accounting role?
• Are there any major accounting projects on the horizon?
• How many accounts/clients will this role support?

Putting It All Together

Ultimately, landing an accountant interview is exciting, but it’s also okay to be a bit nervous about what’s to come. A new job usually means taking a step forward in your career, and that can be a lot of pressure, particularly with the types of interview questions for an accountant you’ll usually face.

But, by making use of the tips above and reviewing the accounting interview questions, you can be ready. You’ll have a strategy that showcases you as an amazing candidate, allowing you to demonstrate to the hiring manager why you’ll be a great addition to their team.

FREE : Job Interview Questions & Answers PDF Cheat Sheet!

Download our " Job Interview Questions & Answers PDF Cheat Sheet " that gives you word-for-word sample answers to some of the most common interview questions including:

• What Is Your Greatest Weakness?
• What Is Your Greatest Strength?
• Tell Me About Yourself
• Why Should We Hire You?

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Co-Founder and CEO of TheInterviewGuys.com. Mike is a job interview and career expert and the head writer at TheInterviewGuys.com.

His advice and insights have been shared and featured by publications such as Forbes , Entrepreneur , CNBC and more as well as educational institutions such as the University of Michigan , Penn State , Northeastern and others.

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Co-Founder and CEO of TheInterviewGuys.com. Mike is a job interview and career expert and the head writer at TheInterviewGuys.com. His advice and insights have been shared and featured by publications such as Forbes , Entrepreneur , CNBC and more as well as educational institutions such as the University of Michigan , Penn State , Northeastern and others. Learn more about The Interview Guys on our About Us page .

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Accounting Equation Problems and Solutions with Examples

What is the Accounting Equation?

The Accounting Equation is based on the double entry accounting, which says that every transaction has two aspects, debit and credit, and for every debit there is equal and opposite credit. It helps to prepare a balance sheet, so it is also called the Balance Sheet Equation.

Accounting Equation Formula

We already know what the words “Asset” and “Liability” mean from the previous lesson. Let’s quickly define this new term, “Owners Equity”.

What is Owner’s Equity?

We can define Owners Equity as “the amount of money that you (the owner) have invested in the business.”

Whenever you contribute any personal assets to your business your owner’s equity will increase. These contributions can be any asset, such as cash, vehicles or equipment. For example, if you put your car worth $5,000 into the business, your owner’s equity will increase by $5,000. If you invest $10,000 of your savings into the business, your owner’s equity will increase by $10,000.

Likewise, if you take money out of business, your owner’s equity will decrease. For example, you go into your store and take $100 from the cashier to buy yourself a shirt. Because you are taking $100 out of business, your owner’s equity will decrease by $100.

Let’s see if you can identify which of the following transactions will result in a change in owner’s equity:

Problems and Solutions: For each of these transactions we could simply have a “yes” and “no” button. I’ll write the correct answer below for you to code.

Transaction 1:

You invest $1,000 of your personal savings into the business.

Change in owner’s equity?

Incorrect Correct

In this scenario you are investing your own personal funds into the business. Any personal investment will increase your owner’s equity.

Transaction 2:

Your new oven breaks. You hire a repairman $50 to fix it.

Correct Incorrect

Again, you are introducing a personal asset into your business and using it as a business asset. Any investment of personal assets will increase your owner’s equity.

Transaction 3:

You purchase a computer for the business using the business bank account.

You are not making any personal investment here. You are using business funds to purchase a business asset. Therefore there was no new investment by you. Your owner’s equity will remain unchanged.

How does the Accounting Equation Works?

Every single transaction that occurs in your bakery will be recorded using the accounting equation .

Before we go any further, there are three very important things to remember about the equation:

• The left side is referred to as “The Debit Side”
• The right side is referred to as “The Credit Side”
• The equation must always be in balance.

The two sides of the equation:

The Debit Side: The left side of the equation is known as the debit side. As you can see, the left side of the equation consists of Assets.

The Credit Side: The right side of the equation is known as the credit side. As you can see, the right side of the equation consists of Liabilities and Owners Equity.

Remember, the equation must ALWAYS balance.

Note : Throughout this lesson, you will also notice that we refer to different “accounts”. An account can be thought of as a collection of related entries. For example, every entry that relates to our loan will be recorded in the “loan account”. Every transaction that relates to our oven will be recorded in the “oven account”. It Might be part of the reason this subject is called “ accounting ”!

Examples of the Accounting Equation

Let’s look at some examples to see the accounting/bookkeeping equation in action.

Transaction 1

After making cupcakes in your Grandma’s kitchen your whole life, you decide to open a bakery. You use your $10,000 in savings to start your business.

Now let’s look at how this fits into the accounting equation.

Accounts affected:

You have just put $10,000 into the bank, which is an asset. This goes on the debit side. Now that the debit side has gone up, we need to balance this with $10,000 on our credit side.

We know that our $10,000 investment represents an increase in owner’s equity, and owner’s equity will go on the credit side.

With these two entries, the equation is now balanced.

Let’s fit this into the accounting equation.

We started off with $0 = $0 + $0. Doesn’t get much easier than that!

Now it’s changed a little.

As you can see, we have +$10,000 on the left side (the debit side), and we have +$10,000 on the right side (the credit side). Because both sides went up by $10,000, we’re still in the balance. Phew!

Still don’t get it? Don’t worry, it’ll click soon enough. Let’s look at another example.

Transaction 2

You need an iPhone to take delivery calls from all your crazy customers. You buy one off eBay for $500.

Remember in the first example we put money into the bank? Well, this time we’ll be using the bank again, only now we’ll be spending money. That means our bank account, an asset, is going to decrease .

Now that we know the Debit side has decreased, we need to record the second side of the transaction that will keep the equation in balance.

We’re going to create a new asset account called iPhone, because we need to record the new phone as an asset . Remember, it cost $500, so the two sides of the transaction are:

BANK -$500 (Debit side decrease) iPhone+$500 (Debit side increase)

Our bank caused the debit side to decrease, but then our new phone caused it to increase. That means our debit side had no change in the end, and our equation still balances.

You may be wondering, why didn’t the credit side change in this example like it did in the previous example?

Remember, the credit side is only involved in transactions that relate to liabilities and owner’s equity. In this particular transaction, only assets were involved: we used an asset (bank) to purchase another asset (iPhone).

We saw above that owner’s equity only relates to investments made personally by the owner. In this example, we used the business bank account to purchase a business asset. Therefore the owner was not involved. If we had used the owner’s personal bank account to buy the iPhone, then our owner’s equity on the credit side would have increased.

Still not getting it? Let’s do a few more examples.

Accounting Equation Problems and Solutions

Have a go at working out the two sides of each transaction. Remember, it needs to balance!

Problem: It’s time to go oven shopping, but first, you need some cash. You visit Anne, the loan officer, and she gives you a loan of $10,000.

Drag & Drop the blocks into correct positions in the table

Transaction 4:

Problem: It’s your lucky day. You just won a lottery prize of $5,000. You decide to invest your $5,000 into the business.

Drag & Drop the blocks into correct positions in table

• Owner’s Equity

Transaction 5:

Problem: We don’t want Anne to get angry. You better pay back some of the loans. You decide to pay back $1,000.

Transaction 6:

Problem: You need a computer to start taking internet orders and also to watch funny Youtube videos after work. You purchase a computer for $1,500.

Transaction 7:

Problem: Your oven got stolen! Time to purchase the new Bakemaster X Series! It costs you $2,000

After recording these seven transactions, our accounts now look like this. We have all our assets listed on the debit side and all our liabilities and owner’s equity listed on the credit side.

Take a quick look back and see if you can follow how the numbers have changed.

Still in balance. Perfect!

In case you haven’t figured out how we got to these figures, we’ve broken it down step by step for you below.

Let’s use our Bank account as an example.

Our bank account started at $0. Then the following happened:

As you can see, we added all transactions that related to the bank to arrive at our ending balance of $20,000. This is the same approach we took for all the accounts.

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Top 5 Accounting Problems & Solutions

What causes accounting problems?

So many things can throw your books out of whack, having a ripple effect on your business operations, financial outlook, and even your team. Several red flags lead to confusion and inaccuracies. Your accounting software, fraudulent activities, internal controls, and misapplication of generally accepted accounting principles (GAAP) may be to blame. 

How do businesses solve accounting problems?

Whether you want to plan for the future or solve for the here and now, there are easy ways to get your accounting system in check. These five pain points give businesses migraines, but we’ve got your pain reliever.

1. Revenue Recognition Issues

Sales must be complete to count toward revenue, so poor accounting practices that don’t follow this rule of thumb can leave your books a mess. That’s why improperly applying GAAP revenue recognition standards, creating fraudulent revenue schemes, and using unreasonable estimates can create revenue recognition issues.

Luckily, it’s easy enough to course correct when things turn upside down. When you work with an accounting services partner, they’ll lean on best practices, such as using accounting software to manage recurring billing and verify compliance with Financial Accounting Standards Board (FASB) standards. But your own team should know the basics, so take the time to get schooled on applicable standards to comply with GAAP revenue recognition. 

2. Payroll Errors

If you’re calculating your own payroll and payroll taxes—or are trying to account for maintaining a remote workforce—you may have an uphill accounting battle. Unless you have a pro accountant working with you, this could mean more errors and problems complying with tax regulations.

But your team needs to get paid appropriately, so how can you guarantee they will? Outsource your payroll to an accounting services partner that will use cloud-based payroll software to calculate all the important figures, including:

Company contributions

Taxes 

Paid time off

Of course, you can’t forget to pay the piper either. Your partner can also go the extra mile to provide support for multiple jurisdictions and their unique tax laws.

3. Incorrect Cash Flow Statements

Without the right strategies at work, your cash flow statements could become more of a mess than the helpful tools they’re supposed to be. Consider a few common issues:

Let’s say your cash flow statements include misclassified operating activities for interest and dividends received and paid. To rectify this, get your accounting team up to speed on FASB changes and best practices for cash flow statement preparation. Don’t have an accounting department? This may open an opportunity to work with professional accounting services. 

Alternatively, your accounts receivable and payable processes could need a facelift to ensure steady cash flow. Get organized and put processes in place to monitor expenses, past-due invoices, and operating cash flow. Use this information in your daily cash reports—you’ll start seeing fluctuations that can inform other decisions.

4. Outdated Accounting Software

Maybe you have accounting software, but it’s behind the times. The wrong tools don’t give you what you need—taking your accounting one step forward and three steps back. Fill in the blank: “My accounting software ... ___________ .”

❌ Is inefficient

❌ Lacks real-time capabilities

❌ Requires manual data entry

Solve your problems by shifting to the cloud. With it, you can clean up the big, hairy, on-premise software infrastructure that comes with legacy software. On top of this, cloud accounting software helps your accounting services team with daily operations , such as:

Regulatory compliance 

Subscription billing 

Forecasting

Revenue recognition 

Data visualization 

Financial reporting

Accounts payable 

Month-end close processes

No one wants to think the worst of their own team, but the fact is there has been an uptick in fraud. Case in point: Fraud activity increased 57 percent between Q2 and Q3 in 2020. The good thing is that fraud and embezzlement often happen because companies just have poor internal controls—something that’s easy to fix with the right accounting services and tools. 

Snuff out fraud by using accounting software to uncover fraudulent expenses. With it, you can flag questionable expenses, sort between intentional fraud and errors such as duplicate payments, and even discourage fraudulent behavior. Your accounting partner can take things a step further by performing a budget versus actual analysis , following up on significant differences, and validating vendors before paying them. 

Make any mess manageable.

Revenue, payroll, cash flow—oh my! Your accounting can take a turn for the worst, but with time-tested solutions, technology, and the right accounting services partner, it’s no sweat. Need help managing your accounting system? Ignite Spot has a track record of success in helping businesses out of the trickiest jams. Explore our services and find the package that’s right for you.

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How to Solve Real-Life Problems of Bank Reconciliations (With Examples)

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Key Takeaways

• Understand the significance of the bank reconciliation process in identifying inconsistencies in day-to-day transactions
• Take a look at a few real-life examples of bank reconciliation statements and the challenges faced by organizations during the reconciliation process, including delays in processing cash and other manual errors
• Learn how you can efficiently leverage artificial intelligence in bank reconciliation to reduce errors and make the process faster and more accurate

Introduction

In the bank reconciliation process, the transactions recorded in the company’s electronic bank statements (EBS) or electronic cash book are compared with its e-passbook or digital passbook cash book are compared with the bank’s passbook to identify any inconsistencies in the day-to-day transactions. In this simple process of tallying the cash book and bank statement, there could be multiple errors. These errors or bank reconciliation problems might differ based on the size of the organization.

In this blog, we will introduce you to some real-life bank reconciliation examples as well as the major roadblocks faced by organizations while reconciling their bank statements .

What Is a Bank Reconciliation Statement?

A bank reconciliation statement is a financial statement that compares a company’s bank account balance with its own accounting records. Its purpose is to identify and reconcile any differences between the two balances. This statement helps ensure accuracy and consistency in financial records.

4 common illustrations of bank reconciliation statements

Before deep diving into the practical examples of bank reconciliation statements, let’s go through a few terminologies which are used in a recurring way while explaining the examples:

1. Cash Book Balance More Than Bank

ABC Corp, has a balance of $2000 as per passbook as on 31st march 2021. However, the balance as per cash book as on 31st march 2021 is  $2210.

Let’s Understand the Transaction Details

• A check of $500 was deposited, but it is not yet processed by the bank.
• Bank charges of $60 were recorded in the passbook, but not in the cash book.
• Checks worth $300 were issued, but not presented.
• Bank interest of $50 was recorded in the passbook, but not in the cash book.

Bank Reconciliation Statement(BRS) Format

2. Cash Book Balance More Than Bank

JPN & Co, has a balance of $20,000 as per passbook as on 31st march 2021.

Let’s Understand the  Transaction Details

• Three checks of $1000, $1500, $1750 were deposited in the bank on 30th December 2021 but were recorded in the bank statement on January 2022.
• A check of $1000 was issued on 31st december 2021, was not processed.
• A dividend of $500 on stocks was credited to the bank account, but not recorded in the cash book.
•  A direct deposit of $600 was made in a bank account by a customer, which was not recorded in the cash book.
• Bank charges of $60 were entered only in the bank passbook.
• Balance as per cash book on 31st december 2021 was $22,210.

Bank Reconciliation Statement (BRS) Format

3. Bank Balance More Than Cash Book

Markson’s & co. has a difference in balance as per cash book and bank statement as on 31st March 2021.

• Balance as per bank statement as on 31st March 2021 is $5000. Balance as per the cash book is $1,650.
• Checks of $2000 and $1000 issued as on 30th March 2021, but not yet cleared.
• Insurance paid by the bank is $200. It is not yet recorded in the cash book.
• An outgoing check of $1000 was recorded twice in the cash book. It is accurately recorded in the bank passbook.
• Payment of a $500 check is recorded twice in the passbook.
• Dividends received $600 recorded only in the bank statement and not in the cash book.
• A check of $500 was deposited on 29th March 2021, but it is not collected.
• Bank charges of $50 were debited, it is only recorded in the bank passbook.

4. Cash Book Balance More Than Bank

Rutherford Inc. has  a difference in the balance as on 31st March 2021 between the bank statement and cash book.

Let’s Understand the Transaction Details:

Cash Book (March 2021) for Rutherford Inc:

Bank statement (March 2021) for Rutherford Inc:

The balance transactions would appear in the bank reconciliation statement:

Challenges Faced While Preparing Bank Reconciliation Statements

Businesses can gain a variety of advantages from effective reconciliation processes. Without good reconciliation, it is difficult determining which expected payments haven’t been made. In addition to detecting fraud, cash book and bank reconciliation statements allow you to quickly identify any potential disruptions in your cash flow.

Effective bank reconciliation process offers various advantages to businesses. It allows businesses to identify any expected payments that haven’t been made, and detect fraud. Bank reconciliation can also help businesses quickly identify any disruptions in their cash flow.

However, even today, the bank reconciliation process is highly manual in nature. The accountants are responsible for manually comparing the digital passbook and e-cash book to prepare bank reconciliation statements. Additionally, sometimes due to the delay in cash being processed in the bank, there is a difference between the passbook and the cash book. This might lead to multiple errors or inconsistencies in the bank reconciliation statement. Let us explore the various problems in bank reconciliation process and real-life examples of errors in bank reconciliation:

In case of electronic fund transfers such as wire transfers, ACH, and credit card payments, the cash is not immediately reflected in the bank, which leads to a difference in the passbook as compaACH, wire transferred to the cash book.

This is a predominant issue which leads to multiple errors in bank reconciliation statements. If there is a delay in checks getting deposited or being processed, the balance on the passbook would not match the cash book balance.

As discussed earlier, bank reconciliation is a highly manual process. The accountants might enter incorrect transaction details or not add the bank fees or interest details mistakenly. These human errors might lead to problems in the bank reconciliation process and eventually the statement.

Reduce Errors With Bank Reconciliation Solutions

Powered by AI/ML, bank reconciliation software make anomaly detection, variance analysis, and financial close task management easier for analysts. HighRadius’ Account Reconciliation Software accelerates the reconciliation process to achieve up to 90% of auto-certification of accounts every month.

It also enables the review of 100% balance sheet reconciliations before ledger close. Driven by artificial intelligence, the software transforms reconciliations from a reactive to proactive process by detecting anomalies, making it faster and accurate.

1. What is a cash reconciliation solution?

A cash reconciliation solution is a tool that helps businesses match their financial records with bank statements, ensuring accuracy and preventing errors. It saves time and reduces financial discrepancies. By automating the reconciliation process, it streamlines financial management.

2. What is an example of a bank reconciliation statement?

A bank reconciliation statement compares a company’s records of its financial transactions with those of its bank statement. For example, if a company’s records show it has $5,000 in its account, but bank statement shows $4,800, the reconciliation statement helps identify and resolve discrepancies.

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Job Costing Examples, Practical Problems and Solutions

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on April 20, 2023

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Table of Contents

Job No. 58 passes through three departments: X, Y, and Z. The following information is given regarding this job:

Required: Calculate the cost of Job No. 58 from the above figures.

Note: Calculation of overheads chargeable to Job No. 58 was made as follows:

The expenses shown below were incurred for a job during the year ended on 31 March 2019.

The total price for the above job was $180,000.

• You are required to prepare a statement showing the profit earned from the job during the year ended 31 March 2019, as well as an estimated price of a job which is to be executed in the year 2019-20.
• You should charge the same percentage of profit on sales as was the case for the the year 2019-20. Materials , wages , and chargeable expenses will be required at $50,000, $70,000, and $20,000, respectively, for the job.

The various overheads should be recovered on the following basis while calculating the estimated price:

• Factory overheads as a percentage of direct wages
• Administrative and selling and distribution overheads as a percentage of factory cost

Note: Calculation of overheads rates and percentage of profit on sales took place as follows:

M/s. Perfect Printers Ltd. operates a printing press. During November 2019, the plant was operating at full capacity. The material and labor costs of Job No. 101 and all other jobs worked on in November are shown below.

In addition to these costs, factory overheads incurred in November amounted to $44,000. Overhead is allocated to production based on direct labor costs.

• Show the factory's profit or loss on Job No. 101 using two different methods of accounting for overtime premium. Assume that the contract price for the job is $40,000.
• Indicate under what circumstances each method should be used.
• State whether the profit or loss of the company during November would be affected by the choice of one method or another.

Factory Overhead Recovery Rate = (Factory Overhead / Direct Labor Cost) x 100 = (44,000 / 44,000) x 100 = 100%

If the overtime premium is fully charged to Job No. 101, the job cost sheet would be prepared as shown below.

If the overtime premium is charged pro-rata to all jobs, the job cost sheet would be prepared as follows:

The overtime premium should be charged fully to Job No. 101 if it was a rush job and it was done at the request of the customer.

However, if the overtime work was due to limited production capacity and it was accidental that Job No. 101 was undertaken during the overtime, then the overtime premium should be charged pro-rata to all jobs.

The company's profit and loss during November will be affected by the choice of any method if all the jobs performed during the month are not completed by the end of the month.

If the overtime premium is fully charged to Job No. 101 but is not completed by 30 November 2019, then the loss on the job will not be included in the account for November 2019.

Similarly, if the overtime premium is charged pro-rata to all the jobs, the profit or loss on any job that remains incomplete will be carried over to the next month.

The job details shown below were taken from the costing books of a contractor for the month of December 2019.

The respective job accounts showed the following balances in the contract ledger on 30 November 2019.

• Job No. 201 = $321,580
• Job No. 202 = $141,865

A certificate of completion was obtained for Job No. 201. Of the balance of this account standing on 30 November 2019, $61,500 was in respect of plant and machinery. The remainder consisted of wages and materials.

A machine costing $5,500, specially brought for this contract, was also sold for $2,000 in December 2019.

For the remainder of the balance on plant and machinery, $40,000 was used on the job for 8 months and the rest for 6 months.

Of the former, 50% was transferred to Job No. 202 and the whole of the remaining plant was returned to stores. The contract price for Job No. 201 was fixed at $375,000.

• Prepare contract accounts for Job Nos. 1 and 2 and state the profit made on jobs certified as completed.
• Allow depreciation on machinery at 15% per annum. Assume 10% for establishment charges on the cost of wages and materials consumed.

1. Establishment charges in respect of Job No. 201 A/c were calculated as follows:

2. Depreciation on plant and value of plant returned to stores were calculated as follows:

3. A plant costing $40,000 was used for 8 months and a plant costing $16,000 was used for 6 months:

4. Half of the plant, with a total depreciated value of $36,000, was transferred to Job No. 202:

Job Costing Examples, Practical Problems and Solutions FAQs

What is job costing.

Job costing is the method of allocating production costs to specific jobs.

What is a job cost sheet?

A job cost sheet is prepared when the actual manufacturing costs are known. The information can be recorded in a job cost sheet which serves as a basis for charging stores, manufacturing, and administrative expenses to jobs.

What are some advantages of job costing?

Some of the main advantages of job costing over process costing include: job costing allocates overhead based on production volume, provides greater accuracy in assigning a cost to products, and differentiates between variable and fixed costs.

What information is included in a job cost sheet?

A job cost sheet should contain the job name, units started and units finished on each job, and direct materials used on the job

What is job-order costing?

Job order costing is a method of accounting for manufacturing costs using a specially designed set of accounts. It is based on the assumption that manufacturing activities are undertaken to fulfill specific customer orders or contracts.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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Example Accounting Problems

These sample problems are intended as a supplement to my book Accounting Made Simple: Accounting Explained in 100 Pages or Less .

Chapter 1: The Accounting Equation

Question 1: Define the three components of the Accounting Equation.

Question 2: If a business owns a piece of real estate worth $250,000, and they owe $180,000 on a loan for that real estate, what is owners’ equity in the property?

Answer to Question 1:

• Assets: All the property owned by a business.
• Liabilities: A company’s outstanding debts.
• Owners’ Equity: The company’s ownership interests in its property after all debts have been repaid.

Answer to Question 2: $70,000

Chapter 2: The Balance Sheet

Question 1: Categorize the following accounts as to whether they’re Asset, Liability, of Owners’ Equity accounts.

• Common Stock
• Accounts Receivable
• Retained Earnings
• Notes Payable

Question 2: For each of the following assets or liabilities, state whether it is current or non-current:

• Accounts Payable
• Property, Plant, and Equipment
• Note Payable
• Common Stock: Owners’ Equity
• Accounts Receivable: Asset
• Retained Earnings: Owners’ Equity
• Cash: Asset
• Notes Payable: Liability

Answer to Question 2:

• Accounts Payable: current liability
• Cash: current asset
• Property, Plant, and Equipment: non-current asset
• Note Payable: non-current liability (Though if a portion of the note is due within the next twelve months, that portion should be shown as a current liability.)
• Inventory: current asset

Chapter 3: The Income Statement

Question 1: Given the following information, calculate ABC Corp’s Net Income:

• Sales: $260,000
• Cost of Goods Sold: $100,000
• Salaries and Wages: $20,000
• Rent Expense: $15,000
• Advertising Expense: $35,000
• Cost of repairs resulting from fire: $50,000

Question 2: Using the above information, calculate ABC Corp’s Operating Income.

Question 3: Using the above information, calculate ABC Corp’s Gross Profit.

Answer to Question 1: $40,000 (Sales of $260,000 minus $220,000 of total expenses.)

Answer to Question 2: $90,000 (Operating Income is intended to represent income from typical business operations.  As a result, expenses resulting from a fire would certainly not be included when calculating Operating Income.)

Answer to Question 3: $160,000 (Sales minus Cost of Goods Sold)

Chapter 4: The Statement of Retained Earnings

Question 1: Using the following information, calculate the ending balance in Retained Earnings:

• Beginning Retained Earnings: $10,000
• Net Income: $5,000
• Dividends Paid: $4,000

Question 2: Calculate Net Income given the following information:

• Consulting Revenue: $50,000
• Rent Expense: $5,000
• Software Licensing Fees: $3,000
• Dividends Paid: $6,000
• Advertising Expense:$20,000

Question 3: Using the following information, calculate how much was paid out in dividends during the year:

• Beginning Retained Earnings: $40,000
• Net Income: $15,000
• Ending Retained Earnings: $30,000

Answer to Question 1: $11,000

Answer to Question 2: $22,000 (Remember, dividends are not an expense! They are a distribution of net income rather than a reduction of net income.)

Answer to Question 3: $25,000

Chapter 5: The Cash Flow Statement

Question 1: Calculate cash flow from operating activities using the following information:

• Cash sales: $10,000
• Credit sales: $15,000
• Cash received from prior credit sales: $8,000
• Rent paid: $3,000
• Inventory purchased: $6,000
• Wages paid:$5,000

Question 2: Categorize the following cash flows as to whether they are operating, investing, or financing activities:

• Dividends paid to shareholders
• Interest paid on loans
• Dividends received on investments
• Purchase of new office furniture

Answer to Question 1: Net cash inflow of $4,000. (Remember not to include the $15,000 of credit sales when calculating cash flow.)

• Taxes paid: Operating Activities
• Dividends paid to shareholders: Financing Activities
• Interest paid on loans: Operating Activities (Note: Principal paid on loans is a financing activity.)
• Dividends received on investments: Operating Activities
• Cash sales: Operating Activities
• Purchase of new office furniture: Investing Activities

Chapter 6: Financial Ratios

Questions 1-3: Use the following income statement and balance sheet to answer the following questions.

Question 1: Calculate the company’s current ratio and quick ratio.

Question 2: Calculate the company’s return on assets and return on equity.

Question 3: Calculate the company’s debt ratio and debt to equity ratio.

Answer to Question 1: Current ratio = 1.5 (30,000 current assets ÷ 20,000 current liabilities). Quick ratio = 0.75 (15,000 non-inventory current assets ÷ 20,000 current liabilities).

Answer to Question 2: Return on assets = 21.4% (60,000 net income ÷ 280,000 total assets). Return on equity = 27.3% (60,000 net income ÷ 220,000 shareholders’ equity)

Answer to Question 3: Debt ratio = 21.4% (60,000 liabilities ÷ 280,000 assets). Debt to equity ratio = 27.3% (60,000 liabilities ÷ 220,000 shareholders’ equity).

Chapter 7: What is GAAP?

Question 1: Who is required to follow GAAP?

Question 2: Who creates the rules for GAAP?

Question 3: What is the purpose of Generally Accepted Accounting Principles (GAAP)?

Answer to Question 1: Publicly-traded companies. (Governmental entities are required to follow GAAP as well, but the rules that make up GAAP for governmental entities are significantly different from the rules for publicly-traded companies.)

Answer to Question 2: The Financial Accounting Standards Board (FASB)

Answer to Question 3: To purpose of GAAP is to ensure that companies’ financial statements are prepared using a similar set of rules and assumptions. This helps to enable meaningful comparisons between the financial statements of multiple companies.

Chapter 8: Debits and Credits

Questions 1-3: Show how the following transactions would affect the Accounting Equation

Question 1: James purchases a $5,000 piece of equipment.

Question 2: James writes his monthly check for rent: $3,000.

Question 3: James takes out a $25,000 loan with his bank.

Questions 4-6: Create journal entries to record the following transactions

Question 4: James purchases a $5,000 piece of equipment.

Question 5: James writes his monthly check for rent: $3,000.

Question 6: James takes out a $25,000 loan with his bank.

Answer to Question 3:

Answer to Question 4:

Answer to Question 5:

Answer to Question 6:

Chapter 9: Cash vs. Accrual

Questions 1-5: Prepare journal entries to record each of the following events.

Question 1: Tom’s Tax Prep’s monthly rent is $3,500. At the end of February, they had not yet received their monthly rent invoice.

Question 2: In early March, Tom’s Tax Prep receives and pays their rent bill for February.

Question 3: Marla, a marketing consultant, performs services for a client. The agree-upon price was $10,000, due 30 days from the date the services were completed.

Question 4: ABC Hardware makes a sale (on credit) for $2,500 worth of lumber. The lumber originally cost them $1,300.

Question 5: Julie takes out a $10,000 loan for her business. Repayment is due in one year along with $1,200 interest.

When the loan is taken out:

At the end of each month during the year:

When the loan is repaid:

Chapter 10: The Accounting Close Process

Prepare closing journal entries for Mario’s Mobile Products, which has the following end-of-year trial balance:

Alternatively, the above can be combined into one journal entry:

In either case, the following closing journal entry is also required in order to close out the Income Summary account and transfer the balance — representing the business’s net income for the period — into Retained Earnings:

Chapter 11: Other GAAP Concepts and Assumptions

Question 1: Andy runs a real estate development firm. Five years ago, he purchased a piece of land for $250,000. This year, an appraiser tells Andy that the land is worth $300,000. At what value should Andy report the land on his balance sheet? Why?

Question 2: Andy is the sole owner of his firm. In June, he moves $30,000 from his business checking account to his personal checking account. If Andy wants his financial records to be in accordance with GAAP, should he record the transaction or not? Why?

Answer to Question 1: Andy should report the land at its original cost: $250,000. Under GAAP’s “Historical Cost” assumption, assets are reported at their historical cost rather than at their current market value. This is done in order to remove subjective asset valuations from the reporting process.

Answer to Question 2: Yes, in order to be in compliance with GAAP, Andy must record the transaction. GAAP’s “Entity Assumption” considers businesses to be separate entities from their owners. As such, transactions between a business and its owners must be recorded as if they were between the business and an entirely separate party.

Chapter 12: Depreciation of Fixed Assets

Questions 1-6: Prepare journal entries to record each of the following events:

Question 1: Liliana spends $20,000 (cash) on a piece of equipment for use in her restaurant. She plans to use the straight-line method to depreciate the equipment over 5 years. She expects it to have no value at the end of the 5 years.

Question 2: After 4 years,  Liliana sells the equipment for $4,000.

Question 3: Same as question 2, except she sells the equipment for $6,000.

Question 4: Same as question 2, except she sells the equipment for $2,000.

Question 5: Oscar is a self-employed electrician. He purchases a piece of equipment for $30,000 cash. He plans to use it for 10 years, at which point he plans to sell it for approximately $4,000.He elects to use the straight-line method of depreciation.

Question 6: Sandra runs a business making embroidered linens for wedding receptions. She purchases a new piece of equipment for $15,000 in credit. She plans to use the units of production method of depreciation. The equipment is expected to produce approximately 5,000 linens, at which point it will be valueless. During the first year after buying the equipment, Sandra uses it to produce 1,500 linens.

To record the purchase:

To record depreciation every year:

(Depreciable value is $26,000. If depreciated over 10 years, that’s $2,600 depreciation per year.)

When the purchase is eventually paid for:

To record depreciation for the first year:

($15,000 depreciable value ÷ 5,000 units = $3 of depreciation per unit. 1,500 units produce x $3 per unit = $4,500 depreciation expense.)

Chapter 13: Amortization of Intangible Assets

Questions 1-2: Prepare journal entries to record each of the following events.

Question 1: Trent runs a business as an engineering consultant. He invents a new system for preparing bridges to deal with extreme weather conditions. He spends $28,000 securing a 14-year patent for his invention. He expects the system to be used for the next few decades at least.

Question 2: Tina runs a business creating medical supplies for surgeries. Her team develops a new tool for assisting in heart surgery. She spends $42,000 on getting it patented. She receives a 14-year patent, but she only expects the technology to be used for about 7 years before a newer technology comes along to replace it.

To record receiving the patent:

To record amortization expense each year:

Chapter 14: Inventory and Cost of Goods Sold

Question 1: Using the following information, calculate Cost of Goods Sold:

• Beginning Inventory: $3,000
• Ending Inventory: $4,500
• Purchases: $6,000

Question 2-4: Use the following information to answer questions 2-4.

• Beginning Inventory: 1,000 units at $4/unit.
• Purchases: 600 units at $5/unit.
• Ending Inventory: 900 units.

Question 2: Calculate Cost of Goods Sold using First-In-First-Out (FIFO)

Question 3: Calculate Cost of Goods Sold using Last-In-First-Out (LIFO)

Question 4: Calculate Cost of Goods Sold using the Average Cost Method

Answer to Question 1: CoGS = $4,500

Answer to Question 2: CoGS = $2,800

Explanation:

The first thing to calculate is how many units were sold. In this case, 700 units must have been sold. Now we just have to figure out the cost for each unit of sold inventory.

Using FIFO, we assume that the first units purchased were the first units sold. Therefore, all 700 sold units must have been from the older ($4 per unit) inventory. 700 units x $4 per unit = $2,800

Answer to Question 3: CoGS =$3,400

Again, we know that 700 units were sold. Under LIFO, we assume that the most recently purchased units are sold first. Therefore, all 600 of the $5 units must have been sold. The remaining 100 sold units must have been from the older ($4/unit) inventory.

(600 units x $5 per unit) + (100 units x $4 per unit) = $3,400

Answer to Question 4: CoGS =$3,062.50

Using the Average Cost Method, we have to calculate the average cost per unit of inventory. We know that there were a total of 1,600 units available for sale and that–in total–they cost $7,000. That gives us an average cost per unit of $4.38 (or $4.375 to be precise).

To calculate CoGS, we multiply this average cost per unit by the number of units sold. 700 units x $4.375 per unit = $3,062.50

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Practical Guide: Solving Problems Examples in Real-World Scenarios

In today’s fast-paced world, problem-solving is an essential skill that can help individuals navigate various challenges. However, merely possessing this skill is not enough. It is crucial to have practical examples of problem-solving techniques and strategies that can be applied to real-life scenarios.

This guide aims to provide a comprehensive overview of problem-solving skills and techniques that can be implemented in different contexts. It explores various problem-solving strategies, including brainstorming, root cause analysis, decision-making frameworks, and creative problem-solving methods.

Furthermore, this guide showcases practical examples of problem-solving in business and personal settings. It features in-depth case studies of real-life scenarios, highlighting the challenges faced, the strategies employed, and the outcomes achieved.

By the end of this guide, readers will have a deeper understanding of problem-solving techniques and strategies. They will also have the knowledge and tools to apply these skills effectively in different scenarios, both in personal and professional life.

Understanding Different Problem-Solving Techniques

The ability to solve problems is a critical skill in both personal and professional life. It involves identifying and analyzing an issue, generating possible solutions, and selecting the best course of action. There are several problem-solving techniques that can be applied to different situations, including:

Brainstorming

Brainstorming involves generating ideas in a group setting without criticism or judgment. This technique encourages creativity and diversity of thought, allowing individuals to approach a problem from different angles.

Root Cause Analysis

Root cause analysis involves identifying the underlying cause of a problem. This technique involves asking “why” multiple times to determine the primary reason for the issue. By addressing the root cause, individuals can develop more effective solutions.

Decision-Making Frameworks

Decision-making frameworks involve using a set of criteria to evaluate different options and make an informed decision. These frameworks can be simple or complex and involve weighing the pros and cons of each alternative.

Creative Problem-Solving Methods

Creative problem-solving methods involve using non-traditional approaches to generate innovative solutions. These techniques can include mind mapping, lateral thinking, or the use of analogies.

By understanding and using different problem-solving techniques, individuals can approach challenges with a more comprehensive and effective approach. These techniques can be applied in both personal and professional settings, enhancing critical thinking and decision-making skills.

Problem-Solving Examples in Business Settings

In today’s competitive business environment, companies face numerous challenges that require effective problem-solving skills. Successful businesses employ problem-solving strategies that help them overcome obstacles and achieve their goals. Here are some real-life examples of companies that used problem-solving to overcome challenges:

Example 1: Improving Customer Service

A telecommunications company noticed a decline in customer satisfaction ratings. Through surveys and customer feedback, they discovered that customers were frustrated with the company’s long wait times and unresponsive customer service representatives. The company implemented a new customer service training program for their representatives, which included active listening, problem-solving, and conflict resolution skills. As a result, the company’s customer satisfaction ratings improved, and they gained a competitive advantage in the industry.

Example 2: Reducing Production Costs

A manufacturing company was struggling with high production costs due to inefficient processes and materials. The company conducted a thorough analysis of their production line and identified areas where they could cut costs. They implemented new production methods and materials that were more efficient and cost-effective. As a result, the company was able to reduce their production costs, increase their profit margins, and remain competitive in the market.

These examples demonstrate the importance of problem-solving skills in the business world. By identifying challenges, analyzing the root causes, and implementing effective solutions, companies can achieve their goals and remain competitive in their respective industries.

Problem-Solving Strategies in Personal Life

Effective problem-solving skills aren’t just essential in professional settings. They’re equally crucial in personal life too. Whether it’s making a tough decision, dealing with unexpected challenges, or resolving conflicts, problem-solving is critical to achieving desired outcomes. Here are some practical problem-solving strategies to apply in personal situations:

1. Breakdown the problem:

When you encounter a problem, start by breaking it down into smaller parts. This approach will help you identify the root cause and develop a step-by-step plan to address the issue.

2. Evaluate your options:

Once you have a clear understanding of the problem, evaluate your options objectively. Consider the pros and cons of each alternative and analyze their potential outcomes.

3. Seek advice:

Don’t hesitate to ask for advice from those you trust and respect. Getting an outside perspective can help you gain a new insight into the problem at hand.

4. Use creative problem-solving techniques:

Applying creative problem-solving techniques like brainstorming, mind-mapping, and reverse-thinking can help you explore innovative solutions to complex problems. It’s essential to think outside the box.

5. Learn from failures:

Failure is a part of life, and it’s okay to make mistakes. The key is to learn from these experiences and use them as an opportunity to grow and develop your problem-solving skills further.

By applying these practical problem-solving strategies in your everyday life, you’ll develop a strong problem-solving mindset that enables you to tackle any challenge with confidence and ease.

Case Studies: Real-Life Problem-Solving Examples

In this section, we will explore real-life examples of problem-solving in different industries. These case studies showcase effective problem-solving strategies and provide insights into how challenges can be overcome using a structured approach.

Airbnb: Breaking Through Regulatory Barriers

When Airbnb was expanding into cities around the world, it faced regulatory barriers that threatened to derail its growth. In New York City, for example, hosts were required to register with the city and rent their apartments for a minimum of 30 days at a time.

To overcome these barriers, Airbnb worked with city officials to develop a new regulatory framework that allowed hosts to rent their homes for shorter periods of time. The company also implemented a host education program to ensure compliance with local laws.

Through this problem-solving approach, Airbnb was able to break through regulatory barriers and continue its expansion into new markets.

Toyota: Improving Quality Control

Toyota faced a massive recall of millions of vehicles due to safety concerns related to its accelerator pedals. In response, the company implemented a problem-solving strategy known as “5 Whys,” which involves asking why a problem occurred five times to identify the root cause.

Through this process, Toyota discovered that a faulty design led to the accelerator pedal becoming stuck, which led to the recall. The company then implemented a new quality control process to prevent similar issues from occurring in the future.

By using a structured problem-solving methodology, Toyota was able to identify the root cause of the issue and implement an effective solution to prevent future recalls.

Microsoft: Adapting to Changing Markets

Microsoft faced significant challenges in the early 2010s as the market shifted towards mobile devices and away from personal computers. The company responded by shifting its focus to cloud-based services and mobile devices.

To do this, Microsoft implemented a problem-solving strategy known as “design thinking,” which involves empathizing with users and designing products that meet their needs. By focusing on the needs of its customers, Microsoft was able to adapt to the changing market and remain a leading player in the tech industry.

These case studies demonstrate the power of effective problem-solving strategies in real-world scenarios. By utilizing structured problem-solving methodologies and focusing on the needs of their customers, these companies were able to overcome challenges and achieve success.

Developing Problem-Solving Skills through Exercises

Problem-solving is a skill that can be developed and honed through practice. By engaging in specific exercises and activities, individuals can enhance their problem-solving abilities and become more effective in real-life scenarios.

Here are a few exercises and activities that can help individuals develop their problem-solving skills:

One of the most popular problem-solving techniques is brainstorming. This exercise involves generating multiple ideas in a short amount of time, without evaluating the quality of each idea. It can be used to solve both personal and professional problems. To conduct a brainstorming session, gather a group of individuals and pose a problem or challenge. Encourage everyone to share as many ideas as possible towards a potential solution.

Mock Scenarios

Mock scenarios are another effective way to practice problem-solving. This exercise involves creating a hypothetical scenario and asking individuals to solve it. The scenario can be related to personal or professional challenges and should require critical thinking and decision-making skills. By practicing in a risk-free environment, individuals can experiment with different problem-solving techniques and strategies, and evaluate the effectiveness of each approach.

Gamification

Gamification involves using game-like elements to engage individuals and motivate problem-solving efforts. This exercise can be particularly effective for younger individuals or those who prefer a more interactive approach. Gamification can involve using puzzles, quizzes, or other game formats to solve problems. These activities offer a fun and engaging way to develop problem-solving skills.

Remember that while exercises can be helpful, problem-solving is ultimately a skill that is developed through practice and experience in real-life scenarios. Continually seeking opportunities to engage in problem-solving can improve abilities and build confidence in making informed decisions.

Implementing Problem-Solving Methods in Real-Time

Problem-solving is not a one-time event but an ongoing process. It requires adaptability, critical thinking, and decision-making abilities to achieve desired outcomes. Here are some practical methods for implementing problem-solving in real-time situations:

Stay Focused on the Problem

When faced with a problem, it’s essential to stay focused on the issue at hand. Avoid getting sidetracked by unrelated details, emotions, or distractions. Keep a clear understanding of the problem and the desired outcome.

Brainstorm Possible Solutions

Engage in brainstorming sessions to generate possible solutions to the problem. Encourage everyone’s participation and have an open mind to new ideas. Use a whiteboard or sticky notes to collect and organize ideas for evaluation.

Prioritize Possible Solutions

After generating possible solutions, evaluate and prioritize them based on their potential impact, feasibility, and cost. Choose the most appropriate solution based on these factors, and consider the potential risks and drawbacks associated with it.

Monitor and Adjust the Solution

Implement the chosen solution and monitor its progress. Check if it’s being executed as planned and if it’s achieving the desired outcomes. Be open to making adjustments to the solution if necessary and continue to monitor its progress.

Document the Problem-Solving Process

Keep a record of the problem-solving process, including the problem, the chosen solution, the implementation process, and the results achieved. Use this information to evaluate the success of the problem-solving process, identify areas for improvement, and apply what you’ve learned to future challenges.

Implementing problem-solving methods in real-time requires focus, creativity, and persistence. With the right approach and mindset, you can successfully overcome challenges and achieve your desired outcomes.

Strategies for Overcoming Common Problem-Solving Challenges

Problem-solving can be a challenging and complex process, and it’s not uncommon to encounter roadblocks along the way. Here are some strategies for overcoming common problem-solving challenges:

Managing ambiguity

Often, problems can be vague and ill-defined, making it difficult to know exactly what to do. To overcome this challenge, it can be helpful to break down the problem into smaller, more manageable pieces. Identifying the root cause of the issue and defining clear objectives can also help reduce ambiguity and provide direction.

Dealing with complexity

Complex problems can be overwhelming, and it’s easy to get bogged down in the details. To tackle complexity, it’s important to step back and take a broader view of the situation. Looking at all the relevant factors and considering different perspectives can help identify potential solutions.

Approaching problems from different perspectives

It can be easy to get stuck in a rut and approach problems in the same way every time. To overcome this challenge, try approaching problems from different angles. Considering multiple perspectives can help uncover new solutions and shed light on potential blind spots.

Building resilience

Problem-solving can be a tough and sometimes frustrating process. It’s important to develop resilience and the ability to persist in the face of obstacles. Practicing mindfulness techniques, maintaining a positive attitude, and taking breaks when needed can all help build resilience.

Maintaining a positive problem-solving mindset

It can be easy to get discouraged when things don’t go as planned. To maintain a positive problem-solving mindset, focus on the progress made, rather than the setbacks encountered. Celebrating small wins along the way can help keep momentum going and boost motivation.

Frequently Asked Questions (FAQ) about Problem-Solving

In this section, we address some of the commonly asked questions related to problem-solving. These FAQ’s aim to provide guidance and clarify doubts on various aspects of problem-solving methods and techniques.

What are the different problem-solving techniques?

There are several problem-solving techniques that individuals and businesses can apply to resolve any challenges they face. Popular strategies include brainstorming, root cause analysis, decision-making frameworks, and creative problem-solving methods.

How can problem-solving skills be developed?

Problem-solving skills can be honed by practicing exercises and activities designed to enhance critical thinking and decision-making processes. Continuous learning and development are also crucial for building effective problem-solving skills.

What are the essential qualities for effective problem-solving?

Effective problem-solving requires critical thinking, adaptability, decision-making skills, a positive mindset, and the ability to manage ambiguity and complexity. Communication and collaboration skills are also important, as problem-solving often involves working with others.

What are some common challenges encountered during problem-solving processes, and how can they be addressed?

Common challenges during problem-solving include managing ambiguity, dealing with complexity, and approaching problems from different perspectives. To overcome these challenges, it is essential to remain flexible, stay focused on the end goal, and break problems down into smaller, more manageable parts. Taking breaks and seeking feedback from others can also be beneficial.

How can problem-solving methods be effectively applied in real-time situations?

Effective problem-solving in real-time situations requires critical thinking, analytical skills, and decision-making abilities. It is important to remain adaptable and flexible, consider multiple options, and prioritize actions based on their potential impact. Communication and collaboration with others can also aid in effective problem-solving.

What are some additional resources for learning about problem-solving?

There are several additional resources available for further learning about problem-solving. Books, online courses, and workshops can provide valuable insights and practical guidance for developing problem-solving skills. Networking with others in similar fields and seeking mentorship can also be beneficial for problem-solving growth and development.

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Accounting Problems (& Answers): How to Avoid Accounting Issues

Keeping up with technology and regulatory changes are significant concerns of 51% and 24%, respectively, of CPA and accounting firm survey participants, according to Accounting Today’s survey, The Year Ahead: 2022 in Numbers . 

Delays in advanced software technology adoption and failures in regulatory compliance can lead to accounting challenges and problems for businesses. These accounting issues include errors in financial statements, fraud and security risks, and the potential for massive fines and imprisonment for regulatory non-compliance.

Trained business finance teams using advanced software technology that also automates regulatory compliance can overcome typical (and new) accounting problems.

What are Accounting Problems?

Accounting problems are issues resulting in material financial statement errors, undetected fraud due to inadequate internal control, misapplication of generally accepted accounting principles (GAAP accounting standards), regulatory noncompliance, and cybersecurity risks. Accounting problems may have unfavorable cash flow impacts and misstate business profitability. 

What Causes Accounting Problems?

Some accounting problems are caused by using outdated software technology for accounting. Intentional fraud due to greed and poor internal control causes other financial issues. Low staffing levels can cause accounting problems. Not training the financial team causes accounting problems related to improperly applying GAAP.

The business must defend itself against cybersecurity attacks and stay up-to-date on changing regulatory compliance issues. 

How do Businesses Solve Accounting Problems?

Financial professionals in businesses should use software with advanced technology capable of handling current accounting standards, including revenue recognition and lease accounting, and regulatory requirements to avoid or solve significant accounting problems.

Requiring CPA employees and accountants to take relevant continuing education courses regularly can also help businesses solve accounting problems. Adequate staffing levels help accountants solve accounting issues.

Top management must communicate an ethical tone, corporate values, employee empowerment, and key expectations.

11 Common Accounting Problems

In its fiscal year 2021, the SEC received 1,913 whistleblower complaints relating to corporate disclosures and financials, signaling possible accounting problems in these publicly-held businesses. The SEC also received whistleblower complaints related to the Foreign Corrupt Practices Act. 

11 common accounting problems are:

• Revenue recognition
• Lease accounting 
• Missing impairment write-downs
• Payroll errors
• Cash flow statement
• Outdated accounting software technology
• Not enough financial analysis
• Inadequate internal control
• Regulatory non-compliance
• Inadequate security

1. Revenue Recognition 

Improperly applying GAAP revenue recognition standards, creating fraudulent revenue schemes, including improper accounting for consignments and third-party inventory shipments beyond the level of possible usage, and using unreasonable estimates, are revenue recognition problems. 

CFODive published an article on August 20, 2020 (based on an Accounting Today analysis) titled Improper revenue recognition tops SEC fraud cases . This article highlights the significance of revenue recognition as an accounting problem. 

Find an accounting software or ERP solution that helps your company achieve proper revenue recognition. Your accounting and finance teams need adequate training on FASB accounting standards to comply with GAAP revenue recognition. Excel spreadsheets are popular. But spreadsheets are error-prone and inefficient. If possible, seek a different software solution. 

2. Lease Accounting 

Changes to GAAP lease accounting standards require lessee companies to capitalize their operating leases with tenant right of use (ROU) and a term of over twelve months. Shorter operating leases (including office space leases) can still be recorded monthly as rent expenses. The leases are amortized over time. 

Accounting standards are codified by the Financial Accounting Standards Board (FASB). Accountants must also follow other changes to the Lease accounting standard.

Business accounting teams need adequate training to follow the latest GAAP standards on Lease accounting. And they will benefit greatly by using specialized lease accounting software.

3. Impairment Write-downs and Fair Market Valuation 

Accountants may miss making impairment write-downs or required adjustments for recording required assets or liabilities at a fair market valuation. 

Changing economic and business conditions require accountants to periodically assess whether asset valuations have been impaired (to recognize the loss of value). Accountants must also consider adjustments to the fair value of certain assets and liabilities. Accounting professionals make adjustments through journal entries and financial statement disclosures when GAAP requires.

Supply chain backlogs and economic conditions resulting from the COVID-19 pandemic triggered accounting issues to watch for, including impairment and fair value accounting, according to EY, a top-tier accounting firm. 

Examples of asset impairment include:

• Assessing goodwill from M&A transactions annually for impairment
• Considering capitalized lease asset impairment
• Recording inventory at the lower of cost or market (LCM), where market value is constrained by an upper range not exceeding net realizable value and a lower range of net realizable value less a normal profit margin. 

Examples of fair market valuation include:

• Trading securities (debt and equity) held as short-term investments; gains or losses on trading securities flow to Net Income on the income statement
• Available-for-sale securities (debt and equity) held as investments to be sold before maturity; net gains or losses are included in Shareholders’ Equity as Other Comprehensive Income (Loss), listed below Retained Earnings 
• Liabilities measured under ASC 820 Fair Value Measurements and Disclosures  

Accountants must have adequate training to properly record asset impairments and fair market valuation when required by GAAP and make necessary financial statement disclosures. Research financial statement areas subject to accounting issues with impairment. 

4. Payroll Errors

If a small business decides to calculate its own payroll, payroll taxes, and benefits, it’s possible that payment errors and accounting problems will occur. Payroll problems like miscalculating paychecks for salary expenses and hourly wages hurt employee morale and productivity.

Outsource payroll to a very experienced company providing those services, like ADP or Paychex. If the right number of hours and payroll information is provided, payments and taxes withheld should be correctly computed and compliant with tax laws. You can expect accurate reports to account for those items. Your business can make payroll tax remittances on time when due.

5. Cash Flow Statement

The cash flow statement may include errors in classification by activity type and may not include restricted cash, a newer GAAP requirement. 

Cash flow statement classification errors may include misclassifying the type of activity for interest and dividends received and paid. Interest received and paid is an operating activity in the cash flow statement. Dividends received are an operating activity, and dividends paid are a financing activity in the cash flow statement. 

The CPA firm, RSM, summarizes U.S. GAAP (vs IFRS) classification for certain items in the cash flow statement, including interest and dividends and restricted cash. 

Cash flow statement problem solving requires keeping up to date with FASB updates and training topics related to cash flow statement preparation to understand the basics. 

6. Outdated Accounting Software Technology

Outdated accounting software technology isn’t efficient, doesn’t provide real-time results for visibility in managing the company or its sales & marketing processes, relies on manual data entry and paper documents for business transaction processing and recording, and doesn’t automate regulatory compliance. 

Outdated ERP systems may not be cloud-based. On-premises software systems cause inefficiencies in accessing the software and require more IT department resources to update the system and address software and hardware problems at the company’s location. These ERP systems not deployed on the cloud aren’t ideal for the changed reality of remote or hybrid work situations. 

Upgrade outdated software technology in accounting software or ERP systems by changing to modern cloud-based software. If you don’t have the budget for an ERP system overhaul, consider integrating third-party add-on software to meet your needs for:

• AP automation and global mass payments software, also automating regulatory compliance 
• Subscription billing (applicable to a SaaS , publishing, or utilities business model)
• Forecasting, planning, and cash management software
• Customer relationship management (CRM) software to increase efficiency and better track the sales and marketing process 
• Lease accounting specialty software
• Revenue recognition software functionality, if not included in your ERP 
• Data visualization software for data analytics and business intelligence

7. Not Enough Financial Analysis

An accounting team without efficient accounting systems is spending too much time closing the books, leaving less time for value-added work. Financial analysis adds value by calculating ratios, spotting and managing business trends, and providing decision support for new opportunities.

Use enhanced cloud-based ERP systems and third-party add-on software with built-in artificial intelligence/machine learning that automates accounting processes and financial analysis to the extent possible. You need real-time dashboards with your company’s KPIs (key performance indicators), including trend analysis that all functional areas with authorization privileges can access. 

Supplement these systems with data visualization software like Tableau or Microsoft Power BI for data analytics with real-time capabilities and periodic automated report runs for data your company follows as timeline trends. Data visualization software embeds machine learning tools to deliver business intelligence. 

8. Inadequate Internal Control 

Small businesses may not have enough staffing to attain the separation of duties needed for adequate internal control. Their accounting systems may be inadequate to prevent fraud and duplicate payment errors. 

When segregation of duties isn’t being achieved, get the business owner involved in the approval process as a matched vendor invoice document reviewer and second signature. 

The finance and accounting department needs the human capital and software resources required to perform its duties and achieve results. Is the accounting department getting its fair share of company resources? 

Custody of Assets

Custody of assets includes recorded balance sheet assets and assets not yet recorded in the books like undeposited cash. 

Inventory needs controls for proper receiving, custody, secured storage with controlled access, and physical inventory in full annually and via periodic cycle counts. Office equipment should also be tagged upon receipt and subject to a physical inventory. As stated earlier, inventory should be tested for any loss in value requiring a write-down. 

Discrepancies in the balance of fixed assets may result from a physical fixed asset count. Set a proper cutoff for recording fixed asset purchases. 

If a fixed asset isn’t recorded, look for the purchase documents and invoice to record it. If another fixed asset isn’t counted, investigate where it may be or if it was sold. For accounting purposes, record the difference between the book value of fixed assets net of accumulated depreciation and sale proceeds, computing gain or loss on the sale of fixed assets. Write off missing fixed assets if necessary after your investigation. 

Fraud, including embezzlement, may result from inadequate internal control and employee collusion. 

Use modern cloud-based automation software that helps you find fraud and errors like duplicate payments. Use variance analysis and followup on significant differences for budget vs actual expenses. Review vendor master files, perform 3-way document matching for invoices, and validate vendors for authenticity before paying them. 

Strive to achieve adequate segregation of duties with employee task assignments. Control or custody of assets and recording transactions in the books need to be performed by different employees. 

10. Regulatory Non-Compliance

Regulatory compliance covers different areas, including taxation, data privacy and security, sanctions lists like OFAC, and the Foreign Corrupt Practices Act (FCPA). 

The Foreign Corrupt Practices Act covers not making bribes in foreign countries. And the FCPA’s scope goes far beyond preventing bribes. 

Violations of the Foreign Corrupt Practices Act and other regulations could result in:

• Massive fines for companies and convicted individuals
• Imprisonment
• Tarnishing a company’s and convicted individual’s business reputation and ethics

Familiarize your company, including the financial and accounting staff, with regulatory issues applying to your industry and company. Perform a project to document regulatory concerns and distribute the results widely. Hold a training session for company employees. Emphasize company values that include being ethical and empowering employees to act as the “conscience of the company.”

Find an automation software solution handling regulatory compliance. Tipalti AP automation software includes automated regulatory compliance features. 

11. Inadequate Security

Cybersecurity is a significant issue that can compromise business intellectual property and customer data and employee records in your system. 

Implement the most advanced cybersecurity software. Create and distribute an up-to-date company policy on required steps for achieving adequate cybersecurity. Train employees on how to avoid email and other scans that can result in hacks compromising company security. 

Using Automation to Solve Accounting Problems

You can solve some accounting problems and become more efficient by applying accounting automation software. AP automation will provide significant benefits for your business.

Accounting Automation Software Applications

Businesses can deploy accounting automation in several areas to improve accounting processes and results. Accounting systems automation includes efficient financial technology (FinTech) applied to vendor invoice processing and payments and customer billing and accounts receivable. 

Automate subscription billing, if applicable to your business model. Use automated customer credit decision solutions to decide which customers will be offered accounts receivable instead of requiring cash payments upfront. 

Integrate CRM and marketing automation software like Salesforce and Marketo to improve sales & marketing processes and convert more new customers. 

Automate forecasting, budgeting, business planning, and cash flow management. 

AP Automation Software Benefits

Gain time to perform financial analysis by closing the books sooner. You can accomplish this by automating routine accounting processes like accounts payable and global mass payments with add-on AP automation software accessed via ERP integration. 

Automated systems provide outsized benefits in the areas of payables automation and global mass payments to suppliers, vendors, and payouts to independent contractors, including freelancers and affiliates, and royalty recipients. Automated systems improve cash flow . They increase efficiency to let your company process vendor invoices and pay in time to take lucrative early payment discounts . 

The best add-on AP automation and global mass payments software:

• Automates supplier onboarding and tax compliance
• Scans with OCR technology or uploads invoices and supporting documents electronically 
• Improves your company’s expense management
• Makes efficient batch payments using a choice of payment methods
• Automates payments reconciliation and adds more accounts payable reports
• Lets your company close its books faster during the accounting cycle
• Reduces fraud and errors
• Automates regulatory compliance

Using electronic documents instead of paper-based documents:

• Ends paper-based data entry, invoice matching, and processing costs
• Creates a relevant document repository through the supplier portal
• Creates an audit trail
• Enables automatic approvals with notifications and follow-up
• Makes efficient batch payments (or single payments)
• Ends the inefficient, unsafe, and costly use of paper checks
• Automatically reconciles batch payments

The level of resources required in accounting and bookkeeping can be leveraged by efficiencies provided by AP automation software. Efficiency is improved by up to 80%. Books are closed much more quickly, letting the finance team spend more time on value-added financial analysis and decision support. 

Cloud-based AP automation software using AI/ML and RPA and tools for regulatory compliance work in combination with ERP systems. 

Real-time SaaS automation software and ERP systems with modern technology can prevent or solve several types of accounting problems and issues, including fraud, accounting errors related to vendor invoices and payments, GAAP compliance in financial reporting, and regulatory compliance.   

And adequate training of the finance and accounting team prevents or solves accounting problems.

About the Author

Barbara Cook

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