Laws Basic Accounting Questions And Answers For Interview Pdf


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Top Accounting and Finance Interview Questions asked to freshers First things first this is the most basic yet the easiest one to be taken for granted, know this well. sure you are explaining your answer in brief (one line about each is ideal) . Commonly asked accounting interview questions with their answers. Collection of questions for beginners and experienced accountants. PDF version also. Sample Accounting Interview Questions. General Accounting. 1. Tell me about yourself? 2. Why did you leave your last job? 3. What is your greatest weakness?.

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ACCOUNTING BASICS AND INTERVIEW QUESTIONS - Download as Word Doc .doc /.docx), PDF File .pdf), Text File .txt) or read online. Frequently asked technical finance interview questions, accounting interview Someone who can't answer basic questions like 'walk me through a DCF' has. Interviewers are likely to cover all the basics of accounting and challenging questions as well. Here are some of the top accounting interview.

Over draft: Under this facility a fixed limit is granted within which the borrower allowed to overdraw from his account. Sources of funds: There are two sources of funds internal sources and external sources.

Bridge finance: It refers to the loans taken by the company normally from commercial banks for a short period pending disbursement of loans sanctioned by the financial institutions. It has the maturity period of 6 months to 3 years. Lease financing: Leasing is a contract where one party owner purchases assets and permits its views by another party lessee over a specified period Trade Credit: It represents credit granted by suppliers of goods.

Application of funds: It explains how the funds obtained and how they used. Share capital: The sum total of the nominal value of the shares of a company is called share capital. Commercial banks: Commercial banks extend foreign currency loans for international operations.

Sources of cash: Internal sources a Depreciation b Amortization c Loss on sale of fixed assets d Gains from sale of fixed assets e Creation of reserves External sources- a Issue of new shares b Raising long term loans c Short-term borrowings d Sale of fixed assets.

The subscription can come from any part of the world except India.

It is an estimate prepared in advance of the period to which it applies. Cash flow statement: It is a statement depicting change in cash position from one period to another.

Application of cash: Euro issues: The euro issues means that the issue is listed on a European stock Exchange. IMF etc. GDR Global depository receipts: A depository receipt is basically a negotiable certificate. The banks also provided overdraft. Seed capital assistance: The seed capital assistance scheme is desired by the IDBI for professionally or technically qualified entrepreneurs and persons possessing relevantexperience and skills and entrepreneur traits.

Unsecured loans: It constitutes a significant part of long-term finance available to an enterprise. It is a detailed plan of operations for some specific future period. Development banks: It offers long-term and medium term loans including foreign currency loans ADR American depository receipts: International agencies: International agencies like the IFC.

The amount of expenditure incurred on to a given thing. Cost accounting: It is thus concerned with recording. Prime cost: It consists of direct material direct labour and direct expenses. It is also known as basic or first or flat cost.

Responsibilities of accounting: It is a system of control by delegating and locating the Responsibilities for costs.

Budgetary control: It is the system of management control and accounting in which all operations are forecasted and so for as possible planned ahead. Cost centre: A location.

It is a management tool which provides a systematic method for evaluating all operations and programmes. It is a statement reconciling the balance as shown by the bank pass book and balance shown by the cash book. Elements of cost: Profit centre: A centre whose performance is measured in terms of both the expense incurs and revenue it earns. Master budget: A summary of budget schedules in capsule form made for the purpose of presenting in one report the highlights of the budget forecast.

Components of total costs: Cash budget: Fixed budget: It is a budget. Objective of BRS: The objective of preparing such a statement is to know the causes of difference between the two balances and pass necessary correcting or adjusting entries in the books of the firm. Option price: Option price is the price which the option buyer pays to the option seller.

An option gives the holder of the option the right to do something. This cost is also known as works cost or production cost or manufacturing cost. Standard costing: Call option: A call option gives the holder the right but not the obligation to buy an asset by a certain date for a certain price. Cost of production: In office and administration overheads are added to factory cost.

Basis means future price minus spot price.. Techniques of costing: Expiration date: The date which is specified in the option contract is called expiration date. Total cost: Selling and distribution overheads are added to total cost of production to get the total cost or cost of sales. Cost of carry: The relation between future prices and spot prices can be summarized in terms of what is known as cost of carry. Put option: A put option gives the holder the right but not obligation to sell an asset by a certain date for a certain price.

Future contracts are standardized exchange traded contracts. European option: It is the option at exercised only on expiration date itself. Factory cost: It comprises prime cost. Marginal costing: It is also referred to as the option premium.

Cost unit: A unit of quantity of a product. Methods of costing: A future contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. The option holder option may exercise or not. Meaning of ratio: Ratios are relationships expressed in mathematical terms between figures which are connected with each other in same manner.

Net asset value: Dividend option: This is somewhat lower than initial margin. Close ended funds: In India secondary market is called stock exchange. Initial margin: It is also called new issue market. Characteristics of mutual fund: Ownership of the MF is in the hands of the of the investors MF managed by investment professionals The value of portfolio is updated every day Open-ended fund: Advantage of MF to investors: Portfolio diversification Professional management Reduction in risk Reduction of transaction casts Liquidity Convenience and flexibility It consists of two markets 1.

Any further transaction for buying the units or repurchasing them. This is called mark to market. Hedging means minimize the risk. It means purchase and sale of securities in different markets in order to profit from price discrepancies. Activity ratio: It is a measure of the level of activity attained over a period. Mark to market: In future market.

In other words arbitrage is a way of reducing risk of loss caused by price fluctuations of securities held in a portfolio. It reflects the costs faced when actually trading in index.

Primary market: Those companies which are issuing new shares in this market. Capital market: Capital market is the market it deals with the long term investment funds. Impact cost: Impact cost is cost it is measure of liquidity of the market. Secondary market: Secondary market is the market where shares buying and selling.

Mutual fund: A mutual fund is a pool of money. This option hives the issuer the right to call back the bonds prior to maturity.

Equity funds: It also referred to as the interest rate risk. Dividend yield: The dividend paid out by the company. Growth option: Index funds: The fund manager takes a view on companies that are expected to perform well. Gilt funds: Market risk: It refers to the risk which the investor is exposed to as a result of adverse movements in the interest rates. Debt funds: Balanced funds: Funds that invest both in debt and equity markets are called balanced funds.

Types of equity funds: Simple equity funds Primary market funds Sectoral funds Index funds Sectoral funds: Sectoral funds choose to invest in one or more chosen sectors of the equity markets. Re-investment risk: It the risk which an investor has to face as a result of a fall in the interest rates at the time of reinvesting the interest income flows from the fixed income security.

Market capitalization: Price earnings ratio: The ratio between the share price and the post tax earnings of company is called as price earnings ratio. Call risk: Call risk is associated with bonds have an embedded call option in them.

Liquid funds: Trustee is responsible to the investors in the MF and appoint the AMC for managing the investment portfolio. Scheme takes over: Meaning of load: Load is the factor that is applied to the NAV of a scheme to arrive at the price. Gross profit ratio: Accrued Income means income which has been earned by the business during the accounting year but which has not yet become due and.

Diminishing balance method b. Fixed installment method b. Methods of depreciation: Group depreciation method b. Gross profit X Net sales Credit risk: Credit risk refers to the probability that a borrower could default on a commitment to repay debt or band loans Declining charge methods: Outstanding Expenses: Outstanding Expenses refer to those expenses which have become due during the accounting period for which the Final Accounts have been prepared but have not yet been paid.

Unirorm charge methods: Insurance policy method. Depreciation fund method e. Inflation risk: Inflation risk reflects the changes in the purchasing power of the cash flows resulting from the fixed income security. Inventory system of depreciation c. Annuity method d. Double declining method 3.

Liquid risk: It is also called market risk. Drawings denotes the money withdrawn by the proprietor from the business for his personal use.

Depletion method c. Closing stock: The term closing stock means goods lying unsold with the businessman at the end of the accounting year.

Sum of years digits method c. Net profit ratio: Net profit. Machine hour rate method. Other methods: Dividend yield ratio: Dividend per share Debt-Equity Ratio: X Net sales May also be used to measure the rate of return expected by investors. Fixed Assets Current ratio: Current Assets Current Liabilities Fixed Assets ratio: This ratio explains whether the firm has raised adequate long-term funds to meet its fixed assets requirements.

Profits available for Equity shareholders X Average Equity Shareholders Funds X Market price per share Profits available for Equity shareholders Number of Equity shares Earning per Equity share EPS: Credit sales Average Accounts Receivable This ratio indicates whether or not working capital has been effectively utilized in making sales. Credit Purchases Average Accounts Payable Working capital turnover ratio: It is also known as Working Capital Leverage Ratio. Creditors Turnover Ratio: It indicates the speed with which the payments for credit purchases are made to the creditors.

Net Sales Fixed Assets The ration helps in cash budgeting since the flow of cash from customers can be worked out on the basis of sales. Liquid Assets Current Liabilities Debtors Turnover Ratio: The ratio the better it is.

Quick Ratio: Net Sales Working Capital The ratio is ascertained y comparing the liquid assets to current liabilities. Pay-outs Ratio: This ratio indicates what proportion of earning per share has been used for paying dividend. Fixed Assets Turnover ratio: This ratio indicates the extent to which the investments in fixed assets contribute towards sales. Dividend per Equity Share X Long-term Funds Stock turnover Ratio: The ratio indicates whether investment in inventory in efficiently used or not.

Shareholders funds Total tangible assets Income before interest and Tax InterestCharges Fixed Interest Cover ratio: It indicates whether the business would earn sufficient profits to pay periodically the interest charges. Overall Profitability Ratio: Earning per Equity share Net profit before interest and tax Operating profit X Capital employed The term capital employed has been given different meanings a.

In the partnership. Proprietary ratio: It is a variant of debt-equity ratio. In the joint venture. Net Profit after Interest and Tax Preference Dividend It indicates the percentage of return on the total capital employed in the business..

Fixed Dividend Cover ratio: This ratio is important for preference shareholders entitled to get dividend at a fixed rate in priority to other shareholders. Difference between joint venture and partnership: In joint venture the business is carried on without using a firm name. Debt Service Coverage ratio: This ratio is explained ability of a company to make payment of principal amounts also on time. Realization concept: Going concern concept: The profit arises only when there is an increase in owners capital.

Accrual concept: Accounting period concept: Matching concepts: Annual report: The report issued annually by a company. Dual aspect concept: Financial analysis: The process of interpreting the past. Lease is a contract between to parties under the contract. According to this concept. The cost or expenses of a business of a particular period are compared with the revenue of the period in order to ascertain the net profit and loss.

Normally accounting period adopted is one year.

Top 100 Accounting Interview Questions.docx

This concept says that the accounting records only those transactions which can be expressed in terms of money only. The term budgeting is used for preparing budgets and other producer for planning. Opportunity cost: The cost associated with not doing something.

Money measurement concept: A statement in which a firm is unable to meets its obligations and hence. Income statement: An accounting statement which shows the level of revenues. A: Two examples include deterioration of working capital i.

Q: I buy a piece of equipment, walk me through the impact on the 3 financial statements. A: Since our cash flow statement starts with net income, an increase in accounts receivable is an adjustment to net income to reflect the fact that the company never actually received those funds. Q: How is the income statement linked to the balance sheet?

Q: What is goodwill? A: Goodwill is an asset that captures excess of the purchase price over fair market value of an acquired business. Differences in depreciation expense between book reporting GAAP and IRS reporting can lead to differences in income between the two, which ultimately leads to differences in tax expense reported in the financial statements and taxes payable to the IRS.

Differences in revenue recognition, expense recognition such as warranty expense , and net operating losses NOLs can create deferred tax assets. I hope you enjoyed this article and found these finance interview questions hepful. Good luck in your interview!

The difference is accounting only deals with financial figures where marketing works on creating those figures. Question 94 What is peach tree accounting? Question 95 What are accounting rules called? Debit what comes in, and credit what goes out Debit the receiver and credit the giver Debit all expenses and loss and credit all incomes and gains.

Question 96 What is an interlocking accounting system? Question 97 What is accounting for plant assets? Question 98 What are the basic assumptions in accounting? Question 99 What are Source documents in accounting?

These include invoice, sales order, purchase order, debit note, credit note, goods received note; goods dispatched note, quotation, statement, remittance advice, and receipt. Question What is mutual fund sub accounting?

An intermediary record keeps all of the individual shareholder account information, such as the individual balances and individual transactions and dividends in each fund. The account balances roll up to match an omnibus account balance that is record kept by the transfer agent of the fund.

When individual investors buy or sell a particular fund those transactions the intermediary combines those transactions and a minimum number of larger trades are placed with the fund in the omnibus account. Question What is Purchase returns Accounting. Question What is the difference between accounting and bookkeeping? Regularly challenged to maintain precise and accurate records, bookkeepers produce the vital reports that keep management up to date on the financial condition of their company.

Bookkeepers are responsible for maintaining the "business checkbook", much like a personal checkbook. They record routine money transactions like customer payments into a "cash receipts journal" and checks to vendors into a "cash disbursement journal.

At month end they transfer or "post", the "journal" totals to the "general ledger" in preparation for financial statements prepared by the accountant. Accountants are responsible for the design and management of the financial systems that bookkeepers use. They prepare monthly financial statements and tax returns at year-end. Accountants may also prepare budgets for management and loan proposals for bankers; and perform cost analysis for the company's products or services.

Trust, reliability, and confidentiality head the list of qualities that employers look for when selecting and promoting Certified Bookkeepers. Strong organization and communication skills are also important. Not only are bookkeepers challenged to record routine money transactions, to reconcile accounts and to locate misguided transitions, they also must be able to paint a picture--both verbally and on paper--of all the activities within their assigned area of responsibility Read More Answers.

Question What are the disadvantages of manual accounting?

Question How many accounting standards are currently published? Question What is the basic accounting equation? Question What are the elements of the accounting equation? Question In which ways is math used in accounting Answer: Summing accounts for inclusion in financial statements i.

Determine net income and various margins by subtracting expenses from revenues, calculating variances between actual and budgets. Tax rates by gross pay to calculated and remit correct taxes, extrapolating period results i. Calculate various ratios such as asset turnover, operating margins, etc. Multiplication and Division is used "primarily" for analysis of financial results with some exceptions noted above.

Question What are the limitations of accounting ratios? Ratios such as EPS and the ROCE are subject to accounting conventions that might deter businesses pursuing policies that are in their long-term interest.

Question What qualification do you need to become an accounting professional? The exam is given in 4 parts and all 4 parts can be taken separately. Once you have passed all 4 for parts of the exam, you will be qualified as a Certified Public Accountant.

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Although the CPA exam is required for all states, the credit qualification may differ for your state. The department of labor and licensing for your particular state will have more information on the items needed in order to sit for the CPA exam. As an accounting professional in the state of Maryland, the requirements are credit hours in order to sit for the CPA examination.

Question What are cost accounting and its applications? This is used in accurate reporting of Cost of Goods Sold and consequently the Gross Income of a company.

A Cost Accountant will follow the "widget" throughout the production process tracking any costs associated and breaking them down to a unit level. It gets more complicated than that but this is a good generic answer. Question What is meant by public accounting? Question Define Tally Accounting Answer: They claim on their website that Tally is used by over 2 million users, in over 90 countries.

Tally 9. Question Why are accounting firms needed? Some of the smaller ones: Businesses will use them to calculate payroll and the accounting firm will calculate the amount of taxes taken out. Company income tax returns, accounting firms will usually represent their work if the company is audited by the IRS.

Accounting firms also give advice to companies on how to spend their money to save tax dollars and advice on tax shelters.

Question Why does the accounting equation have to balance? If you look at your general ledger or trial balance and the assets do not equal the liabilities plus equity the debits don't equal the credits , then you know you have a problem that must be resolved prior to having numbers that should be relied upon for any purpose whatsoever.

Question Contrast bookkeeping and accounting Answer: Accounting is the presentation and interpretation of those records to be used by management for decision making, improvement, and planning.

Question Why Accounting is important in business? Question What do you mean by material facts in accounting? Question What is the definition of manual accounting? Question How does accounting contribute to the community? Accountants help the communities manage their money and they take care of their taxes yearly.

They also manage their money, help set a budget for them and teach them to manage their money wisely. Question What is the definition of offset accounting? Accumulated depreciation, which is a contra account to fixed assets to obtain book value, is an example of an offset account.

Question Accounting for VC money in financials Answer: If it was invested as equity either Common or Preferred Stock , it shows up on the balance sheet as Paid in Capital. If it came in as debt such as bridge loan, secured note, etc. Question What is the relationship between bookkeeping and accounting?

Top 20 Accounting Interview Questions and Answers

Question Explain the concept of responsibility accounting Answer: It traces costs, revenues, or profits to the individual managers who are primarily responsible for making decisions about the costs, revenues, or profits in question and taking action about them. Responsibility accounting is appropriate where top management has delegated authority to make decisions. The idea behind responsibility accounting is that each manager's performance should be judged by how well he or she manages those items under his or her control.

Question What is a difference between public and private accounting? Examples would be audits, tax compliance, consulting, etc. Private accounting is accounting work that is done for your own company. Every company has some form of an internal accounting department and those employees would be considered private accountants.

Question What is the important of computerized accounting to manual? Question Define social responsibility accounting Answer: In addition, it is the social effects of business decisions in addition to the economic effects.

Question What are the disadvantages of back-flush accounting? If these are not met, the system will become unbalanced and may be quite unusable, or a nightmare to maintain. Standard costs must be reliably estimated and variances kept to a minimum. The premise of the system is that a sale triggers the manufacturing process, therefore buildup of work in progress or finished goods needs to be avoided Another drawback is that detailed information for management purposes may not be available where needed, and the production control therefore needs to be all the stronger.

The cost accounts used in back-flush accounting may be more difficult to reconcile to financial accounts needed for reporting Read More Answers. Question Discuss the consistency concept in accounting Answer: For an example if a company is charging depreciation using the straight-line method, they must stick with the straight-line method. Question What is a register when referring to accounting or bookkeeping?

Paper sheet ledgers were originally used to maintain credit records etc. Question What are the Accounting entries for branch accounts? Question What does the word credit mean in terms of accounting? In order for bookkeeping entries to balance, there must always be a debit left side, abbreviated by "dr" and credit right side, abbreviated by "cr" entry that equal one another.

Question What does it mean to do accounting training outside of public practice?

Accounting interview questions with answers

However, you cannot perform statutory audits; instead, you specialize in financial management. Question In accounting, are assets a permanent account?

Question Define "book value" as applied to accounting Answer: Question In terms of accounting the trial balance when is it taken?

Question What is marginal cost? More formally, the marginal cost is the derivative of total production costs with respect to the level of output. Marginal cost and average cost can differ greatly. The short movie Derive a Supply Curve 40 seconds shows an excerpt from the Perfect Competition presentation that derives a supply curve from profit maximizing behavior and a marginal cost curve. Question What steps would you take before approving an invoice for payment?

Finally, for payments you need to format and build. Question What is meaning of invoice? Invoice Number 2.

Invoice date 3. Name and address of the person 4. Name and address of the person to whom invoice is made Buyer of goods and service 5. Applicable rates and taxes with percentages 7. Quantity of the goods and services 9. Quality or any other specifications Invoice must be signed by the person making it Terms and conditions of making the payment Read More Answers.

Question What procedure for excess payment to supplier I would like know without adjusting invoice that means how supplier will send back excess amount how do in oracle apps? This will show as debit balance in supplier account. Question What is the difference between Consigner and Consignee? Consignee is the person who receives the goods and he just possesses the goods and not the owner. Know my question is that we want to close the transaction now and how it possible?

If you received 25 of worth in exchange of 50 advances, you can close it for a temp. The transaction entry would be Question What are premises in accounting sense? What is VAT adjustment? Question What is the Provision? What is the Entry for Provision? Question What are the advantages of Computer accounting over Paper accounting? Question How to prepare finalization accounts? And then prepare profit and loss adjustment account and with the help of the trial balance prepare balance sheet and also show the profit under reserves after deducting the previous year losses and show contingencies if any in the notes to accounts.

Give an example Answer: How will it be charged? Presently it covers 58 services. The service provider but A collected shall pay a service tax from the service receiver. Excise is also a form of indirect tax levied on A goods produced or manufactured in India.

Question What is Capital Budget? It was done to see if the added benefit of a capital purchase, i. Question What is purchasing order? Question What is vendor? Question What is SLA? Question What is debit and credit note? Question What is the difference between Accounts and Finance? Financial Accounting is the area of accounting concerned with reporting financial information to interested external parties Read More Answers. Question What is the dual aspect concept?

Each transaction has two sides. Recording both aspects of coming and going is called dual aspect concept Read More Answers. Please give details? Question What is cash flow and fund flow? Question What is capital gain? The word profit generally means revenue profits. While capital gain is generally received infrequently Read More Answers. Question What are bills receivable? Question What is deferred account? Question What are MIS reports and do you prepare it?

In addition, MIS report is reporting information of reports like efficiency of wing or a department of a company. IF we take BPO Call center sector as example, MIS consists of efficiency of agents, Average time taken hold time etc, and passing this to the management level for their analysis.

Question What is your role in planning? Every work is group work so we find what work we done in every part of Accounting.

Question How can you do credit control? Make the creditor, your debtor 2. For bad creditor, inform your position of willingness but inability to sustain relationship keeping in mind our business position. Question What is bank reconciliation statement? This statement shows the reasons or transactions because of which balances as shown in cashbook and passbook are not tallying with each other.

Question What are the functions of manger -accounts and manager-finance? Explain in detail. Also, change of the accounting procedures of the company. Question What are the extraordinary items? Question What are the fictitious assets? Question What are the Steps involved in Project implementation? Question What are time sheets? How are they maintained? Based on the Timesheet the Company will raise the invoice, for the consulting services provided by its employee, on the end-client. Question What is mean by Working Capital?

Question What is shadow balance? Book balance is There is a debit of The debit is posted in the system and is sent for authorization. Now the Account shows a Shadow Balance of If there is a deficit on side that is, debit, or credit a suspense account is opened with the balancing figure. Question What is the difference between inactive accounts and dormant account? Inactive accounts are those accounts in which transactions are being made for long time. Question What is meant by turnover?

It can be measured with sales volume figure or no. Question What is meant by calendar maintenance? Simply meaning is maintaining the records monthly, quarterly, half-yearly, and yearly. Question What is meant by daily accrual and booking?

Revenues and costs are accrued gathered , that is recognized as they are earned or incurred and not as money is received or paid and recorded in the financial statements of the periods to which they relate.Liability can be defined as an obligation towards another company or party.

For example. The reason why you will never see depreciation being charged on land is that land has an infinite useful life.

Part 1 – Core Accounting Questions

It denotes weighted average cost of capital. Non suitability for the nature of product and nature of business. Systems of accounting:

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