If you’re looking for Accounting job Interview Questions and answers, look no further. Here, we’ve compiled a list of the most commonly asked accounting questions to help you prepare for your next interview. We are trying our best to cover almost all the basic to advanced accounting job interview questions and answers with example, accounting manager interview questions and answers, and technical accounting interview questions and answers. We use easy language so that everybody can understand. We hope this article is very helpful for you. Besides this, every job interview has common interview questions and answers you should also prepare for these. Let’s get started.
100+ Accounting Job Interview Questions and Answers
01. Define What is Accounting?
Accounting is the process of recording, classifying, and summarizing financial transactions to provide information that is useful in making business decisions.
Accounting is important because it provides information that is used in making decisions about how to allocate resources. For example, if a company wants to invest in new equipment, it needs to know how much money it has available to invest. Accounting can also be used to make decisions about pricing, investment strategies, and other business decisions.
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02. What are the accounting Principal?
The accounting principle is the foundation for modern financial accounting. GAAP, or generally accepted accounting principles, are a set of rules that encompass the basic framework of guidelines for financial accounting. The purpose of GAAP is to ensure that financial reporting is consistent and accurate so that investors and creditors have a clear understanding of a company’s financial condition.
There are 10 basic principles of GAAP:
1) Revenue Recognition Principle – Revenue should be recognized when it is earned, not when it is received.
2) Matching Principle – Expenses should be matched with the revenue they helped generate.
3) Full Disclosure Principle – All relevant information should be disclosed in financial reports.
4) Objectivity Principle – Financial information should be objective and free from bias.
5) Materiality Principle – Only information that is material should be reported.
6) Periodicity Principle – Financial reports should be prepared at regular intervals.
7) Comparability Principle – Financial reports should be comparable with those of prior periods.
8) Consistency Principle – Financial reports should be consistent from period to period.
9) Accrual Principle – Financial reports should be prepared on the accrual basis.
10) Realization Principle – Revenue and expenses should be recognized when they are realized, not when cash is received or paid.
03. What Are The Accounting Concepts?
The accounting concepts are the basic assumptions and principles that underlie financial accounting. They include the following:
-Economic entity assumption: This assumption states that a business is a separate economic entity from its owners and other businesses. This means that a business has its own finances, which are distinct from the finances of its owners or other businesses.
-Monetary unit assumption: This assumption states that money is a stable measure of value. This means that money can be used to measure the value of goods and services.
-Full disclosure principle: This principle states that all information that could reasonably be expected to impact the decisions of users of financial statements should be disclosed in those statements.
-Going Concern concept: This is a fundamental assumption of accounting and financial reporting. It states that the business exists for the foreseeable future, and will be able to continue operating for at least one year.
04. What is Working Capital?
In business, working capital, also known as net working capital (NWC), is the difference between a company’s current assets, such as cash and accounts receivable, and its current liabilities, such as debts or accounts payable.
A company’s working capital ratio is a measure of its short-term liquidity and indicates whether it has enough resources to pay its debts over the next 12 months. A high working capital ratio indicates that a company can easily meet its short-term obligations, while a low ratio suggests that it may have difficulty meeting its financial obligations.
Working capital is important because it represents a company’s ability to generate cash flow and service its debt. It is also an important indicator of a company’s financial health and stability.
05. What does Negative Working Capital Mean?
Negative working capital means that a company’s current liabilities exceed its current assets. This can happen for a variety of reasons, but it’s generally not a good sign. It may indicate that the company is having trouble paying its bills, or that it has too much inventory. Negative working capital can also be a sign of financial distress, so it’s important to keep an eye on this number if you’re investing in a company.
06. What is the account receivable?
Accounts receivable is the money owed to a company by its customers. This could be in the form of invoice payments, credit card payments, or any other type of debt that a customer has with a company. Accounts receivable is considered an asset on a company’s balance sheet, because it is money that is owed to the company and will eventually be paid.
Accounts receivable is important to companies because it is money that they are entitled to receive. This money can be used to help finance operations or expand the business. Additionally, accounts receivable can give investors and creditors an idea of how well a company is doing financially. If a company has a lot of accounts receivable, it may mean that it is having trouble collecting payments from its customers.
07. What is the Account payable?
An account payable is a financial obligation that a company has to pay. This could be for goods or services that have been received, or for expenses that have been incurred. Accounts payable are usually short-term obligations, which means they are due within one year. Accounts payable are recorded on a company’s balance sheet as a liability.
Companies often have many different suppliers and vendors that they owe money to. Keeping track of all these accounts payable can be a challenge. That’s why it’s important for companies to have a good accounting system in place.
When it comes time to pay an account payable, the company will typically issue a check or make an electronic payment. If the account is past due, the company may need to negotiate with the vendor to come up with a payment plan.
08. What is a ledger and what are the different types of ledger?
A ledger is a bookkeeping device that is used to record financial transactions. The ledger contains a running balance of all the accounts in the company. This device is important because it ensures that the company’s financial records are accurate and up-to-date.
The ledger is divided into two sections: the general ledger and the subsidiary ledger. The general ledger contains all of the accounts that pertain to the entire company. The subsidiary ledger contains individual accounts for each department or division within the company.
The general ledger is further divided into two parts: the assets and liabilities side. The assets side lists all of the items that the company owns, such as cash, inventory, and equipment. The liabilities side lists all of the money that the company owes, such as loans and credit card balances.
09. Can you explain accrual basis vs. cash basis accounting?
There are two main types of accounting: accrual basis and cash basis. Accrual basis accounting recognizes revenue when it is earned, regardless of when the money is actually received. This means that revenue from a project completed in December would be recognized in December, even if the client doesn’t pay until January. Cash basis accounting, on the other hand, only recognizes revenue when it is actually received. So in the example above, the revenue would not be recognized until January, when the payment is received.
Which type of accounting you use depends on your business and what makes the most sense for you. If you’re selling products or services with long turnaround times, accrual basis accounting may be a better option so that you can more accurately track your revenue.
10. What is your experience in preparing financial statements?
When it comes to preparing financial statements, I have a lot of experience. I’ve been doing it for years and have a strong understanding of the process. I know how to read and interpret financial data, and I’m always looking for ways to improve my skills.
I believe that my experience in preparing financial statements will be a valuable asset to any company. I’m able to provide insights into the health of a business, and I can help identify areas where improvements can be made. I’m also comfortable working with budgets and forecasting, so I can help ensure that a company is on track to meet its financial goals.
11. What are the three main Financial Statements?
The balance sheet, income statement, and cash flow statement are the three main financial statements that businesses use to track their finances. The balance sheet shows a company’s assets, liabilities, and equity at a specific point in time. The income statement shows a company’s revenues, expenses, and profits over a period of time. The cash flow statement shows how much cash a company has on hand and how it is being used.
12. What is your experience in auditing or reviewing financial statements?
As someone with experience in auditing or reviewing financial statements, I know how important it is to have a firm understanding of the numbers. I also know that it can be difficult to wade through all of the information and come to a clear conclusion. Here are a few things that I have learned from my experience in auditing or reviewing financial statements.
First, always take the time to review the entire financial statement. This may seem like common sense, but it is easy to get caught up in one area and miss something important elsewhere. Second, keep in mind that there is usually more than one way to interpret the numbers. As you are reviewing the statement, consider all of the potential ways that the numbers could be read. Finally, don’t be afraid to ask questions. If you don’t understand something, ask for clarification.
13. Can you walk me through a few examples of journal entries?
When it comes to bookkeeping, journal entries are the first step in the process. Journal entries are used to record transactions in the accounting records of a business. These transactions can be anything from sales and purchases, to payments and receipts. To illustrate, let’s take a look at a few examples of journal entries.
Example 1: XYZ Corporation sells goods to ABC Company for $10,000 on credit.
XYZ Corporation would record a journal entry like this: Debit credit – Accounts Receivable 10,000 Sales 10,000
Example 2: ABC Company pays $5,000 of its account receivable to XYZ Corporation. The journal entry would look like this Debit credit – Accounts Receivable 5,000 Sales 5,000
14. What is reversing journal entries?
A reversing journal entry is a type of accounting transaction used to correct errors in double-entry bookkeeping. In a reversing journal entry, two offsetting entries are made in different accounting periods to correct an error. The first entry is made in the current period to reverse the original transaction, and the second entry is made in the previous period to record the corrected transaction.
Reversing journal entries are used to correct errors that have been carried forward from one period to another on the books of account. When an error is discovered, a reversing journal entry is made in the current period to cancel out the incorrect transaction. In addition, a second journal entry is made in the previous period to record the corrected transaction. This ensures that the financial statements for both periods are accurate.
There are several types of errors that can be corrected with a reversing journal entry.
15. Where a cash discount should be recorded in a journal entry?
A cash discount is a reduction in the price of a good or service that is offered by a vendor to a customer for paying their invoices within a certain period of time. The terms of the cash discount are typically stated on an invoice or other document issued by the vendor.
There are two ways to record a cash discount in accounting, depending on when the payment is made. If payment is made within the discount period, then the cash discount can be recorded as a separate line item in the journal entry. For example, if an invoice is for $100 and the terms state that there is a 2% cash discount if paid within 10 days, then the journal entry would show $98 as the amount paid.
If payment is made after the discount period, then the full amount of the invoice must be recorded and the cash discount becomes an expense.
16. What is your experience with double-entry bookkeeping?
Double entry bookkeeping is an essential part of accounting and financial record keeping. It is a system where every transaction is recorded in at least two accounts, which are typically classified as a debit and a credit. This system provides a more accurate picture of financial activity and can help to prevent errors.
I have used double entry bookkeeping in my previous job as an accountant. I found it to be very helpful in keeping track of all the transactions and making sure that everything was balanced. It was also helpful in identifying any errors that were made so that they could be corrected.
Overall, I believe that double entry bookkeeping is an excellent way to keep track of financial activity and would recommend it to anyone who is looking for a more accurate picture of their finances.
17. What is compound journal entry?
A compound journal entry is an accounting transaction that involves two or more accounts. The most common type of compound journal entry is a sales journal entry, which includes a debit to the Accounts Receivable account and a credit to the Sales Revenue account.
Compound journal entries are used to record transactions that impact multiple accounts. In a sales journal entry, for example, there would be a debit to Accounts Receivable (because money is owed to the company) and a credit to Sales Revenue (because revenue has been generated).
While compound journal entries are not as common as simple journal entries (which only involve one account), they are still an important part of bookkeeping and should be recorded correctly in order to maintain accurate financial records.
18. What is budgeting and why is it important?
Budgeting is an important part of accounting which involves allocating resources in order to achieve financial goals. The budgeting process begins with setting financial goals and then creating a plan to achieve them. This plan includes estimating income, determining expenses, and finding ways to save money.
Budgeting is important because it helps individuals and businesses allocate their resources in a way that will allow them to reach their financial goals. It also prevents overspending, which can lead to debt and other financial problems.
Creating a budget can be difficult, but there are many helpful resources available. There are also software programs that can automate the budgeting process. For businesses, working with a professional accountant or financial advisor can ensure that the budget is accurate and meets the company’s needs.
19. What are three common budgeting methods used by accountants?
There are many different methods that accountants can use to create a budget. Three of the most common are the following:
- The top-down approachbegins with an overall goal or target for the company’s spending. This target is then broken down into smaller budgets for each individual department or division.
- The bottom-up approachstarts with estimating the costs of specific projects or activities. These estimates are then aggregated to form a total budget for the company.
- The zero-based approachassigns a cost to every activity within the company, regardless of whether it has been done in the past or not.
20. What made you interested in accounting?
I have always been interested in numbers and how they can be used to understand a business. I also like the challenge of working with complex financial data.
21. What do you think are the most important skills for an accountant?
The most important skills for an accountant are attention to detail, analytical skills, and problem-solving skills.
22. What do you think are the most important soft skills for an accountant?
The most important soft skills for an accounting are communication, leadership, and teamwork.
23. What education or training is necessary to become an accountant?
To become an accountant, you will need to complete a four-year degree in accounting or a five-year master’s degree in accounting. In addition to your academic coursework, you will also need to complete an internship with a certified public accountant (CPA) firm. Once you have completed your education and training, you will be eligible to take the Uniform CPA Examination.
24. What is Microsoft Accounting Professional?
Microsoft Accounting Professional is a software program that helps businesses keep track of their finances. It can be used to create invoices, track expenses, and manage payroll. Microsoft Accounting Professional is easy to use and can save businesses time and money.
25. What accounting software platforms are you familiar with?
The question also say like this way: Name the popular accounting applications? There are a variety of accounting software platforms available on the market, each with its own set of features and capabilities. Some of the more popular accounting software platforms include QuickBooks, Sage 50, Xero and Tally.
QuickBooks is one of the most widely used accounting software platforms, particularly among small businesses. It offers a wide range of features and is relatively easy to use.
Sage 50 is another popular option, particularly among medium-sized businesses. It offers advanced features and is more customizable than QuickBooks.
Xero is a newer accounting software platform that has gained popularity in recent years due to its cloud-based architecture and ease of use.
Tally is an accounting software platform that focuses on small businesses. It is very easy to use and offers a range of features, including reporting tools and the ability to integrate with other applications.
26. What accounting software have you worked for before and which one is your top choice?
The question also say like this way: Name the accounting application you prefer and why? I have worked with a few different accounting software programs and my top choice would have to be QuickBooks. I find QuickBooks to be the most user-friendly and intuitive of all the accounting software programs I have used. It is also very affordable, which is important for small businesses.
27. What Circumstance goodwill Increase?
There are a number of circumstances that can increase goodwill. For example, if a company acquires another company at a price above the book value of its assets, the excess is recorded as goodwill. Goodwill also arises when a company’s business reputation is strong and translates into intangible assets such as customer relationships or favorable supplier arrangements. Finally, if a company has been in business for many years and has consistently generated earnings, it may have a history of successful operations that investors view favorably, resulting in higher goodwill.
28. Explain the Revenue Recognition and Matching Values?
Revenue recognition is the process of recognizing revenue in the financial statements. The purpose of revenue recognition is to match the revenues with the expenses incurred in earning those revenues. The matching principle is the basic accounting principle that requires revenues and expenses to be matched in the financial statements.
The revenue recognition principle states that revenue should be recognized when it is earned, not when it is received. This means that if a company earns revenue in one period but does not receive the cash until a later period, the company should still recognize the revenue in the first period.
The matching principle requires that expenses be matched with revenues. This means that if a company incurs an expense in one period but does not earn any revenue from that expense until a later period, the company should still recognize the expense in the first period.
29. What are the pre-requisites of revenue recognition?
Revenue recognition is the process of recognizing revenue in accordance with generally accepted accounting principles. Revenue is recognized when it is earned, and it is recognized as earned when all of the following criteria have been met:
- Persuasive evidence of an arrangement exists
- Delivery has occurred or services have been rendered
- The seller’s price to the buyer is fixed or determinable
- Collectability is reasonably assured
If these criteria are not met, then revenue cannot be recognized. For example, if delivery has not yet occurred, then revenue cannot be recognized until delivery has taken place. Similarly, if the seller’s price is not fixed or determinable, then revenue cannot be recognized until a price has been established.
30. What is TDS?
TDS abbreviation is Tax Deducted at source. When you receive income from certain sources, the payer is required to deduct a portion of the payment as tax. This tax is known as ‘tax deducted at source’ or TDS. The amount of TDS deducted depends on the type of income and the applicable tax rate. The payer then deposits this amount with the government.
For example, if you earn interest from a bank deposit, the bank will deduct 10% TDS on the interest amount and deposit it with the government. Similarly, if you are a professional and earn consulting fees, your client will deduct TDS at the applicable rate before making payment to you.
As a taxpayer, it is important to be aware of TDS so that you can claim credit for it while filing your tax return.
31. Where to Point out Tax Deducted at source (TDS) within the Balance Sheet?
Tax Deducted at source (TDS) is an important part of the Balance Sheet. It is a method of collecting taxes from individuals and businesses. The tax collected through TDS is used to fund the government’s expenditure.
TDS must be reported in the Balance Sheet under the heading “Other Taxes”. The amount of tax collected through TDS must be reported as a separate line item under “Other Taxes”.
The tax collected through TDS can be used to offset any taxes that are due from the individual or business. This can help to reduce the amount of tax that is owed at the end of the year.
32. What is Nominal Accounts with Examples?
A nominal account is an account that pertains to the income and expenses of a company. In other words, it is an account that deals with the financial transactions of a company. The most common examples of nominal accounts are sales, purchases, and salaries.
Nominal accounts are important because they give business owners and managers a clear picture of where the company’s money is coming from and where it is going. This information is critical for making sound financial decisions.
For example, let’s say a company has $10,000 in sales and $9,000 in expenses. The difference between these two numbers is the net income of the company. This information would be found in the nominal account for sales and expenses.
Nominal accounts are also used to calculate a company’s tax liability.
33. Describe Real Account And Nominal Accounts?
An account is a financial record of a specific transactions or activities. Accounts are divided into two categories, nominal and real. Nominal accounts are used to record temporary transactions, such as revenue and expenses. Real accounts are used to track permanent information, such as assets and liabilities.
Nominal accounts are important because they provide a way to track the financial health of a company on a short-term basis. This information can be used to make informed decisions about spending and budgeting. Real accounts are also important, because they provide information about the long-term financial health of a company. This information can be used to make informed decisions about investments and growth.
34. What are the major errors in accounting?
The accounting profession is one that is rife with opportunities for errors. From simple math mistakes to more complex issues such as failing to properly record transactions, there are many ways that an accountant can make a mistake. Some of the most common errors include:
*Making simple math mistakes when recording transactions or preparing financial statements
*Failing to properly record transactions
*Incorrectly categorizing expenses or income
*Failing to reconcile accounts
*Making errors in payroll calculations
While accounting errors can occur in any type of organization, they can be especially costly for small businesses. This is because small businesses often have limited resources and staff, which can make it difficult to recover from an accounting error. In some cases, a single mistake can lead to the downfall of a small business.
35. Difference between inactive and dormant accounts?
When it comes to accounting, there is a big difference between inactive and dormant accounts. Inactive accounts are those that have been used in the past, but are no longer active. For example, an old checking account that you no longer use would be considered inactive. Dormant accounts are those that have never been used before.
Inactive accounts still have a balance and can be reactivated at any time, while dormant accounts have zero activity and may need to be opened up again from scratch. In both cases, it’s important to keep accurate records so you know exactly where your money is going.
36. What is GAAP?
GAAP is the Generally Accepted Accounting Principles. These are a set of rules and guidelines that companies must follow when preparing their financial statements. The purpose of GAAP is to ensure that financial statements are consistent and accurate, so that investors and creditors can make informed decisions about whether or not to invest in a company.
There are four main principles of GAAP:
- Relevance: Financial information must be relevant to the decision-making needs of users.
- Reliability: Financial information must be reliable, meaning it must be free from material error and bias.
- Comparability: Financial statements should be able to be compared with other companies’ statements in order to allow for effective decision making.
- Understandability Financial information should be understandable.
37. What are the accounting standards?
There are a few different accounting standards, but generally they all revolve around the same concepts. The Generally Accepted Accounting Principles (GAAP) are a set of guidelines that accountants follow when preparing financial statements. These principles were established by the Financial Accounting Standards Board (FASB).
International Financial Reporting Standards (IFRS) are another set of guidelines that have been adopted by more than 100 countries.
Both GAAP and IFRS aim to improve financial reporting by creating transparency and consistency. This allows investors and other interested parties to easily compare financial statements from different companies. The standards also help to prevent fraud by providing clear rules that everyone must follow.
While both GAAP and IFRS are similar, there are some key differences between the two sets of standards.
38. Why Are Accounting Standards Necessary?
The Generally Accepted Accounting Principles (GAAP) is necessary to maintain credibility in financial reporting and to keep financial statements comparable across different businesses. Without GAAP, businesses could report their finances in any way they choose, which would make it difficult to compare performance or make investment decisions.
GAAP is also important for protecting investors and other stakeholders from fraud and misrepresentation. For example, Enron used creative accounting techniques to hide its massive debt from investors, leading to one of the biggest corporate bankruptcies in history. By adhering to GAAP, companies can provide accurate and transparent financial reporting that gives stakeholders confidence in the business.
Overall, accounting standards are necessary to ensure the fairness, accuracy, and comparability of financial reports.
39. What is deferred tax liability?
A deferred tax liability is an income tax liability that arises from temporary differences between the financial reporting basis and tax basis of assets and liabilities. A deferred tax asset is the opposite of a deferred tax liability.
A company has a deferred tax liability when its financial reporting basis for an asset or liability is different from its tax basis. The most common reason for this difference is accelerated depreciation for financial reporting purposes. This results in a lower taxable income in the current year, which creates a deferred tax liability. The company will eventually pay taxes on this income, but not until the asset is sold or the loan is repaid.
Another common reason for a deferred tax liability to arise is when a company reports income from interest on its loans as operating income rather than as non-operating income. This results in a lower taxable income in the current year, which creates a deferred tax liability.
40. What are the deferred tax asset?
A deferred tax asset is an accounting term for a situation in which a company has paid taxes in advance, on income that has not yet been earned. The company records the tax payment as an asset on its balance sheet, because it expects to receive a refund when the taxes are eventually paid.
Deferred tax assets can arise from many different types of transactions, including accelerated depreciation, research and development credits, and losses carried forward from prior years. In each case, the amount of the deferred tax asset is equal to the amount of taxes that have been paid in advance.
Deferred tax assets are important because they represent a potential source of cash for a company. If a company has significant deferred tax assets, it may be able to use them to reduce its taxes payable in future periods. This can provide a significant advantage when it comes to managing cash flow and earnings.
41. Can you explain deferred assets with an example?
A deferred asset is an economic resource that a company has acquired but has not yet used or realized. For example, a firm may purchase new equipment but not put it into operation until the following year. The cost of the equipment is then “deferred” until it is used.
Another common type of deferred asset is inventory. A company may produce or purchase goods but not sell them until later. The cost of the goods is deferred until they are sold.
Deferred assets can also arise from prepaid expenses. For example, if a company pays for insurance one year in advance, the cost of the insurance is deferred until the following year when the coverage begins.
Deferred assets can be found on a company’s balance sheet under the heading “Assets.
42. What is Deferred Revenue Expenditure?
Deferred revenue expenditure is an accounting term for an expenditure that is incurred today but will not be charged against current earnings. The purpose of this treatment is to match the timing of the expense with the timing of the revenue it generates.
An example of a deferred revenue expenditure would be advance payment for subscription services. The subscriber pays upfront but the service will not be used until a later period. In this case, the amount received would be reported as deferred revenue on the balance sheet and recognized as income when earned.
Another common example is research and development costs. Companies often incur substantial costs in developing new products or improving existing ones. However, these costs are not immediately reflected in sales because it takes time to bring the product to market. As a result, these expenses are capitalized on the balance sheet and amortized over time.
43. What is the equation for the Acid-Test Ratio in accounting?
The Acid-Test Ratio is one of the most important ratios in accounting. It is used to measure a company’s financial health and its ability to pay its debts. The equation for the Acid-Test Ratio is: Current Assets – Inventory / Current Liabilities
This ratio is important because it shows how much liquid assets a company has compared to its liabilities. A high ratio means that the company has a lot of cash and can easily pay its debts. A low ratio means that the company may have trouble paying its debts.
44. What is a Bank Reconciliation Statement and why is it prepared?
A bank reconciliation statement is a document that lists all of the deposits and withdrawals made to and from a company’s bank account during a specific period of time. The purpose of this statement is to reconcile the discrepancies between the bank’s records and the company’s records. This process is important because it helps businesses keep track of their finances and prevent fraud.
There are two main types of reconciling items: outstanding checks and deposits in transit. Outstanding checks are checks that have been written by the company but have not yet cleared the bank. Deposits in transit are deposits that have been made by the customer but have not yet been processed by the bank.
Reconciling these items can be a time-consuming process, but it is important to do on a regular basis in order to maintain accurate financial records.
45. What are Fictitious Assets?
A fictitious asset is an asset that does not exist in physical form and has no real value. It is created for financial reporting purposes only. Examples of fictitious assets include goodwill, patents, and copyrights.
Fictitious assets are often used to inflate a company’s financial statements and make it look more profitable than it actually is. This can be done by overstating the value of the asset, or by booking revenue from the sale of the asset before it has actually been sold.
Fictitious assets can be misleading to investors and creditors, who may not be aware that the asset is not real. In some cases, companies have been forced to write down the value of their fictitious assets when they are exposed.
46. Can you explain the basic accounting equation?
In accounting, the basic equation is Assets = Liabilities + Equity. This equation represents the relationship between what a business owns (assets), what it owes to others (liabilities), and the owners’ equity in the business. In other words, assets are financed by either liabilities or equity.
The equation is the foundation of double-entry bookkeeping, which is used by most businesses today. The left side of the equation (assets) represents all of the resources that a business has at its disposal. The right side of the equation (liabilities and equity) represents all of the claims against those assets.
Liabilities are obligations that arise during the course of business operations, such as loans from banks, money owed to suppliers, or wages owed to employees.
47. What are the branches of accounting?
There are three primary branches of accounting, each of which plays an important role in financial recordkeeping and reporting:
- Financial Accounting:This branch of accounting focuses on the preparation of financial statements for external users, such as shareholders, creditors, and regulators. Financial accounting is governed by generally accepted accounting principles (GAAP).
- Managerial Accounting:This branch of accounting provides information and analysis to help managers make decisions about how to best run their businesses. Managerial accounting is not subject to GAAP.
- Cost Accounting:This branch of accounting provides information and analysis to help managers determine the costs of their products or services. Cost accounting is not subject to GAAP.
48. What is retail banking?
Retail banking is the provision of services by a bank to individual customers, rather than to businesses or other banks. Retail banking services include: savings and checking accounts, mortgages, credit cards, and personal loans. Retail banks typically have a large network of branches and ATMs, allowing customers to conduct their banking activities at a time and place that is convenient for them.
In recent years, retail banks have faced increased competition from online-only banks, which often offer higher interest rates on savings accounts and lower fees. In order to compete, retail banks have had to provide more innovative products and services, such as mobile banking and rewards programs.
Despite the challenges posed by online competitors, retail banks still play an important role in our economy. They provide critical financial services to millions of consumers and small businesses across the country.
49. What is departmental accounting?
Departmental accounting is the process of recording, classifying, and summarizing financial transactions to provide information for decision-making by department managers.
The goal of departmental accounting is to provide managers with information that will help them make decisions about how to allocate resources and manage activities within their departments.
Departmental accounting information can be used to make decisions about pricing, production levels, investment in new equipment or technology, and hiring or firing staff.
Managers must carefully consider all of the information available to them when making decisions, as each decision can have a significant impact on the financial health of the department and the company as a whole.
50. What is the perpetual or periodic inventory?
Inventory is the stock of goods that a company has on hand. The perpetual inventory system is a system of inventory management that records the sale or purchase of inventory in real-time. This means that as soon as a sale is made, or a purchase is made, the inventory is updated to reflect this change. The periodic inventory system, on the other hand, does not update the inventory in real-time. Instead, it updates the inventory at set intervals, such as once a month or once a year.
The main advantage of the perpetual inventory system is that it provides an up-to-date record of what inventory is available. This can be helpful in avoiding stock outs and ensuring that customers can always get the products they need. The periodic inventory system is less expensive to implement, since it requires less data entry and fewer updates to the inventory management software.
51. Abbreviation of VAT in accounting?
VAT is an acronym for “value-added tax.” It is a consumption tax levied on certain goods and services in order to generate revenue for the government. The VAT is added to the price of the good or service at each stage of production, so that the final consumer bears the brunt of the tax. Businesses are able to recover VAT paid on purchases, but not on sales.
The abbreviation for VAT can be confusing because there are many different types of taxes that use acronyms. The most common type of VAT is the federal value-added tax, which is imposed by the United States government. However, states and localities may also impose their own value-added taxes.
52. Describe CPA?
A CPA is a Certified Public Accountant. In order to become a CPA, one must pass an exam administered by the American Institute of Certified Public Accountants (AICPA). The CPA exam is a four-part test that covers auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation.
A CPA designation is the gold standard for accountants. It signifies that the holder has the knowledge and skills necessary to provide quality accounting services. CPAs are held to high ethical standards and are required to complete continuing education courses to maintain their license.
The role of a CPA varies depending on the needs of their client. They may be responsible for preparing tax returns, auditing financial statements, or providing consulting services.
53. How do public accounts and private accounts differ?
There are a few key ways that public and private accounting differ. One of the most important ways is who they answer to. Public accounting firms are beholden to shareholders, meaning they have to answer to a board of directors. Private accounting firms don’t have this same level of accountability and can make decisions based on what they think is best for the company, not what will appease shareholders. This can make private accounting firms more nimble and responsive to change.
Another big difference between public and private accounting is the type of work they do. Public accounting firms tend to do more audit work, while private firms do more tax work. This is because public companies are required by law to have their financial statements audited, while private companies are not. However, both types of firms do provide consulting services and can help with things like financial planning and budgeting.
54. What is the difference between accounting and auditing?
While both accounting and auditing involve reviewing financial records, there is a key difference between the two. Accounting focuses on recording and categorizing financial transactions, while auditing goes one step further to ensure that these transactions are accurate and comply with relevant laws and regulations.
Auditors may work for either an organization or an independent firm, and their responsibilities include reviewing financial statements, testing internal controls, and conducting interviews with company personnel. They also may be called upon to provide recommendations for improving financial recordkeeping or internal controls.
Organizations rely on accounting data to make sound decisions about where to allocate resources and how to manage risks. As such, accountants play a critical role in ensuring the accuracy of this information. To that end, they often work closely with auditors to ensure compliance with relevant laws and regulations.
55. What do you mean by a purchase return in accounting?
In accounting, purchase return refers to the return of merchandise that a customer has purchased from a company. The reasons for the return may include defective merchandise, incorrect size or style, or simply because the customer has changed their mind.
When a customer returns merchandise, the company will issue a credit to the customer’s account. The amount of the credit is equal to the purchase price of the returned item (s). The credit will appear on the customer’s next statement.
If the returned merchandise is in resalable condition, the company may choose to put it back on the shelf and sell it to another customer. In this case, there is no need to issue a credit to the original customer’s account.
56. What is accounting cycle?
An accounting cycle is the process that companies use to record and report their financial activities. The accounting cycle includes four main steps: recording transactions, adjusting entries, preparing financial statements, and closing the books.
Recording transactions is the first step in the accounting cycle. Companies keep track of their financial activities by recording all of their transactions in a journal. A transaction is any event that has a financial impact on the company. This could include something as simple as buying office supplies or selling products to customers.
After all of the transactions have been recorded in the journal, it’s time to adjust entries. Adjusting entries are made at the end of each accounting period to ensure that the financial statements are accurate. This step may involve correcting errors from previous periods or recording information that has not yet been reported.
57. What is the operating cycle in accounting?
An operating cycle is the time it takes to convert cash into inventory, and then convert that inventory back into cash. This is also known as the cash conversion cycle.
For a business that sells products, the operating cycle begins when cash is used to purchase inventory. The inventory is then sold, and the proceeds are used to pay for expenses and debts. Finally, the business receives payment from customers, which completes the cycle and allows it to start over again.
The length of the operating cycle depends on a number of factors, including how quickly inventory is turned over and how long it takes customers to pay their invoices. Businesses with long operating cycles may have difficulty managing their cash flow, because they are constantly using cash to purchase new inventory before receiving payment from customers.
58. What is Accounts Payable Cycle?
The accounts payable cycle is the process that companies use to manage and pay invoices from suppliers. The cycle begins when a company receives an invoice from a supplier and ends when the company pays the supplier. In between, there are a number of steps that the company must take to ensure that the invoice is accurate and that payment is made on time.
The first step in the accounts payable cycle is to verify that the invoice is correct. This includes checking that the quantities, prices, and terms of sale are all accurate. If there are any discrepancies, they must be resolved before payment can be made.
Once the invoice has been verified, it must be approved by the appropriate person within the company. This ensures that payment will be made for legitimate expenses only. After approval, payment must be scheduled.
59. Define balancing in accounting
In accounting, balancing refers to the process of ensuring that the debits and credits in a transaction are equal. This can be done by using a T-account, which is a graphical representation of a ledger account that shows the debit and credit side by side. Balancing is important because it helps to ensure that the books are in agreement and that there are no errors in the entries.
60. Define Scrap value in accounting?
The scrap value is the estimated amount that can be realized from the sale of an asset after it has been fully depreciated. The scrap value is also known as the salvage value.
61. Define Partitioning in accounting?
In accounting, partitioning is the process of breaking down a whole into its component parts. This can be done for financial reporting purposes, to better understand the profitability of different parts of a business, or to allocate resources more effectively.
Partitioning can be done in many different ways, but some common methods include by customer, product, or geography. For example, a company might want to see how profitable different types of customers are, so they would break down their sales by customer type. Or they might want to understand which products are selling well and which are not, so they would partition their sales by product.
Geographic partitioning can also be useful for companies with operations in multiple countries. This type of analysis can help managers understand which regions are most profitable and where they should focus their efforts.
62. What is the key difference between a provision and a reserve?
When it comes to provisions and reserves, the key difference is that provisions are created for specific known liabilities, while reserves are set aside for potential future losses that have not yet been quantified. Provisions are typically used to cover things like warranties and employee severance packages, while reserves are more commonly used for things like legal expenses or bad debt write-offs.
Another key difference is that provisions are typically charged against income in the period in which they are incurred, while reserves are not. This means that provisions can have a direct impact on a company’s bottom line in any given year, whereas reserves do not. Finally, because provisions are created for specific known liabilities, they tend to be more accurate than reserves, which are based on estimates of future losses.
63. Define offset accounting?
In accounting, offsetting is the process of netting items on opposite sides of a ledger. For example, when a company pays its suppliers, the accounts payable are offset against the cash account. This creates a single entry that represents the net amount of money owed to or by the company.
Similarly, when a company sells goods or services on credit, the accounts receivable are offset against the revenue account. This creates a single entry that represents the net amount of money owed to or by the company.
Offsetting is used in both double-entry and single-entry accounting systems. In double-entry accounting, each transaction is recorded as two entries: a debit and a credit. These entries offset each other and cancel out, leaving a net zero balance in the ledger.
In single-entry accounting, only one entry is made for each transaction.
64. Define overhead in terms of accounting?
Overhead, in terms of accounting, refers to the indirect costs incurred by a business during its normal operations. These costs are not directly tied to the production of any particular good or service, but are necessary to keep the business running. Common overhead expenses include rent, utilities, administrative salaries, and office supplies.
In order to accurately calculate their overhead costs, businesses must keep track of all their expenses and determine which ones fall into the overhead category. This can be a complex task, as many expenses can be classified as either direct or indirect depending on how they are used. For example, the cost of raw materials may be considered a direct expense if it is used specifically in the production of a particular product. However, if those same raw materials are purchased for use in general office operations (such as making furniture), they would be classified as an indirect expense.
65. Define fair value in accounting?
In accounting, fair value is the value of an asset or liability that is determined by what a willing buyer would pay for the asset or liability in an arm’s length transaction. The fair value of an asset can be different from its book value, which is the historical cost of the asset less any depreciation that has been recorded. For some assets and liabilities, such as shares of stock, there may not be a market price and so their fair value must be estimated using other valuation techniques.
The fair value concept is important in financial reporting because it provides guidance on how to measure certain assets and liabilities on financial statements. For example, when a company acquires another company, the assets and liabilities of the acquired company are typically recorded at their fair values as of the date of acquisition. This allows investors to see what the true economic cost of the acquisition was.
66. When are the revenues reported in the accounting period?
Revenues are reported in the accounting period when they are earned. This means that if a company provides services or sells products on credit, the revenue is not recognized until the customer pays.
67. How did you help reduce costs in a previous accounting job?
In my previous accounting job, I helped reduce costs by streamlining the invoicing process and automating many of the tasks associated with it. This saved the company time and money, and improved our bottom line. I also implemented new software that helped us keep track of expenses and budget better. By doing so, we were able to save money on office supplies and other overhead costs.
68. What is the marginal cost?
The marginal cost is the increase or decrease in the production costs that are associated with the production of one additional unit of output. In other words, it is the cost of producing an extra unit of a good or service. The marginal cost can be found by adding together the variable costs and the fixed costs associated with producing an additional unit.
The marginal cost is important to businesses because it can help them to determine how much to produce in order to maximize their profits. If a business produces more units than what consumers are willing to buy, then they will have to sell their goods at a lower price, which will result in a loss. On the other hand, if a business doesn’t produce enough units, they will miss out on potential sales and profits. By understanding the marginal cost, businesses can find that happy medium between too much and too little production.
69. List the three basic elements of cost
The three basic elements of cost are direct materials, direct labor, and overhead. Direct materials are the raw materials used to produce a product or service. Direct labor is the labor required to produce a product or service. Overhead is the indirect costs of production, such as rent and utilities.
70. What are the MIS reports?
MIS reports are management information system reports. They are tools that help managers track performance and make decisions about their business. MIS reports can include data on sales, customers, inventory, financials, and more.
MIS reports can be customized to show the specific information that a manager needs to see. For example, a manager might want to see a report that shows all of the sales for the month, or a report that shows which products are selling the most. MIS reports can help managers track progress and make informed decisions about their business.
71. Can you define depreciation and its types?
Depreciation is the gradual reduction in the value of an asset over time. The most common types of depreciation are straight-line, declining balance, and sum-of-the-years’-digits.
Straight-line depreciation is the simplest method, and it evenly reduces the value of an asset over its useful life. For example, if a company buys a piece of equipment for $1,000 that has a useful life of 10 years, the equipment would be depreciated by $100 each year under the straight-line method.
The declining balance method accelerates depreciation by applying a higher depreciation rate to an asset in its early years. The most common declining balance rate is double the straight-line rate. For example, if an asset were depreciated under the declining balance method over five years, it would be depreciated by $200 in each of the first two years and $100 in each of the remaining three years.
Sum-of-the-years’-digits method (SYS) The sum-of-the-years’-digits method is also referred to as the double declining balance method. Under the SYS method, a fraction is applied to an asset’s estimated useful life.
72. What is the key difference between accumulated depreciation and depreciation expense?
There are two types of depreciation: accumulated depreciation and depreciation expense. Accumulated depreciation is the total amount of depreciation that has been recorded on an asset over its useful life. Depreciation expense is the amount of depreciation recorded in a single period.
The main difference between accumulated depreciation and depreciation expense is that accumulated depreciation is the total amount of depreciation recorded on an asset, while depreciation expense is the amount of depreciation recorded in a single period.
73. Why is Depreciation not charged on Land?
Depreciation is not charged on land because it is considered a non-depreciable asset. Land is not subject to wear and tear like buildings or machinery, so it does not need to be replaced as often. This makes it a more stable investment, which is why it is not depreciated.
74. What is Amortization?
Amortization is the process of spreading the cost of an intangible asset over its useful life. Amortization is used for capital expenses such as research and development costs, patents, and copyrights. When an intangible asset is amortized, its cost is allocated over its useful life, and the asset is then carried on the balance sheet at its amortized cost.
75. What is the difference between depreciation and amortization?
There are two methods of allocating the cost of a long-term asset over its useful life—depreciation and amortization. Both methods result in a systematic and rational allocation of the cost of an asset, but there are some key differences between the two.
Depreciation is used for allocating the cost of plant assets, such as machinery, buildings, and vehicles. The goal of depreciation is to match the expense of using up a long-term asset with the revenue that it generates. Depreciation is recorded on the income statement as an operating expense.
Amortization is used for allocating the cost of intangible assets, such as patents or copyrights. The goal of amortization is to match the expense of using up an intangible asset with the revenue that it generates. Amortization is also recorded on the income statement as an operating expense.
76. Differentiate between consignor and consignee?
A consignor is the person who owns the goods being shipped. The consignee is the person who is responsible for receiving the shipment. The consignment agreement between the two parties spells out the terms of the transaction, including who pays for shipping, insurance, and other costs.
In a typical consignment arrangement, the consignor pays for shipping and insurance costs upfront. When the consignee receives the shipment, they inspect it to make sure there is no damage. If everything is in order, they send payment to the consignor minus a commission fee that was agreed upon in advance.
There are some key differences between a consignor and a consignee. First, the consignor owns the goods being shipped while the consignee does not.
77. What are Accounting Values?
One of the most important aspects of accounting is values. Values in accounting help to ensure that an organization’s financial statements are accurate and consistent. There are a few different types of values that are used in accounting:
- Integrity: This value refers to being honest and transparent in all financial reporting. It is important for organizations to be truthful in their financial statements so that investors and other stakeholders can make informed decisions.
- Objectivity: This value requires that all financial information be reported objectively, without bias. This means that accountants must avoid conflicts of interest and report information fairly and accurately.
- Professionalism: This value requires that accountants maintain high ethical standards and act in a professional manner when dealing with clients and colleagues.
78. What is a FIXED ASSET Register?
A fixed asset register is an important tool for accounting and managing a company’s fixed assets. It is a record of all the company’s fixed assets, including their location, value, and depreciation. The register can help companies keep track of their assets and ensure that they are properly accounted for. It can also be used to help make decisions about buying, selling, or leasing assets.
79. What are assets minus liabilities?
An asset is anything that a company owns and can use to generate revenue. This could be cash, investments, inventory, or property. A liability is anything that a company owes. This could be money owed to suppliers, loans, or taxes payable. The difference between assets and liabilities is called equity. Equity is the portion of a company’s ownership that represents the residual value of its assets after liabilities are paid.
80. Can you list several examples for liability accounts?
Liability accounts represent the debts and obligations of a company. Several examples of liability accounts are Accounts Payable, Accrued Expenses, Notes Payable, and Unearned Revenue.
Accounts payable is an account that represents the amount of money a company owes to its suppliers for goods and services that it has received.
Accrued expenses are expenses that have been incurred but have not yet been paid for.
Notes payable is an account representing the amount of money a company owes to its creditors.
Unearned revenue is income that has been received but has not yet been earned.
81. How to adjust entries into account?
In order to make adjustments to entries in an accounting system, one must first locate the original entry. Once the original entry is located, one can then make the necessary changes with new entries. The changes that are made will be reflected in the financial statements.
It is important to keep in mind that when making adjustments to entries, all supporting documentation must be updated as well. This includes invoices, receipts, and any other documents that support the original entry. Without updated documentation, the adjustment may not be accepted by the auditors.
82. What is “deposit in transit”?
A deposit in transit is a bank deposit that has been made by a customer but has not yet been processed by the bank. This can happen for a number of reasons, such as the deposit being made after banking hours or on a holiday. Customers should be aware that their funds may not be available immediately after making a deposit in transit.
Deposits in transit are particularly common when businesses make large deposits, such as those made at the end of the month. This is because businesses often have more cash on hand at these times, and they may not be able to make smaller deposits throughout the month. Deposits in transit can also occur when individuals make deposits into accounts that are not theirs, such as when someone makes a payment into another person’s account by mistake.
83. What is the cash flow statement of a company?
A company’s cash flow statement is one of the most important financial statements. It tells investors and creditors how much cash a company has on hand and how it is being used. The cash flow statement is an important tool for investors to understand a company’s financial health.
84. What are the activities that are included in the Cash Flow Statement?
The Cash Flow statement is divided into three sections: operating activities, investing activities, and financing activities.
Operating activities include cash inflows and outflows from day-to-day business operations. This section is the most important in understanding a company’s overall financial health.
Investing activities include cash inflows and outflows from long-term investments, such as the purchase of equipment or real estate.
Financing activities include cash inflows and outflows from issuing new equity or debt, or repaying existing equity or debt.
85. What is the financial impact of buying a fixed asset?
When a business buys a fixed asset, such as land, buildings, or equipment, it incurs an expense. This expense is typically recorded as a debit on the company’s balance sheet. The financial impact of buying a fixed asset can be significant, depending on the size and nature of the purchase.
Fixed assets are important because they can help a business generate revenue. For example, a company may purchase a new piece of equipment that helps it increase production or improve efficiency. The increased revenue can offset the initial cost of the asset and create shareholder value.
However, there are also risks associated with buying fixed assets. If a company over-invests in an asset, it may find itself unable to generate enough revenue to cover the costs of the investment. This can lead to financial difficulties and decreased shareholder value.
86. What is an over accrual?
An over accrual is an accounting error that occurs when a company records expenses in its accounting records before they are actually incurred. This can happen when a company prepays for expenses or when it accrues expenses but does not pay them until after the end of the accounting period. Over accruals can lead to problems because they can create artificial profits in the short term and then cause losses in the long term when the prepaid expenses are actually incurred.
87. What are the challenges faced by an Accountant?
There are many challenges faced by accountants. One of the biggest challenges is keeping up with changing technology. As technology advances, accountants must constantly update their skills and knowledge in order to keep up with the latest software and applications. They also face the challenge of maintaining ethical standards in an industry that is constantly changing and evolving. Additionally, accountants must be able to work well under pressure and meet deadlines, as they often deal with sensitive financial information.
88. List the items that are included in the profit and loss account.
The profit and loss account includes several items, including revenue, expenses, gains, and losses. Revenue is the total amount of money that a company brings in from sales or other sources. Expenses are the costs incurred by a company to generate revenue. These include things like cost of goods sold, selling expenses, and administrative expenses. Gains are increases in the value of assets or decreases in the liabilities of a company. Losses are decreases in the value of assets or increases in the liabilities of a company.
89. What’s Accounting Ethics?
When it comes to questions about accounting ethics, there are a few key things you should keep in mind. First and foremost, always be truthful and transparent in your accounting practices. This means being honest about financial records and being clear about any potential conflicts of interest. Additionally, avoid engaging in activities that could be perceived as unethical, such as embezzlement or fraud. If you follow these guidelines, you will be well on your way to maintaining ethical standards in your accounting practices.
90. What is Accounting Transaction?
An accounting transaction is an event that has a financial impact on an organization. This can include something as simple as a customer purchase or a company expense. Transactions are recorded in the accounting records of a business and used to generate financial statements.
Accounting transactions provide critical information that businesses use to make decisions about where to allocate resources and how to manage finances. Transactions also give investors and creditors insight into the financial health of a company. Without proper accounting for transactions, it would be difficult for businesses to make informed decisions or maintain accurate records.
91. What are the three main types of accounts?
The three main types of accounts in accounting are asset, liability, and equity accounts. Asset accounts represent the things that a company owns, such as cash, buildings, and inventory. Liability accounts represent the money that a company owes to others, such as creditors and suppliers. Equity accounts represent the ownership interests of the shareholders in a company.
92. What are Accruals?
In accounting, accruals refer to the recording of revenue and expenses that have been incurred but not yet received or paid. This ensures that financial statements reflect the true financial position of a company, even if payments have not yet been received or made. Accruals are important because they provide an accurate picture of a company’s financial health and can be used to make informed decisions about future spending and investments.
93. What is a contra account?
A contra account is a type of ledger account that typically has a balance that is the opposite of what would be expected for a normal account. For example, if an asset account typically has a positive balance, then the contra asset account associated with it would have a negative balance.
Contra accounts are used to record offsetting entries for specific types of accounts. They are often used to record the accumulated depreciation of an asset, which would be recorded as a negative amount in the contra asset account. Other common examples of contra accounts include contra revenue accounts and contra liability accounts.
While Contra Accounts can be helpful in some cases, they can also make financial statements more difficult to read and understand. As such, it’s important to use them only when necessary and to clearly label them as Contra Accounts on financial statements.
94. What is the difference between deduction and Cash Discount?
Deduction is an accounting method in which businesses can reduce their taxable income by subtracting certain expenses from their gross income. Cash discount is a type of deduction that allows businesses to deduct the amount of cash they paid for goods or services within a certain period of time. The main difference between deduction and cash discount is that deductions can be taken for a variety of expenses, while cash discounts can only be taken for payments made in cash.
95. What is a Credit Note and Debit Note?
A credit note, also called a credit memo, is issued by a seller to a buyer. It notifies the buyer that they have been credited for an overpayment or return of merchandise. A debit note is the opposite and is issued by the buyer to notify the seller of an error in billing, such as an incorrect amount charged.
96. Explain the Convention of Materiality?
The term “Convention of Materiality” refers to the guidance that accountants follow when determining which items on financial statements are important enough to be disclosed. The general rule is that any information that could potentially influence a reader’s decision-making should be included. This can be a tricky concept because there is no bright line test for materiality. As a result, professional judgment must be used to make these decisions.
There are a few different factors that may be considered when determining whether an item is material. First, the size of the item relative to other items on the financial statements can be considered. For instance, if an error in accounting for inventory results in a $100 overstatement of revenue, this would likely be considered material.
97. What Is Contingent Liabilities?
Contingent liabilities are those potential future payments that may become due as a result of certain events occurring. They are recorded on a company’s balance sheet as an estimate of the amount that will eventually be paid out. For example, if a company is involved in a lawsuit, it will record a contingent liability for the estimated amount that it may have to pay if it loses the case.
Contingent liabilities can create financial risk for a company if they turn out to be larger than expected. This is why companies must carefully assess and disclose their contingent liabilities in their financial statements. Investors need to be aware of these risks when considering whether to invest in a company.
98. What Is An Accounting Loss?
An accounting loss is a reduction in the value of an asset or security. It can also refer to the amount of money that a company has lost over a period of time. Accounting losses can be caused by a variety of factors, including write-downs, impairment charges, and losses on investments.
When a company incurs an accounting loss, it will typically report the loss on its financial statements. This can have a negative impact on the company’s stock price and may cause investors to lose confidence in the company.
Accounting losses can be difficult to recover from, but companies often take steps to minimize their losses. For example, a company may sell off assets that are no longer profitable or write down the value of certain assets.
If you’re interviewing for an accounting position, it’s likely that you’ll be asked about your experience with accounting losses.
99. What’s the Owner’s Equity? How Will You Calculate It?
The owner’s equity is the portion of the business that is owned by the shareholders. It can be calculated by taking the total assets and subtracting the liabilities. The owner’s equity will be used to calculate the return on investment for the shareholders.
To calculate the owner’s equity, you will need to first find the total assets of the company. This can be done by looking at the balance sheet. Once you have found the total assets, you will need to subtract the total liabilities from this number. This will give you the shareholder’s equity.
The shareholder’s equity can be used to calculate the return on investment for the shareholders. To do this, you will need to divide the net income by the shareholder’s equity. This will give you a percentage that represents how much profit was made for each dollar that was invested by the shareholders.
100. What is Computerized Accounting?
In short, computerized accounting is the use of computers to manage and record financial transactions. This can include everything from bookkeeping and invoicing to more complex tasks like creating financial reports. Computerized accounting is often seen as more efficient and accurate than manual accounting methods, since it reduces the chance for human error.
101. What is Executive Accounting?
Executive accounting is a field of accounting that deals with the financial management of a company, including the preparation of financial statements, the management of cash flow, and the making of investment decisions. Executive accountants also provide advice on tax planning and risk management. They typically work in senior positions within accounting firms or in the finance departments of large corporations.
The role of an executive accountant is to provide financial information and advice to company executives so that they can make informed decisions about where to allocate resources. Executive accountants must have a deep understanding of both accounting principles and business strategy. They use this knowledge to prepare financial reports that offer insights into a company’s overall financial health. Executive accountants also play a key role in cash management.
102. Explain What Are The Functions Of Accounting?
There are four main functions of accounting: financial reporting, taxation, auditing, and management decision-making.
103. What are the 4 Phases Accounting?
The accounting process can be divided into four phases: bookkeeping, adjusting entries, financial statements, and closing the books.
Bookkeeping is the first phase of accounting and involves recording all of the transactions made by a business. This includes sales, purchases, payments, and receipts. All of these transactions are recorded in a journal and then posted to a ledger. The ledger is used to track all of the businesses assets, liabilities, and equity.
Adjusting entries are made at the end of each accounting period to ensure that the financial statements are accurate. This includes things like accruing expenses that have been incurred but not yet paid, or recognizing revenue that has been earned but not yet received.
Financial statements are then prepared using the information from the ledger. The three main financial statements are the balance sheet, income statement, and cash flow statement.
104. What Are Accounting Entities?
An accounting entity is a business or organization for which financial statements are prepared. The U.S. Securities and Exchange Commission (SEC) requires public companies to file financial statements with the SEC. Accounting entities can also be nonprofit organizations, governments, and individuals.
The purpose of an accounting entity is to create a boundary between the entity’s finances and the personal finances of its owners, employees, and other stakeholders. This boundary allows financial statements to be prepared that show how the entity is performing financially without being influenced by the personal finances of its stakeholders.
Accounting entities are required to follow generally accepted accounting principles (GAAP) when preparing their financial statements. GAAP is a set of standards and guidelines that dictate how financial statements should be prepared. These standards ensure that financial statements are consistent and comparable across different accounting entities.
105. Explain the term indebtedness
Debt, or indebtedness, is an obligation to pay money to someone else. It is the result of borrowing money or using a credit card. When you borrow money, you agree to repay the loan plus interest. If you don’t repay the loan, the lender can take legal action against you.
Credit cards are a type of debt because you must pay back what you spend plus interest and fees. If you don’t make your payments on time, your credit card company can increase your interest rate and charge late fees.
Debt can be useful if it allows you to make a purchase that you couldn’t otherwise afford. But it’s important to be aware of the risks involved in taking on debt. Make sure you understand the terms of any loan or credit card before you agree to them.
106. What Is Payroll?
Payroll is a system used by organizations to pay their employees. It involves keeping track of employee hours worked and calculating how much each employee should be paid. Payroll can be done manually or through software.
Manual payroll involves keeping track of employee hours worked on a timesheet. This information is then used to calculate how much each employee should be paid. The employer then writes a check for each employee’s wages.
Software-based payroll systems automate the process of tracking employee hours and calculating wages. These systems can also handle other payroll tasks, such as tax withholding and direct deposit. Payroll software typically integrates with accounting software, making it easy to track all financial information in one place.
107. What is bad debt expense?
Bad debt expense is an accounting term used to describe the write-off of an uncollectible receivable. When a receivable becomes uncollectible, it is written off as a bad debt expense. This write-off is recorded as a debit to the allowance for doubtful accounts and a credit to the accounts receivable.
The amount of bad debt expense can be estimated using the percentage of sales method or the aging of receivables method. The percentage of sales method estimates bad debt expense as a percentage of credit sales. The aging of receivables method estimates bad debt expense based on the age of receivables.
Bad debt expense is an important part of managing Accounts Receivable. By estimating bad debt, companies can make provisions for expected losses and manage their cash flow more effectively.
108. What is aging of receivables?
Aging of receivables is the process of categorizing outstanding invoices according to the length of time they have been outstanding. The goal is to identify which invoices are at risk of not being paid and to take appropriate action.
There are several methods for aging receivables, but the most common is to divide them into three categories: current, past due, and severely past due.
Current receivables are those that are due within the next 30 days. Past due receivables are those that are 31-60 days old, and severely past due receivables are those that are 61 days or older.
To ensure timely payment, it is important to keep track of aging receivables and take appropriate action when necessary. This may include sending reminder letters, making phone calls, or offering discounts for early payment.
These are some important accounting interview questions that you should be prepared to answer. By being prepared and having a good understanding of accounting principles, you will be able to impress your interviewer and land the job. We recommended for common interview question and answer to know.