AccountingQA Latest Questions

Simerpreet
SimerpreetHelpful
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I am looking for accounting entries asked in interviews.

  2. SidharthBadlani CA Inter Student

    Interviews can appear daunting. But don't worry we are here for you. Here is a comprehensive list of journal entries and other technical and behavioral questions mostly asked in interviews. Journal entries for the following situations are most frequently asked: A cashier is absconding with cash wortRead more

    Interviews can appear daunting. But don’t worry we are here for you. Here is a comprehensive list of journal entries and other technical and behavioral questions mostly asked in interviews.

    Journal entries for the following situations are most frequently asked:

    • A cashier is absconding with cash worth 10,000.
    • Bad debts worth ₹10,000 have been recovered.
    • The Head Office received ₹ 5,000 from its Branch.
    • Issue of bonus shares worth 5,00,000
    • Depreciation on land
    • Contra Entries
    • Inventory used for personal purposes
    • Personal car transferred to inventory

    Besides these, there are certain general questions that are almost always asked. You must be well prepared for these questions. For example,

    • Introduce yourself
    • Why do you want to join this company?
    • Why do you not want to join our competitors? ( prepare one or two specific competitors)
    • Why do you think you are fit for this role?

    Behavioral Questions

    Behavioral questions seek to evaluate your personality and access how you would act or react in certain situations.

    Here are some of the most frequently asked behavioral questions:

    • Tell me about an experience where you faced stress and how you handled it.
    • How do you react when team members do not agree with you?
    • How do you react when you do not agree with the team leader?
    • What is the biggest challenge that you have ever faced in your life and how did you handle it?
    • Tell me about a time when you had to take a leadership role.
    • Tell me about a time when you took initiative.
    • Tell me about a time when you failed and how you handled it.
    • Tell me about a time when you used your problem-solving skills
    • Tell me about the biggest mistake you have committed in life.
    • Tell me about your strengths and weaknesses.
    • Have you ever worked with a team before?
    • Where do you see yourself in 5 years?
    • Tell me about the biggest mistake you committed in your life.

    Technical questions

    Technical questions are those that test your academic knowledge of accounting. They intend to assess your conceptual understanding and clarity of the subject. Here’s a list of technical questions related to accounting most frequently asked in interviews:

    • What is working capital?
    • What is AS 1? ( Prepare all AS)
    • What is the P/E ratio?
    • A company takes a loan of ₹5,00,000 to buy an asset. State the impact on the cash flow statement and balance sheet.
    • A company issues debentures worth ₹10,00,000. State the impact on the cash flow statement and balance sheet.
    • What is the difference between a trial balance and a balance sheet?
    • Differentiate between dormant and inactive accounts.
    • What is Acid-Test Ratio?
    • How can we estimate bad debts?
    • How can a company improve its market capitalization?
    • What is GAAP?
    • Why do we need AS?
    • What are fictitious assets?
    • What is the difference between provision and reserve?
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AbhishekBatabyal
AbhishekBatabyalHelpful
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  2. Ayushi Curious Pursuing CA

    Introduction Audit refers to an independent examination of the financial information of any entity to express an opinion on the financial statements of the entity.  An audit is conducted to ensure that the financial statements of the entity whose books of accounts are audited reflect a true and fairRead more

    Introduction

    Audit refers to an independent examination of the financial information of any entity to express an opinion on the financial statements of the entity.  An audit is conducted to ensure that the financial statements of the entity whose books of accounts are audited reflect a true and fair view of the affairs of the entity.

    In audit reports, an auditor uses the term ‘true and fair’ is used to express that the financial statements are free from any kind of material misstatement and depict a correct financial image of the entity.

    The term holds great significance in the audit reports of entities and auditors have to use this term carefully.

    Meaning of ‘True’ and ‘Fair’

    The term consists of two words, ‘True’ and ‘Fair’. Let’s understand what each of these words actually means.

    True

    The word ‘true’ suggests that the auditor, after examining the financial statements, has found no material misstatement whether due to error or fraud. The financial information depicted by the financial statements and the underlying accounting records is correct. The preparation and presentation of the financial statements are in accordance with the accounting standards applicable to the entity.

    Fair

    The word ‘fair’ means the financial information presented through the financial statement does not have an element of bias or sugar coating. There is a faithful presentation of financial information and the amounts at which the assets and liabilities, income and expenses and equity are shown is justified.

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Radha
Radha
In: >

Interest on investmentTrial Balance
  2. Rahul_Jose Aspiring CA currently doing Bcom
    This answer was edited.

    Interest on Investment is to be shown on the Credit side of a Trial Balance. Interest on investment refers to the income received on investment in securities. These securities can be shares, debentures etc. of another company. When one invests in securities, they are expected to receive a return onRead more

    Interest on Investment is to be shown on the Credit side of a Trial Balance.

    Interest on investment refers to the income received on investment in securities. These securities can be shares, debentures etc. of another company. When one invests in securities, they are expected to receive a return on investment (ROI).

    Since interest on investment is an income, it is shown on the credit side of the Trial Balance. This is based on the accounting rule that all increase in incomes are credited and all increase in expenses are debited. A Trial Balance is a worksheet where the balances of all assets, expenses and drawings are shown on the debit side while the balances of all liabilities, incomes and capital are shown on the credit side.

    For example, if Jack bought Corporate Bonds of Amazon, worth $50,000 with a 10% interest on investment, then the accounting treatment for interest on investment would be

    Cash/Bank A/C Dr     5,000
    To Interest on Investment in Corporate Bonds (Amazon) 5,000

    As per the above entry, since interest on investment is credited, it will show a credit balance and hence be shown on the credit side of the Trial Balance. Interest on investment account is not to be confused with an Investment account. Investment is an asset whereas interest on investment is an income.

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Astha
AsthaLeader
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  2. AbhishekBatabyal Helpful Pursuing CA, BCOM (HONS)
    This answer was edited.

    Ledger is the book where the transaction related to a particular account is recorded. For example, the Sales ledger will only record the transactions related to sales. Ledgers in Tally also serve the same purpose. Posting in the ledger is automatically done when the transactions are entered in the vRead more

    Ledger is the book where the transaction related to a particular account is recorded. For example, the Sales ledger will only record the transactions related to sales.

    Ledgers in Tally also serve the same purpose. Posting in the ledger is automatically done when the transactions are entered in the vouchers.

    Now, if you want to delete a ledger, you can easily do by following some simple steps.

    I have shared the steps of deleting a ledger in Tally Prime and Tally ERP 9 both.

     

    Deleting a ledger in Tally Prime 

    To delete a ledger in Tally Prime, the steps are as follows:

    Gateway of Tally → Alter → Ledger → Click on the ledger you want to delete.

    Upon clicking the ledger, the ledger alteration menu will open.

    At the bottom, there is a ‘Delete’ option. Either click on it or simply press Alt + D and click on ‘Yes’. Your ledger will be deleted.

     

    Deleting a ledger in Tally ERP 9 

    To delete a ledger in Tally ERP 9, the steps are as follows:

    Gateway of Tally → Accounts Info → Ledger → Alter → Select the ledger you want to delete.

    Steps are almost similar in both versions of Tally. Little difference is there due to the different interfaces of the two versions.

    Just like Tally Prime, you can click on the ‘Delete’ option at the bottom or press Alt + D to delete the ledger.

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Sandy
Sandy
In: >

Depreciation
  2. Nistha Pursuing B.COM H (B&F) and CMA
    This answer was edited.

    Depreciation refers to that portion of the value of an asset that is written off over the useful life of the asset due to wear and tear. Now, when we talk about depreciation, there are multiple methods to calculate depreciation such as: Straight Line Depreciation Method Diminishing Balance Method OrRead more

    Depreciation refers to that portion of the value of an asset that is written off over the useful life of the asset due to wear and tear.

    Now, when we talk about depreciation, there are multiple methods to calculate depreciation such as:

    • Straight Line Depreciation Method
    • Diminishing Balance Method Or Written Down Value Method
    • Sum of Years’ Digits Method
    • Double Declining Balance Method
    • Sinking Fund Method
    • Annuity Method
    • Insurance Policy Method
    • Discounted Cash Flow Method
    • Use Based Methods
      • Output Method
      • Working Hours Method
      • Mileage Method
    • Other Methods
      • Depletion Method
      • Revaluation Method
      • Group or Composite Method

    The most commonly used methods are discussed below:

    1. Straight Line Depreciation Method: This is the simplest method for calculating depreciation where a fixed amount of depreciation is charged over the useful life of the asset.

    Formula:

    Suppose a company Bear Ltd purchases machinery costing 8,00,000 with useful life of 10 years and salvage value 1,00,000. Then depreciation charged to the machinery each year would be:

    Depreciation = (8,00,000 – 1,00,000)/10 = 7,00,000/10 = 7,000 p.a.

    2. Diminishing Balance Method Or Written Down Value Method: Under this method, a fixed rate of depreciation is charged every year on the opening balance of the asset which is the difference between the previous year’s opening balance and the previous year’s depreciation. Here the book value of asset reduces every year and so does the depreciation amount.

    Formula:

    Suppose a company Moon ltd purchases a building for 50,00,000 with a useful life of 5 years and decides to depreciate it @ 10% p.a. on Diminishing Balance Method. Then depreciation charged to the machinery would be:

    3. Sum of Years’ Digits Method: In this method, the life of asset is divided by the sum of years and multiplied by the cost of the asset to determine the depreciating expense. This method allocates higher depreciation expense in the early years of the life of the asset and lower depreciation expense in the latter years.

    Formula:

    Suppose a company Caps Ltd purchases machinery costing 9,00,000 having a useful life of 5 years. Then the depreciation cost would be:

    4. Double Declining Balance method: This method is a mixture of straight-line method and diminishing balance method. A fixed rate of depreciation is charged on the reduced value of the asset at the beginning of the year. This rate is double the rate charged under straight-line method.

    Formula:

    Suppose a company Paper Ltd purchases machinery for 1,00,000 with an estimated useful life of 8 years. Then the depreciation rate would be:

    Straight line = 100%/8 = 12.5%

    Double declining method = 2*12.5% = 25%

    5. Sinking Fund Method: Under this method, the amount of depreciation keeps on accumulating till the asset is completely worn out. Depreciation is the same every year. Profits equal to the amount of depreciation is invested each year outside the company. At the time of replacement of the asset the investments and sold and the proceeds thereof are used to purchase the new asset.

    6. Annuity Method: This method calculates depreciation by calculating its internal rate of return (IRR). Depreciation is calculated by multiplying the IRR with an initial book value of the asset, and the result is subtracted from the cash flow for the period.

    7. Use Based Methods: Depreciation, under these methods, is based on the total estimated machine hours or total estimated units produced during the life of the machine. It is calculated by dividing the cost of the machine by the estimated total machine hours or estimated lifetime production in units and multiplying by the units produced or machine hours worked.

    Formula:

    Suppose a company Box Ltd purchases machinery for 25,000 (estimated life 5 years) whose estimated life production is 5,000 units. If it produces 700 units in the first year of operation then depreciation cost would be:

    Depreciation = 25,000/5,000*700 = 3,500

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A_Team
A_Team
In: >

  2. AbhishekBatabyal Helpful Pursuing CA, BCOM (HONS)
    This answer was edited.

    Fictitious assets are the expenses and losses which are yet to be written off, so they appear in the Asset side of the balance sheet of the relevant financial year because expenses and losses have a debit balance. They are not assets in substance. Examples: Business loss ( debit balance of Profit anRead more

    Fictitious assets are the expenses and losses which are yet to be written off, so they appear in the Asset side of the balance sheet of the relevant financial year because expenses and losses have a debit balance. They are not assets in substance.

    Examples:

    1. Business loss ( debit balance of Profit and loss A/c )*
    2. Prepaid expenses
    3. Discount on the issue of debentures.
    4. Huge promotional expenditure.

    *business loss is shown as a negative figure under the head Reserve and Surplus, when the balance sheet is prepared as per Schedule III of The Companies Act, 2013.

    Deferred revenue expenditures are the expenses incurred for which the benefits are expected to flow to the enterprise beyond the current year. Such expenses are huge and are not written off completely in a financial year. The part of the expenditure which is not written off is shown on the assets side of the balance sheet.

    Examples:

    1. Huge advertisement expense.

    As you can see, there is some similarity between the two. Deferred revenue expenditure can be called a type of fictitious asset as it is shown in the asset side of the balance sheet but it isn’t an asset.

     

    The term ‘fictitious asset’ has a broader meaning than deferred revenue expenditure and also includes the losses such as discounts on the issue of debenture and business loss.

    The difference between fictitious assets and deferred revenue expenditure are as follows:

    Fictitious Assets Deferred Revenue Expenditure
    1 These are no real assets but expenses and losses that are not completely written off in an F.Y. These are expenses incurred from which benefits are expected to flow for more than one accounting period.
    2 It has a broader meaning. It has a narrower meaning.
    3 Examples:- business loss, discount on issue of debentures, prepaid expenses etc. Examples:- huge promotional expenditure etc.
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Simerpreet
SimerpreetHelpful
In: >

A) No entries made at all in the general ledger for items paid by petty cash B) The same number of entries in the general ledger. C) Fewer entries made in the ...

  2. AbhishekBatabyal Helpful Pursuing CA, BCOM (HONS)
    This answer was edited.

    The correct option is D) Fewer entries in the general ledger To understand why option D is correct, we need to understand the concept. Petty cashbook is a special cashbook prepared for recording petty or small cash expenses. The benefit is that the chief cashier can focus on large cash and bank tranRead more

    The correct option is D) Fewer entries in the general ledger

    To understand why option D is correct, we need to understand the concept.

    • Petty cashbook is a special cashbook prepared for recording petty or small cash expenses.
    • The benefit is that the chief cashier can focus on large cash and bank transactions and there are fewer transactions in the main cashbook.
    • The petty cashier is provided with a fixed amount for a month or week and is reimbursed the amount spent at the end of the period after he sends the details of expenses to the chief cashier.
    • There are entries for the transfer of cash to the petty cashier in the main cashbook only.

    Option A ‘No entries made at all in the general ledger for items paid by petty cash ‘ is wrong. It is not possible to omit entries of petty expense just because there is a petty cashbook. There will be entries related to:

    • The cash is given to the petty cashier in a fixed amount or the amount spent as petty expenses during the month or week.

    Petty cash A/c  Dr.        Amt

        To Cash A/c                   Amt

     Option (B) ‘The same number of entries in the general ledger is wrong because there can never be the same number of entries as all the petty expenses are recorded in the petty cashbook and only the entries for transfer of cash to the petty cashier is recorded in the main cash book.

    Option D ‘More entries made in the general ledger​’ is wrong because the number of entries actually reduce as only petty cash transfer entries are recorded in the main cashbook instead of numerous entries of petty cash transactions.

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