Series -6 – Personalized replies to the questions that can be asked in Interviews for Accounts & Finance Role.

Hello everyone!! Welcome back to the TAX DESTINATION blog.Thanks for your continuous support & tremendous response to our blogs. Check out the Previous series if you haven’t read the same where we have given questions that can be asked in HR Round & Technical Round for Audit Role

In this series, we would like to give questions that can be asked in the Accounts & Finance Role

Questions  that can be asked in Accounts Profile

Basic Questions:

01. What is the use and purpose of Excel Pivot Table, VLOOKUP, HLOOKUP?

Pivot Table is an interactive way to quickly summarize large amounts of data. It is used to summarize, sort, reorganise, and group. It allows us to extract the significance from a large, detailed data set.

VLOOKUP: It is a function that makes Excel search for a certain value in a column, to return a value from a different column in the same row.

HLOOKUP: Stands for Horizontal Lookup. It is a function that makes Excel search for a certain value in a row, in order to return a value from a different row in the same column.

02. Definition, Difference and Journal entry of – (Mandatory Ques-any one)?

i. Provision & Contingent Liability

JE for Provision:

Expense A/c…. Dr

To Provision A/c…. Cr

JE for Contingent Liability:

Cash A/c…. Dr

To Accrued Liability A/c…Cr

ii. Accrued Payable & Accrued Expenses

iii. Prepaid Expenses

Prepaid expenses are future expenses that are paid in advance. On the balance sheet, prepaid expenses are first recorded as an asset. After the benefits of the assets are realized over time, the amount is then recorded as an expense.

JE

Prepaid Rent….. Dr

To Cash…… Cr

iv. Dividend

Dividends are payments a company makes to share profits with its stockholders. They’re paid on a regular basis, and they are one of the ways investors earn a return from investing in a stock.

On Declaration :

Retained Earnings…Dr

To Dividend payable… Cr

On Payment:

Dividend Payable…Dr

To Cash…Cr

v. Bad Debts and Provision for doubtful debts

vi. Return on Capital and Return of Capital

vii. Contingencies and Reserves

viii. Deferred tax asset and liabilities

ix. Depreciation and Impairment

x. Accumulated Depreciation: 

Accumulated depreciation is the total amount of the depreciation expenditure allocated to a particular asset since the asset was used. It is a contra asset account, i.e. a negative asset account that offsets the balance in the asset account with which it is usually linked. The accumulated balance of depreciation increases over time, adding the amount of the depreciation expense recorded during the current period.

03. IND AS -115,116,16 or respective AS (if you haven’t study INDAS-Study respective AS) -Mandatory ques on one of them (Just go through concepts, understand difference between AS and INDAS- In-depth study not required)

03. What is schedule III?

Schedule III provides the format of financial statements of companies complying with the Accounting Standards and Ind AS.

04. Accounting Concepts such as Going Concern concept and Prudence Concept

Going Concern Concept: Going concern concept is one of the accounting principles that states that a business entity will continue running its operations in the foreseeable future and will not be liquidated or forced to discontinue operations for any reason.

Prudence Concept: Prudence concept is a concept that has been put in place to ensure that the person who is making the financial statements makes sure that the assets and income are not overstated to make sure the company is not overvalued

05. What are the Golden Rules of Accounting? What are the different types of Accounts (Real, Nominal and Personal)?

Golden Rules of Accounting:

1 Debit The Receiver, Credit The Giver

2 Debit What Comes In, Credit What Goes Out 

3 Debit All Expenses And Losses, Credit All Incomes And Gains

Different types of Accounts: 

Personal: Personal Accounts are the ones that are related to individuals, companies, firms, groups of associations etc. Eg Veer’s A/c, Kapoor Pvt Ltd, Prepaid Expenses A/c etc.

Real: Real Accounts are the ones that are related to properties, assets or possessions. Real Accounts can be of two types: Tangible Real Accounts and Intangible Real accounts. Eg Machinery A/c, trademarks, goodwill etc.

Nominal: Nominal Accounts relate to income, expenses, losses or gains. These include Wages A/c, Salary A/c, Rent A/c etc.

06. What is CFS? Components of CFS? What is the treatment of depreciation in CFS? 

•  A cash flow statement (CFS) is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company. 
•  The CFS measures how well a company manages its cash position, meaning how well the company generates cash. 
• The CFS complements the balance sheet and the income statement
•  The main components of the CFS are cash from three areas: operating activities, investing activities, and financing activities. 
•  The two methods of calculating cash flow are the direct method and the indirect method. 
• Depreciation is a non-cash expense and needs to be added back to the cash flow statement in the operating activities section, alongside other expenses such as amortization and depletion.

07. What are the steps of the accounting cycle?

1. General Ledger Cycle: The eight steps of the accounting cycle
   include the following

•      Identify transactions
•      Record transactions into a journal
•      Posting
•      Unadjusted trial balance
•      Worksheet
•      Adjusting Journal Entries
•      Financial Statements
•      Closing of books

• Depreciation concept and Entries: 
• The basic journal entry for depreciation is to debit the Depreciation Expense account (which appears in the income statement) and credit the Accumulated Depreciation account (which appears in the balance sheet as a contra account that reduces the amount of fixed assets)

•  provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivables that have been issued but not yet collected. It is identical to the allowance for doubtful accounts. Here, the expense is recognized for probable bad debts because as soon as invoices are issued to customers rather than waiting several months to find out exactly which invoices turned out to be uncollectible. Thus, the net impact of the provision for doubtful debts is to accelerate the recognition of bad debts into earlier reporting
  periods.

• Deferred Revenue concept and accounting entries:
•  
• When we receive the money, we will debit it to our cash account because the amount of cash our business has increased. And, we will credit our deferred revenue account because the amount of deferred revenue is increasing.

• Three way matching concept:

• Bank Reconciliation concept: 
•  is the process of matching the balances
  in an entity’s accounting records for a Bank account to the corresponding information on a bank statement. A bank reconciliation should be
  done at regular intervals for all bank accounts, to ensure that a company’s cash records are
  accurate.

• Accumulated depreciation is the total amount of
  the depreciation expense
  allocated to a particular asset since the asset was used. Accumulated depreciation
  is an Asset.

• Salary Entry:

   Gross
Salary Account        Dr.

      To TDS A/c….Cr

      To
Cash Account / Salary payable    Cr. 

• What are
  operating Expense: 

1.  Manufacturing
   expense both definition and example: 

     Example:  Direct labour, Direct
materials, Manufacturing overheads.

1.  Accrued
   Expense: 

     Example: 
Cost of future
customer warranty.

1. Prepaid Expense: 
2.  are future expenses that are paid in advance and hence recognized
   initially as an asset. 

     Example: Prepaid rent.

1.  Month
   Close: 

     Month
close is a step followed in an entity to record, reconcile, and review             accounting information.

1. :

Record daily operational financial
transactions

Reconcile accounting system modules
and subsidiary ledgers.

Record monthly journal entries.

Reconcile balance sheet accounts.

Review revenue and expense accounts.

Prepare financial statements.

Management review.

Close accounting
systems for the month.

1. What is AP Ageing: 

1. Definition of AP And AR:

Accounts payable are amounts due to vendors or suppliers for goods or
services 

received that have not yet been paid for.

Accounts receivable (AR) is the balance of money due to a firm for goods or 

services delivered or used but not yet paid for by customers. 

1. What is Liability: 
2.  is
   something a person or company owes, usually a sum of money. … Recorded on the
   right side of the balance sheet, liabilities include
   loans, accounts payable.

1.  

Accrued Expense:

 Interest Expense   Dr.

 To Interest Payable  Cr.

Deferred
revenue:

  Bank A/c               Dr.

  To Rental Income A/c  Cr.

Cash     A/c                                                  
   Dr

To Miscellaneous income/ Accounts payable      Cr

Real Account:

Debit
what comes in

Credit
what goes out 

Nominal Account:

Debit
all the Expense/ lose

Credit
all incomes/ gains

Personal Account:

Debit
the receiver

Credit
the giver.

• Accounting Assumptions:

The
three main Accounting assumptions are going concern, consistency, and accrual basis.

Straight Line Method: Under the SLM,
equal depreciation expense is charged in each period of the asset’s useful life
minus Salvage.

Example: King Fisher Air, Inc. purchased an aeroplane
200 million. It is expected to last10 years and salvage value of 10 million.
The Depreciation rate would be 10% on the cost every year.

Diminishing balance Method: Diminishing refers to reduction, Hence the diminishing method refers to the reduction or declining
method.

Example: King Fisher Air, Inc. purchased an aeroplane 200 million. It
is expected to last10 years and salvage value of 10 million. The Depreciation
rate would be 10% on the cost every year

1 Year Depreciation, Formula says= ( Netbook value-residual value)* depreciation rate

 (200million-10million)*10%=19
million

2 year Depreciation, = 171 million * 10%= 171.million

•      COGS refers to the direct costs of producing the goods sold
  by a company. This amount includes the cost of the materials and labor directly
  used to create the good. It excludes indirect expenses, such as distribution
  costs and sales force costs.

COGS = Beginning Inventory + Purchases
During the Period – Ending Inventory

Gross margin= Revenue- COGS/ Revenue.

• 
   

A contingent
liability is a liability or a potential loss that may
occur in the future depending on the outcome of a specific event.

A contingent
asset is a potential economic benefit that is dependent on future
events out of a company’s control.

•  

Purchase
A/c   Dr

CGST
A/c     Dr

SGST
A/c     Dr

    To Party/cash Cr

• Fixed assets
  accounting entries:

Purchase Entry:

Furniture
A/c    Dr

To vendor
A/c   Cr

Depreciation Entry

Depreciation
A/c Dr

To
Accumulated Depreciation A/c Cr

Profit on Sale of Fixed Asset:

Bank
A/c       Dr

To
Gain on sale of furniture A/c Cr

To
Furniture A/c                          
Cr

           
Loss on Sale of Fixed Asset:

            Loss on Sale of furniture  
Dr

           
Bank A/c                           
Dr

           
To Furniture                     
Cr

Bank/
Party A/c     Dr

To
Sale                    Cr

To
CGST                 Cr

To
SGST                 Cr

• When an asset is put to
  use.

• What is GL and what is Sub GL- 

• Salary entry When TDS, PF, ESI are given.