Accounting Interview Questions and Answers
Q) Mention three financial statements?
A) Following points are the three financial statements:
In balance sheets, we can see the company assets, equity of shareholders, and liabilities.
The income statements bring out the company’s expenses and revenues.
And the last statements are cash flow, which shows the financial activities and investing operating of the cash flows.
Q) What are the various types of accounts and their golden rules?
A) Total 3 types of accounts:
Personal account: It relates to a person with whom a business handle. The golden rule of a Personal account is receiver debit and giver credit.
Real account: The real account is related to assets. The golden rule here is to debit what comes in and credit what goes out.
Nominal account: The Nominal account deals with income, gain, loss, and expenses. The nominal account golden rule is all expenses and losses debit and gains & incomes of credit.
Q) What is Capital expenditure and revenue expenditure?
A)Capital Expenditure: The capital expenditure is a fixed asset, which is productive assets for a long time schedule. For example: Land, Building, etc
Revenue Expenditure: The revenue expenditure whose when it’s assured the benefit is expired with a similar year of accounting. For example: Rent, Salary, etc.
Q) What is meant by deferred revenue?
A) It receives the payments in advance for services which have not been delivered the goods. All these revenues are classified on the balance sheet of the company which is referred to as a liability not similar to the asset.
Q) Define accrued income in simple lines?
The accrued income is considered as the amount which was not received but which will be earned.
It is yet to receive the amount.
In general ledger accounts, accrued income has not been stored.
Q) What do you know about accrued expense?
A) The accrued expense is defined as an expense that is incurred, but there is no expenditure documentation. In expenditure documentation, to record an accrued expense, the journal entry is created.
Q) What are the full forms of BRS, ESI, NEFT, and ESI?
ESI – Employee State Insurance
NEFT – National Electronic Funds Transfer
GST – Goods and Services Tax
BRS – Bank Reconciliation Statement
Q) In accounting, what are the common errors?
Errors of principle
Errors of omission
Errors of commission
Q) Auditing Vs Accounting?
A) The accounting stores all the business activities and the Auditing checks the events have been recorded accurately.
Q) What is meant by deferred expense?
A) The deferred expense which has been made, but it doesn’t report as an expense up to future accounting period.
Q) What are fictitious Assets?
A) The fictitious assets cannot torch or been shown, only goodwill, rights, etc are comes under fictitious assets.
Q) What is the main difference between a Dormant account and an Inactive account?
A) The inactive accounts are coming under, closed and there will be no use in the future. Dormant accounts are used in the future but not functional.
Q) Difference between receivable accounts and deferred revenue?
A) The deferred revenue is known as cash which we receive from customers for goods/services which are not provided.
The account receivable is known as owning the cash from the customers for already provided services/goods.
Q) What are the rules of double-entry bookkeeping?
A) Double entry bookkeeping is an accounting principle that has corresponding credit for each debit. Always, the total debit is similar to total credit. In this method, if one account is debited then at the same time another credit account gets credited.
Q) What are the various accounting branches?
A) Totally three accounting branches are there:
Q) What is Depreciation and how many types of Depreciation?
A) The Depreciation is known as asset value which is decreasing as it is in use. There are two types of Depreciation, they are:
Straight Line Method
Written Down Value Method.
Q) Explain the compound journal Entry?
A) The compound journal entry is similar to other accounting entry which is more than one debit/credit which is the combination of various simple journal entries.
Q) What is meant by working capital?
A) Working capital is known as current assets liabilities of less current. Generally, in banking, the working capital is referred to narrowly to as current assets. The less current liabilities exclude the cash and bearing debt which excludes the interest.
Q) In which phase, we capitalize rather than expense a purchase?
A) Once, the date of the purchase which we used in the business more than one year, then it is capitalized and depreciated.
Q) At which circumstances the goodwill increase?
A) Goodwill is created and increased, whenever a company purchases another business for more than the good value of its assets which are tangible/intangible, then goodwill will increase.
Q) What is administrative-accounting?
A) The main theme of administrative accounting is operating managerial planning. It also handles functions like taxes and payroll, and also the bookkeeper. In financial accounting handles complete business finance. Administrative accounting deals with in the company on a particular process.
Q) How to record PPE? and why it is essential?
A) These are the important 4 areas to be noted when accounting on the balance sheet for the PPE:
The four areas are Depreciation, initial purchase, Additions, and Dispositions.
Under these four areas, we also consider revaluation for various businesses. PPE is the main capital asset that provides profits, revenue, and cash flows.
Q) Mention any 3 examples of common budgeting methods?
A) We have listed out few examples of the common budgeting methods are zero-based budgeting, Incremental, and value-based budgeting.
Q) What are revenue recognition and matching principles?
A) The revenue recognition principles show the procedure and schedule by which revenue is stored and identified as a financial statements item basis on particular criteria which is the transfer of ownership.
The matching principle shows the schedule of expense which will be similar to the incurred period, as opposed to when they paid.