Top 100 Accounting Interview Questions with Answers for 2022
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Top Accounting Interview Questions with Answers [Updated]
Are you looking for commonly asked accounting interview
questions for an upcoming interview? There is a lot of competition in the job
market nowadays for the position of accounting and you need to be
well-prepared. This article will list some of the common accounting interview
questions along with answers to help you ace them.
Accounting is an important part of any organization and they
usually hire someone who has good knowledge in the field. It is popularly known
as the language of business and is core to the growth of an organization. If
you want, you can improve your skills with a professional accounting
certification.
Interviewers are likely to cover all the basics of
accounting interview questions which require a thorough understanding of
accounting principles to answers correctly.
Here are some of the top accounting interview questions
which are generally expected:
Q1. How many types of business transactions are there in
accounting?
Ans. There are two types of business transactions in accounting
– revenue and capital.
Q2. Explain real and nominal accounts with examples.
Ans. A real account is an account of assets and liabilities.
E.g. land account, building account, etc.
A nominal account is an account of income and expenses. E.g.
salary account, wages account, etc.
Q3. Which accounting platforms have you worked on? Which one
do you prefer the most?
Ans. Describe the accounting platforms (QuickBooks,
Microsoft Dynamic GP, etc.) that you have worked with and which one you liked
the most.
Q4. What is double-entry bookkeeping? What are the rules
associated with it?
Ans. Double-entry bookkeeping is an accounting principle
where every debit has a corresponding credit. Thus, the total debit amount is
always equal to the total credit. In this system, when one account is debited
then another account gets credited at the same time.
Q5. What is working capital?
Ans. Working capital is calculated as current assets minus
current liabilities, which is used in day-to-day trading.
Q6. How do you maintain accounting accuracy?
Ans. Maintaining the accuracy of an organization’s
accounting is an important activity as it can result in a huge loss. There are
various tools and resources which can be used to limit the potential for errors
to creep in and address them quickly if any errors do arise.
Q7. What is TDS? Where do you show TDS on a balance sheet?
Ans. TDS (Tax Deducted at Source) is a concept aimed at
collecting tax at every source of income. In a balance sheet, it is shown in
the assets section, right after the head current asset.
Q8. What is the difference between ‘accounts payable (AP)’
and ‘accounts receivable (AR)’? Ans.
Accounts Payable |
Accounts Receivable |
The amount a company owes because it purchased goods or services on
credit from a vendor or supplier. |
The amount a company has the right to collect because it sold goods
or services on credit to a customer. |
Accounts payable are liabilities. |
Accounts receivable are assets. |
Q9. What is the difference between a trial balance and a
balance sheet?
Ans. A trial balance is the list of all balances in a ledger
account and is used to check the arithmetical accuracy in recording and
posting. A balance sheet, on the other hand, is a statement
that shows the assets, liabilities, and equity of a company
and is used to ascertain its financial position on a particular date.
Q10. Is it possible for a company to show positive cash
flows and still be in grave trouble?
Ans. Yes, if it shows an unsustainable improvement in
working capital and involves a lack of revenue going forward in the pipeline.
Q11. What are the common errors in accounting?
Ans. The common errors in accounting are – errors of
omission, errors of commission, errors of principle, and compensating errors.
Q12. What is the difference between inactive and dormant
accounts?
Ans. Inactive accounts are which are closed and will not be
used in the future. Dormant accounts are not currently functional but may be
used in the future.
Q13. Are you familiar with the Accounting Standards? How
many accounting standards are there in India? [Frequently asked accounting
interview question]
Ans. There are currently 41 Accounting Standards which are
usually issued by the Accounting Standards Board (ASB).
Q14. Why do you think Accounting Standards are mandatory?
Ans. Accounting Standards play an important role in
preparing a good and accurate financial report. It ensures reliability and relevance
in financial reports.
Q15. Have you ever helped your company to save money or use
its available financial resources effectively?
Ans. Explain if you have proposed an idea that has affected
the company’s finances positively. Tell how you have optimized the process and
how you came to such a decision through historical data review.
Q16. If our organization has three bank accounts for
processing payments, what is the minimum number of ledgers it needs?
Ans.Three ledgers for each account for proper accounting and
reconciliation processes.
Q17. What are some of the ways to estimate bad debts?
Ans. Some of the popular ways of estimating bad debts are –
the percentage of outstanding accounts, aging analysis, and percentage of
credit sales.
Q18. What is deferred tax liability?
Ans. Deferred tax liability signifies that a company may pay
more tax in the future due to current transactions.
Q19. What is a deferred tax asset and how is the value
created?
Ans. A deferred tax asset is when the tax amount has been
paid or has been carried forward but has still not been recognized in the
income statement. The value is created by taking the difference between the book
income and the taxable income
Q20. What is the equation for Acid-Test Ratio in accounting?
Ans. The equation for Acid-Test Ratio in accounting
Acid-Test Ratio = (Current assets – Inventory) / Current
Liabilities
Q21. What are the popular accounting applications?
Ans. I am familiar with accounting apps like CGram Software,
Financial Force, Microsoft Accounting Professional, Microsoft Dynamics AX, and
Microsoft Small Business Financials.
Q22. Which accounting application do you like the most and why?
Ans. I find Microsoft Accounting Professional the best as it
offers reliable and fast processing of accounting transactions, thereby saving
time and increasing proficiency.
Q23. Tell me something about GST.
Ans. GST is the acronym for Goods and Service Tax and it is
an indirect tax other than income tax. The seller charges the
customer on the value of the service or product sold. The seller then deposits
the GST to the government.
Q24. What is a bank reconciliation statement?
Ans. A bank reconciliation statement or BRS is a form that
allows individuals to compare their personal bank account records to that of
the bank. BRS is prepared when the passbook balance differs from the cashbook
balance.
Q25. What is tally accounting?
Ans. It is accounting software used by small businesses and
shops to manage routine accounting transactions.
Q26. What are fictitious assets?
Ans. Fictitious assets are intangible assets and their
benefit is derived over a longer period, for example, goodwill, rights,
deferred revenue expenditure, miscellaneous expenses, preliminary expenses, and
accumulated loss, among others.
Q27. Can you explain the basic accounting equation?
Ans. Yes, since we know that accounting is all about assets,
liabilities, and capital. Hence, its equation can be summarized as:
Assets = Liabilities + Owners Equity.
Q28. What are the different branches of accounting? Ans.
There are three branches of accounting –
• Financial
Accounting
• Management
Accounting
• Cost
Accounting
Q29. What is the meaning of purchase return in accounting?
Ans. As the name suggests, purchase return is a transaction
where the buyer of merchandise, inventory, or fixed assets returns these
defective or unsatisfactory products back to the seller.
Q30. What is retail banking?
Ans. Retail banking or consumer banking involves a retail
client, where individual customers use local branches of larger commercial
banks.
Q31. What has offset accounting?
Ans. Offset accounting is the process of canceling an
accounting entry with an equal but opposite entry. It decreases the net amount
of another account to create a net balance.
Q32. What are the trade bills?
Ans. These are the bills generated against each transaction.
It is a part of the documentation procedure for all types of transactions.
Q33. What is fair value accounting?
Ans. As per fair value accounting, a company has to show the
value of all of its assets in terms of the price on the balance sheet on which that
asset can be sold.
Q34. What happens to the cash, which is collected from the
customers but not recorded as revenue?
Ans. It goes into “Deferred Revenue” on the balance sheet as
a liability if no revenue has been earned yet.
Q35. Why did you choose ‘accounting’ as a career?
Ans. This could be a tricky accounting interview question so
you can answer like – “I was good at numbers and accounting since my school
days, but it was during my 10+2; I decided to adopt this field as a profession
and did Bachelor’s and then Master’s in Accounting.”
Q36. What is an MIS report, have you prepared any?
Ans. Yes, I have prepared MIS reports. It is an acronym for
Management Information System, and this report is generated to identify the efficiency
of any department of a company.
Q37. What do you mean by the company’s payable cycle?
Ans. It is the time required by the company to pay all its
account payables.
Q38. What is Scrap Value in accounting?
Ans. Scrap Value is the residual value of an asset that any
asset holds after its estimated lifetime.
Q39. Which account is responsible for interest payable?
Ans. The current liability account is responsible for interest
payable.
Q40. What is the departmental accounting system?
Ans. It is a type of accounting information system that
records all the financial information and activities of the department. This
financial information can be used to check the profitability and efficiency of
every department.
Q41. What is a perpetual inventory system?
Ans. Perpetual inventory is a methodology that involves
recording the sale or purchase of inventory immediately using enterprise asset
management software and computerized point- of-sale systems.
Q42. What do you mean when you say that you have negative
working capital?
When a company’s current liabilities exceed its current
assets, it is named as negative working capital. It is a common terminology in
certain industries like retail and restaurant businesses.
Q43. What are the major constraints that can hamper relevant
and reliable financial statements?
Ans.
1. Delay,
which leads to irrelevant information
2. No
balance between costs and benefits
3. No
balance between the qualitative characteristics
4. No clarity
in true and fair view presentation
Q44. Tell me the golden rules of accounting, just mention
the statements. Ans. There are three golden rules of accounting –
• Debit the
receiver, credit the giver
• Debit
what comes in, credit what goes out
• Debit all
expenses and losses, credit all incomes and gains
Q45. Please elaborate, on what this statement means – “Debit the
Receiver, Credit the Giver”.
Ans. So, this is among the most frequently asked accounting
interview questions. Your reply should be –
This principle is used in the case of personal accounts. If
a person is giving any amount either in cash or by cheque to an organization,
it becomes an inflow and thus that person must be credited in the books of
accounts. Therefore, when an organization received the money or cheque, it
needs to credit the person who is paying and debit the organization.
Q46. Any idea what is ICAI?
Ans. Of course, it is the abbreviation of the Institute of Chartered
Accountants in India.
Q47. What do you mean by premises?
Ans. Premises refer to fixed assets presented on a balance
sheet.
Q48. What is Executive Accounting?
Ans. Executive Accounting is specifically designed for
service-based businesses. This term is popular in finance, advertising and
public relations businesses.
Q49. What are the bills receivable?
Ans. Bills receivable are the proceeds or payments, which a
merchant or a company will be receiving from its customers.
When replying to accounting interview questions, be very
specific and don’t speak up generic stuff.
Q50. Define Balancing.
Ans. Balancing means equating or balancing both debit and
credit sides of a T-account.
Q51. What is Marginal Cost?
Ans. If there is an increase in the number of units
produced, the total cost of output is changed. Marginal cost is that change in
the cost of an additional unit of output.
Q52. What are Trade Bills?
Ans. Every transaction is documented and the trade bills are
those documents, generated against each transaction.
Q53. Can you define the term Material Facts?
Ans. Yes, these are the documents such as vouchers, bills,
debit and credit notes, or receipts, etc. They serve as the base of every
account book.
Q54. What are the different stages of the Double Entry
System?
Ans. There are three different stages of the double-entry
system, which are –
• Recording
transactions in the accounting systems
• Preparing
a trial balance in respective ledger accounts
• Preparing
final documents and closing the books of accounts
Q55. What are the disadvantages of a Double Entry System?
Ans.
• Difficult
to find the errors, especially when transactions are recorded in the books
• In case
of any error, extensive clerical labour is required
• You can’t
disclose all the information of a transaction, which is not properly recorded
in the journal
Q56. What is Assets Minus Liabilities?
Ans. It stands for an owner’s or a stockholder’s equity.
Q57. What is GAAP?
Ans. GAAP is the abbreviation for Generally Accepted
Accounting Principles (GAAP) issued by the Institute of Chartered Accountants
of India (ICAI) and the provisions of the Companies Act, 1956. It is a cluster
of accounting standards and common industry usage, and it is used by
organizations to:
• Record
their financial information properly
• Summarize
accounting records into financial statements
• Disclose
information whenever required
Q58. Can you tell me some examples of liability accounts?
Ans. Some popular examples of liability accounts are –
• Accounts
Payable
• Accrued
Expenses
• Bonds
Payable
• Customer
Deposits
• Income
Taxes Payable
• Instalment
Loans Payable
• Interest
Payable
• Lawsuits
Payable
• Mortgage
Loans Payable
• Notes
Payable
• Salaries
Payable
• Warranty
Liability
Q59. What is the difference between accounts receivable and
deferred revenue?
Ans. Accounts receivable is yet-to-be received cash from
products or services that are already sold/delivered to customers, whereas,
deferred revenue is the cash received from customers for services or goods not
yet delivered.
Q60. Where should you record a cash discount in a journal
entry?
Ans. A cash discount should be recorded as a reduction of
expenses in a cash account.
Q 61. What is compound journal entry?
Ans. A compound journal entry is just like other accounting
entries; the only difference is that it affects more than two account heads.
The compound journal entry has one debit, more than one credits, or more than one
of both debits and credits.
Q 62. What is the dual aspect term?
Ans. The dual aspect suggests that every business
transaction requires double-entry bookkeeping. This can be understood with the
example- If you purchase anything, you give the cash and receive the stuff, and
when you sell anything, you lose the stuff and earn the money. This defines the
aspects of every transaction.
Q 63. What is retail banking?
Ans. Retain banking is also known as consumer banking, where
individuals use the local branches of larger commercial banks.
Q 64. Define depreciation.
Ans. Depreciation refers to the decreasing value of any
asset that is in use.
Q 65. What are the different types of depreciation?
Ans. Depreciation is of two types –
1. Straight
Line Method
2. Written
Down Value Method
Q 66. What is the difference between the consignor and
consignee? Ans. Consigner – S/he is the shipper of the goods
Ans. Consignee – S/he is the recipient of the goods.
Q 67. Define Partitioning.
Ans. Partitioning refers to the
division/subdivision/grouping/regrouping of financial transactions in a given
financial year.
Q 68. Differentiate between Provision and Reserve. Ans.
Provisions – This refers to keeping the money for a given
liability. In short, EXPENSES.
Reserves – Refers to retaining some amount from the profit
for future use. In short, PROFITS.
Q 69. What is an over accrual?
Ans. It is a situation where the estimate for accrual
journal entry is very high, and this may apply to the accrual of revenue or
expense.
Q 70. What is reversing journal entries?
Ans. Reversing entries refer to the journal entries that are
made when an accounting period starts. These entries reverse or cancel the
adjusting journal entries that were made at the end of the previous accounting
period.
Q 71. Name some intangible assets.
Ans. Intangible assets include –
• Patents
• Copyrights
• Trademarks
• Brand
names
• Domain
names
Q 72. What is Bad debt expense?
Ans. Bad debts expense is asset accounts receivable of a
company and is considered to be uncollectible accounts expense or doubtful
accounts expense.
Q 73. When do you capitalize rather than expense a purchase?
Ans. An item’s cost is capitalized is it is expected to be
consumed by the company over a long period. This way their economic value does
not depreciate.
Q 74. When does goodwill increase?
Ans. Goodwill can be increased through the acquisition of
another company as a subsidiary, by paying more than the fair value of its tangible
and intangible assets.
Q 75. What are Revenue Recognition and Matching Principles?
Ans. Revenue Recognition Principle – This principle suggests
that the revenue should be recognized and recorded when it is realized and
earned, no matter when the amount has been paid.
Matching Principle – This principle dictates the companies
to report an expense on its income statement the time the related revenues are
earned. It is associated with the accrual basis of accounting.
Q 76. Name different accounting concepts.
Ans. The most popular accounting concepts are –
• Accounting
Period Concept
• Business
Entity Concept
• Cost
Concept
• Dual
Aspect Concept
• Going
Concern Concept
• Matching
Concept
• Money
Measurement Concept
Q 77. What is the owner’s equity?
Ans. The owner’s equity is a business owner’s claim against
the assets of the business. It is also called the capital of the business and
is calculated by subtracting equity of creditors from the total equity.
Q 78. What is a debit note?
Ans. Debit note or debit memorandum is a commercial document
sent to a seller, by a buyer, formally requesting a credit note. The original
document is sent to the party to whom the goods are being returned and the
duplicate copy is kept for office record.
Q 79. What is a credit note?
Ans. A credit note is a receipt given to a buyer who has
returned a product, by the seller/shop. This intimation suggests that the
buyer’s account is being credited for the purpose indicated.
Q 80. Explain Contingent Liabilities.
Ans. Contingent Liabilities are potential obligations that
may or may not become an actual liability. They may or may not be incurred by
an entity, based on the outcome of an uncertain future event, e.g. – If an
ex-employee of an ABC company sues it for gender discrimination for any
particular sum, the company has a contingent liability. In case the company is
found guilty, it will have a liability, and if it is not found guilty, the
company will not have an actual liability.
Q 81. What is GST?
Ans. GST or Goods and Service Tax is an indirect tax charged
on the value of the service or product sold to a customer. Here the consumers
pay the tax to the seller, who thereby deposits the GST to the government.
Q 82. Can you name some common errors in accounting? Ans.
Some common accounting errors are –
• Error of
omission
• Error of
commission
• Error of
original entry
• Error of
accounting principle
• Compensating
error
• Error of
entry reversal
• Error of
duplication
Q 83. What is project implementation?
Ans. Project implementation is a phase when the plans and
visions come into reality. This includes carrying out the tasks to deliver the
outputs and monitor the related progress.
Q 84. What are the various stages of project implementation?
Ans. There are six steps involved in project implementation,
which are –
• Identifying
need
• Generating
and screening ideas
• Conducting
a feasibility study
• Developing
the project
• Implementing
the project
• Controlling
the project
Q 85. Are you in favour of having accounting standards?
Ans. I believe that accounting standards contribute to high
quality and accurate reporting and ensure reliable financial statements.
Q86. What do you mean by Amortization and also mention its
journal entry?
Ans. Amortization is an accounting concept that is used to
gradually write off the cost. Through amortization, over a period of time, one
can allocate the cost of any intangible asset. Also, it
can be done to repay any loan principal. However, those
assets which have an indefinite life like Goodwill can not be amortized.
Below is the journal entry for amortization:
|
Debit |
Credit |
Amortization expense |
xxx |
|
Accumulated amortization |
|
xxx |
The concept of amortization in accounting is different from
depreciation. The major point of difference between amortization and
depreciation is their usage. Amortization works for intangible assets whereas
depreciation works for tangible assets. Also, unlike depreciation, amortization
has no salvage value. Another key difference between both is that depreciation
can be implemented using both the straight-line method and accelerated method
but amortization is implemented through the straight-line method.
Using the below transactions solve the practical accounting
questions:
Firm’s Name – ABC Ltd. which is 10 years old firm on
December 31, 2018. As on January 01, 2019, below are the trial balance entries
Transactions/entries |
Amount in INR |
Accounts Payable |
50,000 |
Accounts Receivable |
20,000 |
Cash |
4,50,000 |
Merchandise inventory |
6,620 |
Land |
60,000 |
Unearned revenue |
10,000 |
Salaries payable |
32,000 |
Common Stocks |
15,000 |
Prepaid Rent for Office |
15,000 |
Supplies |
20,000 |
Retained Earnings |
25,000 |
Later other transactions which took place in 2019 are:
1. Paid
salaries payable from 2018.
2. As of
March 2019, the petty cash expense made was Rs 10,000.
3. Advanced
payment made for the company’s car which was on lease Rs, 1,00,000 on May 1,
2019.
4. Paid
office rent in advance Rs. 25,000 on May 3, 2019.
5. Supplies
purchased for Rs. 10,000 on the account.
6. During
the year, purchased 20 CCTV cameras for Rs. 20,000 for cash.
7. Sold 103
CCTV cameras for Rs. 42,000 (calculate the cost of goods sold using FIFO
method)
8. Accounts
payable was Rs. 30,000
9. Petty
cash replenished and the receipts included office supply expenses – Rs. 2,000,
miscellaneous Rs. 7,000. Currency left Rs.1000
10. Billed
Fixing services for Rs 10,000 for the year.
11. The
salaries paid were Rs. 30,000 in cash
12. Accounts
receivable were Rs. 60,000
13. Ad and
marketing expense Rs. 6,000
14. Utility
expense paid Rs. 5,000
15. The
dividend paid to the shareholders was Rs. 15,000.
Q87.What is the total value of cash in the above
transactions?
Ans. Here is the total calculation of cash:
All Cash Transactions and balances:
• Actual
Cash = 4,50,000
• Salaries
payable = 32,000
• Company’s
car lease = 1,00,000
• Office
rent = 25,000
• CCTV
purchase = 20,000
• Accounts
payable = 30,000
• Petty
cash = 10,000
• Petty
cash replenished = 7,000 + 2000
• Balance
petty cash = 1000
• Salaries
paid = 30,000
• Accounts
receivable = 60,000
• Ad and
marketing expense = 6,000
• Utility
expense = 5,000
• Dividend
paid = 15,000
Hence as per the nature, here is the actual calculation of
cash:
4,50,000 – 32,000 – 1,00,000 – 25,000 – 20,000 – 30,000 –
(10,000 – 1,000) – 1,000 + 60,000 –
5,000 – 15,000 = 2,73,000
Q88. What is the total value of accounts receivable in the
above transactions? Ans. All entries related to accounts receivable:
• Accounts
receivable = 20,000
• Income
from selling CCTV camera = 42,000
• Billed
Fixing services = 10,000
• Accounts
receivable = 60,000
Hence, here is the total calculation of accounts receivable:
20,000 + 42,000 + 10,000 + 60,000 = 1,32,000
Q89. What is the value of the total fixed assets?
Ans. As no other assets apart from land is mentioned we will
consider Land as the only fixed assets:
Value of Fixed Asset:
Land = 60,000
Q90. What will all be included in current assets? Ans. We
will include the following things:
• Closing
inventory
• Bank and
cash value
• Supplies
• Account
Receivables
Q91. What will be included in the Owner’s equity?
Ans. We will include the following things in owners equity:
• Capital
(Common Stocks)
• Retained
earnings (balance at the beginning of the year, profits for the current year,
less dividend paid, capital contributed during the year if any)
Q92. What will be included in the Current Liabilities?
Ans. Under the current liabilities, we will include the
amount for creditors/payables which is 10,000 in the above case.
Q93. What do you mean by Days Payable Outstanding (DPO)?
Ans. DPO or Days Payable Outstanding refers to the average
number of days which ideally a company takes to clear its credit purchase in
regards to the outstanding suppliers. Most of the time, DPO is a monthly task
for a business, however, each month the day of clearing the outstanding payment
might differ, hence the average is taken out to estimate the payment period.
Below is the formula for calculating DPO:
Closing accounts payable / Purchase per day Or
(Average accounts payable / COGS) X Number of days
Q94. Find out the DPO in the below query. Ans.
Average accounts payable in June 50,000
Cost of Goods sold in June 5,00,000
As the month of June has 30 days the DPO will be:
(50,000/5,00,000)*30 = 3 days
Hence, the DPO in the above situation is 3 days. This states
that a company takes 3 days on average to clear all its pending invoices.
Q95. What are the different types of liquidity ratios in
accounting? Ans.
Basically, there are five different types of ratios in
accounting:
1. Current
Ratio
The higher the company has a current ratio, the better is
the company’s strength to handle short term financial issues. It is calculated
by – Current ratio = Current Asset/ Current Liabilities
2. Net-Working
Capital Ratio
It articulates that whether or not a company has sufficient
funds to carry out short term operations. It is calculated by – Current Asset –
Current Liabilities
3. Quick
ratio
The quick ratio is also known as the acid test ratio or liquid
ratio which illustrates the
company’s short term liquidity to meet any short-term
obligations. If the quick ratio is below 1:1, the company is not in a good
state to handle short term debts. Quick ratio = Liquid Assets / Current
Liabilities
4. Super-Quick
Ratio
Super Quick Ratio = (Cash + Marketable Securities) / Current
Liabilities
5. The
operating Cash Flow ratio
It is calculated by dividing cash flow from operations with
current liabilities. It is observed that a sound operating cash flow ratio
makes the firm’s liquidity position better.
Here cash flow from operations will generally include:
All revenues from operations + Non-cash based expenses –
Non-cash based revenue
Whereas Current Liabilities will include:
Balance payments, creditors, provisions, short term loans,
etc.
Q96. What is the Accounting Information System (AIS)?
Ans. This is a frequently asked accounting interview
question thus you should know everything about AIS.
AIS is a computer-based method used for tracking accounting
activity and involves – collecting, storing, processing, organizing, and
summarizing accounting data and transactions. It also helps in cumulating
financial transactions and essential financial reports, which helps
stakeholders in decision making. Using AIS for storing and processing financial
data helps in the following tasks:
• Measure
the financial performance
• Evaluate
the finances of the company and compare it with the previous period to draw a
conclusion
• Avoid any
miss-handling of data
• Connects
Information Technology with GAAP principles
Q97. What do you mean by tangible real accounts and
intangible real accounts? Ans.
Tangible Real Account – Those assets which can be touched
and have a physical existence are
defined as tangible real accounts.
Example – Machinery A/c, Vehicle A/c, Building A/c
Journal Entry –
• Debit
what comes in
• Credit
what goes out
Intangible real account – Those assets which have some
monetary values but can’t be touched are referred to as intangible real
accounts.
Example – Goodwill, Patents, Copyrights
Journal Entry –
• Debit
what comes in
• Credit
what goes out
Q98. How to perform an income statement analysis?
Ans. The income statement is the company’s core financial
statement highlighting the profits and losses of the company. It involves:
All revenues – expenses (both operating and non-operating
activities)
To analyze this statement, financial analysts consider
vertical analysis and horizontal analysis.
1. Vertical
analysis:
It involves comparing the up and
down of the income statement to the revenue (in percentage). The key metrics
involved are:
o Cost of
Goods Sold (COGS)
o Gross
profits
o Depreciation
o Interest
o Earnings
Before Tax (EBT)
o Tax
o Net
earnings
2. Horizontal
analysis
It involves
comparing the year-over-year (YoY) change of each line in the income statement.
To perform this analysis:
• Take the
value in Period N and
• Divide it
by value in Period N-1
• Subtract
the value by 1 (gives the per cent change)
Q99. What is Section 209(4A) in The Companies Act, 1956?
Ans. Section 209(4A) in The Companies Act, 1956 states that:
Every company must preserve the books of accounts, together
with the vouchers relevant to
any entry in such books of account, in good order, relating
to a period of not less than 8 years immediately preceding the current year.
So of the Current Year Ending is – March 2020 then, the
company needs to store the accounts and vouchers for the following years:
March 2019, 2018, 2017,……, to 2012
Q100. Which latest accounting trends you think are
prevailing in 2020? [one of the most frequently asked accounting interview
questions]
Ans. Below are some of the latest accounting trends:
1. Increased
dependency on cloud
Companies are now using cloud computing as a technology for
tracking – tracking inventory, sales, and expenses. A report by Accounting Age
suggests that 78% of small businesses will rely solely on cloud technology and
67% accountants say that cloud technology will make their role easier.
2. Automated
Data Entry:
As per the Practice of Now 2020 survey, nearly two-thirds of
accountants consider automation of processes, workflows, and payments the
biggest challenge that will impact accountancy in the next 12 months. That’s
why a lot of companies have started depending upon automation software as they
are efficient and reduce the chances of error or loss of entry.
The Parting Note
Going through the above accounting interview questions will
probably have given you an idea of the type of accounting interview questions
that are asked during an accounting interview. These will also help you to
freshen up your accounting knowledge.
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