Accounting Interview Questions & Answers
What is Accounts?
Answer: Accounts refers to the preparation and presentation of financial data in the format of debit and credit.
- What are the different types of accounts and three golden rules of accounts?
Answer: There are three types of account:
Personal Account: Relates to a person with whom a business deals. Example-Ravi, Tata Iron, Mohan
Real Account: Relates to assets. Example: Machinery, Furniture, Cash
Nominal Account: Relates to income, gain, expenses, and loss. Example: Salary, commission, Rent
Golden Rules of Accounting
. Debit the Receiver
. Credit the Giver
. Debits what comes In
. Credit what goes Out
. Debit all Expenses & Losses
. Credit all Gains & Incomes
3. Different between Capital Expenditure and Revenue Expenditure?
Capital Expenditure– Capital Expenditure is for fixed assets, which are expected to be productive assets for a long period of time.
Example- Land, Building, Machinery ETC.
Revenue Expenditure- That Expenditure whose benefits expire with the same accounting year in which it’s assured.
Example- Salary, Rent, Telephone ETC.
4. How many types of Accounting concepts?
Answer: There are seven types of Accounting concept
Separate Entity Concept
Money Measurement Concept
Going Concern Concept
Dual Aspect Concept
- What is BRS? Tell some of the reasons for the differences between cash book and bank statement?
Answer: It is a statement that is used to reconcile the difference between Cashbook and bank statement.
- Cheques issued but not yet presented for payment.
- Cheques paid into the bank but not yet cleared.
- Interest charged by the bank not entered in the Cashbook.
- Different between Trading Company & Manufacturing Company?
Answer: Trading Company is a company whose business is buying and selling of goods whereas,
A manufacturing company produces goods through the process of manufacturing and sells it.
- How many types of Cash books?
Answer: There are three types of Cash Book
Single column cash book Double column cash book Triple column cash book
Single column cash book: Records cash Transaction only
Double column cash book: Records Cash & Bank Transaction
Triple column cash book: Records Cash, Bank & Discount Transaction
- 8. What is Depreciation, different types of depreciation?
Answer: Depreciation in the value of fixed assets is known as Depreciation.
Types of Depreciation
- Straight-line method 2) Diminishing value method
- Annuity method 4) Machine hour rate method
5) Revaluation method 6) Sum of the year’s digit method
- What is the transaction?
Type of transaction?
Answer: A transaction is an agreement between a buyer and a seller.
- Define Assets? Explain the various types of Assets?
Answer: Any think which we own benefit of the business is called assets.
1 Fixed Assets
2 Current Assets
3 Fictitious Assets
- Define liabilities? Explain the various types of liabilities?
Answer: liabilities are a debt which is must pay by the company.
1 Fixed liabilities
2 Current liabilities
3 contingent liabilities
- What are the three main financial statements?
Three main financial statements are income statements, balance sheets, and cash flow statements.
Income Statement: it presents a summarized view of revenue, income, profit, and loss of a particular accounting period.
Balance Sheet: B/S would show them as on date assets, liabilities & capital position of a business.
Cash Flow Statement: it shows the movement of cash and cash equivalents for a business during an accounting period.
- What is the difference between a trade discount & a cash discount?
|1. It is a discount provided by the supplier of goods/services on the list or catalog prices of the goods supplied.||1. It is a discount allowed by the supplier of goods or services to the buyer from the invoice price.|
|2. It is provided due to business considerations such as trade practices, large quantity orders, etc.||2. it is provided as an incentive or a motivation in return for paying a bill within a specified time.|
|3. Trade discount is not separately shown in the books of accounts, and all transactions recorded in purchases or sales book are in net amount only.||3. A cash discount is shown separately in the book, it is shown as an expense in the profit and loss A/C.|
|4. Trade discount is allowed on both credit and cash transactions.||4. A cash discount is only allowed on cash payments.|
|5. trade discount is given on the basis of purchase.||5. A cash discount is given on the basis of payment.|
BRS- Bank Reconciliation Statement
GST- Goods and Services Tax
ESI- Employee State Insurance
NEFT- National Electronic Funds Transfer
GAAP- Generally Accepted Accounting principle
PAN- Permanent Account Number
SLM- Straight Line Method
15. Different between Revenue and Expense?
Revenue– Revenue means the money received from the customer for the sale of goods & provides service.
Expense- Expense means payment of money for any service of goods purchase. It is an outflow of money.
- What are the contents of the balance sheet?
Answer: The contents of the balance sheet are:
- Capital & liabilities
- Loans-long & short term
- Advances have taken
- Current liabilities
- Fixed Assets
- Investments-long term & short term
- Current Assets
- Cash & bank balances
- Advances are given
- A purchased computer for office use worth Rs 50000 by cheque of SBL. Pass the Journal Entry.
Answer: Computer A/C———Dr 50000
To SBI A/C 50000
- Purchase 50 shares from ITC LTD @300 each in the name of business through owners’ debit card.
Answer: Investment A/C——–Dr 15000
To Capital A/C 15000
- CFL of Rs 1000 purchase from A.K Electrics for replacing tube light by cash.
Answer: Electrical Equipment A/C——–Dr 1000
To Cash A/C 1000
- What is the journal entry for goods given in charity 1,00,000?
Answer: Charity A/C——–Dr 100000
To purchase A/C 100000
- What is the journal entry for Free Samples 10,000?
Answer: Advertisement A/C——–Dr 10000
To purchase A/C 10000
- Withdrew cash from the business for personal use 500.
Answer: Drawings A/C——–Dr 500
To cash A/C 500
- What is a contra entry?
Answer: which accounting entry is recorded on both the debit and credit side of the cashbook is known as the contra entry.
- What is Stock?
Answer: Unsold item at the time of the period is called stock.
- What is the Voucher?
Answer: A Documentary Evidence in support of Transaction is called a voucher.
- What is Bad Debt, provision for Bad Debt, Outstanding Expenses, Prepaid Expenses, Accrued income?
Bad Debt: When the amount is unrecovered from debtors it is known as bad debt.
Provision for bad debt: It is estimated loss in which bad debt is an actual loss.
Accrued income: Income which is a due but not received is called accrued income.
Outstanding Expenses: Any expenses which are incurred in this financial year, but could not be paid within this year, then it is outstanding expenses.
Prepaid Expenses: Any expenses which are paid in advance but expenses will be incurred next year, it is called prepaid expenses.
27: What is the rectification of errors?
Answer: Error is unintentional mistakes. It must be rectified before the finalization of the account.
28: What items are included in the profit and loss account?
- Trade Expenses
- Traveling Expenses
- Trade Discount
- Carriage Out
- Income Tax
- Discount Allowed
- Differentiate public and private Accounting?
Answer: Public accounting is a type of accounting that is done by one company for another company.
Private accounting is done for your own company.
- Differentiate Accounting & Auditing?
Answer: Accounting is all about recording daily business activities while auditing is the checking that whether all these events have been noted down correctly or not.