1. Tell us have you ever prepared MIS reports and what are these?
Yes, I have prepared few MIS reports during my previous jobs. MIS reports are created to identify the efficiency of any department of a company.
2. Tell us how much statistics knowledge is necessary or required in accounting?
You must be very good at statistics if you want to do well in accounting. Otherwise, with minimum knowledge you cannot manage your day to day transactions effectively in accounting.
3. Tell me what is fair value accounting?
As per fair value accounting, a company has to show the value of all of its assets in terms of price on balance sheet on which that asset can be sold.
The rules for debit and credit for different accounts,
☛ for a capital account, you credit to increase it and debit to decrease it
☛ for an asset account, you debit to increase it and credit to decrease it
☛ for a liability account, you credit to increase it and debit to decrease it
☛ for an expense account, you debit to increase it, and credit to decrease it
☛ for an income account, you credit to increase it and debit to decrease it
5. What are things will not be included in bank reconciliation statement?
In a bank reconciliation statement, following thing can be excluded.
☛ Direct payments made by bank not entered in Cash book
☛ Cheques deposited but not cleared
☛ Cheques dishonoured not recorded in cash book
☛ Wrong debits given by bank
☛ Bank Charges or Interst debited by bank
☛ Banks direct payment not entered in Cash book
6. Can you list out some of the accrued expenses and the accounts in which you would record them?
☛ Wage accrual is entered with a credit to the “wages payable account”
☛ Interest accrual is entered with a credit to the “interest payable account”
☛ Payroll tax accrual is entered with a credit to the “payroll taxes payable account”
7. What does financial statement of the company includes?
Financial statement of the company includes various information like
☛ Balance Sheet ( Assets, liabilities, and equity)
☛ Income statement ( Profit or Loss statement)
☛ Equity statement
☛ Cash flow statement
8. Mention in simple terms what is the difference between Asset, equity, and liabilities?
☛ Asset: What financial institute (bank) or people owe you
☛ Liabilities: It is something you owe people or organization
☛ Equity: It is something you own, for example, the amount of your house loan you paid off
9. Tell us how much mathematics knowledge is necessary or required in accounting?
Not much knowledge but basic mathematical background is required in accounting for operations like addition, subtraction, multiplication and division.
10. Tell me what are the accounting events that are frequently involved in compound entries?
The accounting events that are frequently involved in compound entries are;
☛ Record multiple line items in a supplier invoice that address to different expenses
☛ Record all bank deductions associated to a bank reconciliation
☛ Record all deduction and payments related to a payroll
☛ Record the account receivable and sales taxes related to a customer invoice
11. Explain me what is the general classification of accounts that usually ledger account involve?
The general classification of accounts that usually ledger account involves are
☛ Assets- Cash, Accounts Receivable
☛ Liabilities- Accounts Payable, Loans Payable
☛ Stockholders' equity- Common Stock
☛ Operating revenues- Revenues through Sales
☛ Operating expenses- Rent Expense, Salaries Expense
☛ Non-operating revenues and gains- Investment Income, gain on Disposal of Equipment
☛ Non-operating revenues and losses- Interest Expense, Loss on Disposal of Equipment
12. What is the difference between accumulated depreciation and depreciation expense?
The difference between accumulated depreciation and depreciation expense is that
☛ Accumulated depreciation: It is the total amount of depreciation that has been taken on a company's assets up to the date of the balance sheet
☛ Depreciation expense: It is the amount of depreciation that is reported on the income statement. Basically, it is the amount that corresponds only to the period of time indicated in the heading of the income statement.
Due to double entry, the “cash account” will increase as such the liability account increases.
14. What are the three factors that can affect your cash flow and business profitability?
The three factors that can affect your cash flow and business profit includes
☛ Cash flows from investing activities: It includes shares, bonds, physical property, machineries, etc.
☛ Cash flows from operating activities: It does not include cash received from other sources like investments
☛ Cash flow from financing activities: It includes any activities that involves dividend payments that the company made to its shareholders, any money that includes stock to the public, any money borrowed from the lender etc. in other words, it is a report that tells the firm about the money borrowed and paid out in order to finance its activities.
15. What is liabilities and what all does include in current liabilities?
Liability can be defined as an obligation towards another company or party. It may consist of delivering goods, rendering services or paying money. They are the opposite of assets, and it may include
☛ Account payable
☛ Interest and dividend payable
☛ Bonds payable
☛ Consumer deposits
☛ Reserves for federal taxes
☛ Short term loans
16. What is the difference between depreciation and amortization?
Capital expenses are either depreciated or amortized based upon the type of asset.
Depreciation
☛ Depreciate means to lose value of an asset due to their usage, wear and tear, outdated, etc.
☛ Depreciation cost is calculated in terms of tangible assets like furniture, plant & machinery, building, etc.
☛ The purpose of calculating depreciation costs recovery
☛ The easiest way to calculate depreciation is to know the loss of value of an asset over its life.
☛ For example, a car worth $30,000 has estimated the lifetime of 10 years after that it will have no value in the market. The cost or loss in value throughout this 10 years is known as depreciation
☛ Various method for depreciation includes straight line depreciation, declining balance method, group depreciation method, unit of time/production depreciation method, etc.
Amortization
☛ Amortize means to write off or pay the debt over a period of time. Amortization can be for loans, or it can be for Intangible assets
☛ Amortization cost is calculated in terms of intangible assets like goodwill, trademark, loans, patents, etc.
☛ The purpose of calculating amortization is also for cost recovery
☛ Amortization calculates the amount spent after the intangible assets throughout the life for that asset
☛ For example, Pharmaceutical Company spent $20 million dollars on a drug patent with a useful life of 20 years. The amortization value for that company will be $1 million each year
☛ Various method for amortization is negative amortization, zoning amortization, business amortization, etc.
17. Why some asset accounts have a credit balance?
Some asset accounts have a credit balance due to following reasons,
☛ Receiving and posting an amount that was higher than the recorded receivable
☛ Expenses occurred faster than the agreed upon prepayments
☛ An error caused by posting an amount to a wrong account
☛ The amount of checks written exceeded the positive amount in the Cash account
☛ Continuing to amortize or depreciate an asset after its balance has reached zero
18. What are the activities that includes in Cash Flow Statement?
The cash flow statement showcase the cash generated and used during the year or months. Various activities that are involved for the Cash Flow are
☛ Operating activities – business activities accounting to cash
☛ Investing activities – sale and purchase of equipment or property
☛ Financial activities- purchase of stock and own bonds
☛ Supplemental information- exchange of significant items that don't involve cash
19. List out some of the examples for liability accounts?
Some of the examples for liability accounts
☛ Accounts Payable
☛ Accrued Expenses
☛ Short-term Loans Payable
☛ Unearned or Deferred Revenues
☛ Installment Loans Payable
☛ Current Portion of Long-term Debt
☛ Mortgage Loans Payable
20. Explain me the types of accounts involved in double entry book-keeping?
Double entry book-keeping involves five types of accounts,
☛ Income accounts
☛ Expense accounts
☛ Asset accounts
☛ Liability accounts
☛ Capital accounts
21. Tell me what is dual aspect term in accounting?
As the name implies, the dual aspect concept states that every transaction has two sides. For example, when you buy something, you give the cash and get the thing. Similarly, when you sale something, you lose the thing and gets the money. So this getting and losing is basically two aspects of every transaction.
22. Tell me the types of ledger?
There are three types of ledger
General ledger
Debtors ledger
Creditors ledger
23. What knowledge should financial accountant have?
A certified financial accountant should have knowledge about
☛ Accounting principles and practices
☛ Reporting and analysis of financial data
☛ Auditing practices and principles
☛ Account management
☛ Budgets
☛ Software knowledge dealing with Accounting
☛ Knowledge of relevant laws, codes and regulations
24. Can you list out things that fall under intangible asset?
Things that fall under intangible asset are,
☛ Patents
☛ Copyrights
☛ Trademarks
☛ Brand names
☛ Domain names, and so on.
25. How you can adjust entries into account?
To adjust entries into account, you can sort entries into five categories.
☛ Accrued expenses: Expenses have been incurred but the vendors invoices are not generated or processed yet
☛ Accrued revenues: Revenues have been earned but the sales invoices are not generated or processed yet
☛ Deferred revenues: Money was received in advance of having been paid or earned
☛ Deferred expenses: Money was paid for a future expense
☛ Depreciation expense: An asset purchased in one period must be allocated to expense in each of the accounting periods of the asset's useful life
