Q1. How many types of business transactions are there in accounting?
There are two types of business transactions in accounting – revenue and capital.
Q2. Explain real and nominal accounts with examples.
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?
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?
Double entry bookkeeping is an accounting principle where every debit has a corresponding credit. Thus, the total debit 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?
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?
Maintaining the accuracy of an organisation’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 quickly if any errors do arise.
Q7. What is TDS? Where do you show TDS on a balance sheet?
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)’?
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 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?
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 which 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?
Yes, if it shows an unsustainable improvement in working capital and involves lack of revenue going forward in the pipeline.
Q11. What are the common errors in accounting?
The common errors in accounting are – errors of omission, errors of commission, errors of principle and compensating error.
Q12. What is the difference between inactive and dormant accounts?
Inactive accounts are which that 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?
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?
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 their available financial resources effectively?
Explain if you have proposed an idea which has affected the company’s finances positively. Tell how you have optimised the process and how you came to such a decision through historical data reviewing.
Q16. If our organisation has three bank accounts for processing payments, what is the minimum number of ledgers it needs?
Three ledgers for each account for proper accounting and reconciliation processes.
Q17. What are some of the ways to estimate bad debts?
Some of the popular ways of estimating bad debts are – percentage of outstanding accounts, aging analysis and percentage of credit sales.
Q18. What is a deferred tax liability?
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?
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?
The equation for Acid-Test Ratio in accounting Acid-Test Ratio = (Current assets – Inventory) / Current Liabilities
Q21. What are the popular accounting applications?
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 you like the most and why?
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.
GST is the acronym for Goods and Service Tax and it is an indirect tax other than the income tax. The seller charges it to the customer on the value of the service or product sold. The seller then deposits the GST to the government.
Q24. What is bank reconciliation statement?
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?
It is an accounting software used by small business and shops to manage routine accounting transactions.
Q26. What Do You Understand By Intercompany Settlement?
A key functional area of SAP for Utilities that supports cross-company exchange of settlement data based on international standards such as EDI, XML, and Microsoft Excel.
Intercompany data exchange manages data transfer between retailers, distributors, and independent service operators with special regard to the requirements in deregulated markets.
Q27. What Is Fbt (fringe Benefit Tax)?
The tax payable on a non-salary benefit provided to an employee or an associate of the employee. The employer is liable to pay any FBT and may choose to recover the FBT amount from the employee.
Q28. What Is Debit And Credit From The Banks Point Of View?
Credit what comes in.
Debit what goes out.
Q29. What Is Meant By Liabilities?
Liabilities are what all you owe from the bank on notes payable or in other words it is: Liability=Asset-Owners equity.
Q30. What Steps Would You Take Before Making A Payment?
We should verify that any advances have been made.
See that all the services/goods delivered according to bill.
Any query is there to attend on that ultimately can be made payment.
Q31. What Are Steps To Define Supplier?
Supplier should follow the check list.
He should create confidence in the client mind
Services to be done (fulfilled in time)
Services to be done according the specification of the client.
He should be placed the another order by doing the above three steps.
Q32. What Is The Meaning Of Invoice?
Invoice is a statement which contains the under mentioned details compulsorily:
• Invoice Number
• Invoice date
• Name and address of the person making the invoice ( Seller of goods and service)
• Name and address of the person to whom invoice is made. ( Buyer of goods and service)
• Description of goods / services involved
• Applicable rates and taxes with percentages
• Rate of the goods / services
• Quantity of the goods and services
• Quality or any other specifications
• Price / Value of the goods and services
• Invoice must be signed by the person making it
• Terms and conditions of making the payment.
Q33. What Is The Difference Between Eft & Wire?
The Payment methods Electronic and Wire are modes of Electronic Fund Transfers . These modes might differ in the formats and documents involved at the site level. WIRE is a kind of outdated method used by remote sites for payments in ORACLE. Jargon might be different but the actual mode is same of either of them.
Q34. What Is The Difference Between Sap Memory And Abap Memory?
SAP Memory: Global, user-related memory that extends beyond transaction limits. Access to the SAP memory is via SPA/GPA parameters.
ABAP Memory: Memory area within each main session, which can be accessed by programs using the EXPORT and IMPORT statements and which remains available using a series of program calls (call sequence).
Q35. How Does The Payment Mechanism Work?
The open items of an account can only be cleared once you post an identical offsetting amount to the account. In other words, the balance of the items assigned to each other must equal zero. During clearing, the system enters a clearing document number and the clearing date in these items. In this way, invoices in a vendor account are indicated as paid, and items in a bank clearing account are indicated as cleared. You generally use the payment program to clear invoices. Manual clearing of open items is therefore not usually necessary. However, you will sometimes have to clear items manually if, for example, you receive a refund from your vendor or you have set up a direct debit procedure.
Q36. What Do You Understand By Open Item Managed Account?
Open item management ensures that all items that have not yet been cleared are available in the system. Only after every open item in a document is cleared can a document be archived.
Q37. What Procedure For Excess Payment To Supplier I Would Like Know Without Adjusting Invoice That Means How Supplier Will Send Back Excess Amount How Do In Oracle Apps?
Excess payment to supplier is treated as Advance paid to supplier. This will show as debit balance in supplier account.
Supplier can send the payment by way of cheque / demand draft without adjusting in his subsequent bills.
Q38. What Is Three Way Matching Of Invoice? What Is The Difference Po Able Invoice And Non Po Able Invoice?
PO expenses are paid for the core business activities. e.g a food manufacturing co. will pay its usual charges for Raw material freight, plant maintenance etc.
A non PO expenditure is the one which is payment for its non core activities e.g payment of utility bills e.g telephone charges, electricity bill.
for usual transactions of core business transaction a PO is created i.e. Purchase order# is created & non PO is for non core activities.
Q39. What Is A Parked Report?
You can use document parking to enter and store (park) incomplete documents in the SAP System without carrying out extensive entry checks.
Q40. What Is Account Payable? How We Pass The Entries In Account Payable?
Account payable is the outstanding balance that we must pay to the third party or suppliers.
We pass the entries in account payable from two sides: purchase order and general ledger.
Purchase order module will be posted after material order has been arrived in warehouse and combining with invoice plus related documents that have been approved by authorized person.
General ledger normally from service entry where it must be attached by service agreement between company and third party.
Q41. What Is Debit And Credit From The Customer Point Of View ?
debit means “receivable” & credit means “payable”.
Q42. What Is Debit And Credit From The Banks Point Of View ?
In Banks point of view debit means you have deposited money in the bank . and credit means you have withdraw money from the banks.
Q43. Can You Give A Sample Process Flow For Procure To Pay Cycle?
Step1: Receipt of Invoice and goods
Step2: QC approval
Step3: Verification with po terms
Step4: creation of liability
Step5: payment after due date.
Q44 . What Is The Meaning Of Grn?
GRN means goods receipt notes ,it is generally used in manufacturing industries for checking of purchased of raw materials .
GRN contains the following details.
• Ordered quantity .
• Received Quantity.
• Defective quantity in received quantity
• Quality standards details.
Q45. What Items Of Information Do You Need Before You Can Approve An Invoice For Payment?
1. Have the goods been received in good order ?
2. Is the quantity/price correct ?
3. Were you expecting any discount ?
4. Is the delivery charge correct ?
Q46. Have you ever found an invoice discrepancy, and if so, how did you resolve it?
I have found an invoice discrepancy in the past. I was doing a final review of the invoice when I noticed an odd detail with the dates. An earlier date was on a row above a later date, which was very odd at my last job. I decided to pull out the original documents in order to compare the two. This analysis allowed me to realize the date had been entered into the invoice incorrectly. While this may seem like a minor issue, it can lead to troubles during tax review time.
Q47. What documents would you use to verify an invoice?
Verifying invoices is an important part of making sure the company is only paying accurate bills. To verify an invoice, I would use a purchase order, receiving report and vendor invoice. I would then compare those three documents to make sure all of them match. If the three documents have the same information, it is a good indication that the bill is valid and should be paid.
Q48 Can you explain why integrity plays such a vital role in accounting?
Thank you for asking this important question. Integrity plays a vital role in accounting, and more specifically being an accounts payable clerk, because of the sensitive financial information involved. As an accounts payable clerk, I schedule payments for vendor bills. If I do not act with complete honesty, there is a chance that fraudulent activities will take place. Integrity helps ensure the company’s money goes where it should. Not only that, but I think is it important for honesty to permeate a work environment to give make all employees feel confident in the work being done.
Q49 How do you plan to advance your accounting career?
I am excited about the opportunities available at this company and in the position of accounts payable clerk. I know there are more certifications I should pursue if I want to become an accountant. Right now I am working on my Certified Public Accountant designation, which I plan to use should an accountant position open up within the business. Otherwise I will continue to gain experience and knowledge that will help me get an accountant position in the future. I plan on doing this by attending workshops and conferences offered by the company and area accountant schools.
Q50. Do you know what it means for a vendor to have a debit balance?
A debit balance is an amount owed. In a banking situation, it could mean that the account holder is overdrawn and owes the bank some money. If a vendor has a debit balance, it means our company has somehow overpaid the vendor company. In most circumstances, our company will either get a credit on our next bill or the vendor company will pay back the amount right away. Because of how t he term is used, some less experienced bookkeepers may end up thinking that more money is owed to the vendors, but this is an incorrect assumption.