Account12

Can you name different branches of accounting?

There are three branches of accounting named as “Financial Accounting”, “Management Accounting” and “Cost Accounting”.

Differentiate Accounting and Auditing?

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.

Define 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.

What do we mean by purchase return in accounting?

It is the term introduced in the records for every defective or unsatisfactory good returned back to its supplier.

Define the term material facts in accounting?

Material facts are the bills or any document that becomes the base of every account book. It means that all those documents, on which account book is prepared, are called material facts.

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.

Define company’s payable cycle?

It is the time required by the company to pay all its account payables.

Define retail banking?

It is a type of banking that involves a retail client. These clients are the normal people and not any organizational customers.

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.

Define bills receivable?

All types of exchange bills, bonds and other securities owned by a merchant that is payable to him are said as bills receivable.

Define depreciation and its types?

By depreciation we mean that a value of an asset is decreasing as it is in use. It has two types such as “Straight Line Method” and “Written Down Value Method”.

Differentiate between consignor and consignee?

Consigner is the owner of the goods or you can say he is the person who delivers the goods to the consignee. The consignee is the person who receives the goods.

Define balancing in accounting?

Balancing means to equate both sides of the T-account i.e. the debit and credit sides of a T-account must be equal/balanced.

How much statistics knowledge is necessary or requiredin 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.

Define Scrap value in accounting?

It is the residual value of an asset. The residual value is the value that any asset holds after its estimated life time.

Define Marginal Cost?

Suppose you have to produce an additional unit of output. The estimated cost of additional inputs to produce that output is actually the marginal cost.

Define Partitioning in accounting?

It is a kind of groups made on the basis of same responses by a system.

Differentiate between provision and reserve?

Provisions are the liabilities or the anticipated items such as depreciation. You can say provisions are expenses. Reserves are the profits of any company and a part of that profit is placed back to the business to keep it sustainable in tough times of a company.

Define Offset accounting?

Offset accounting is one that decreases the net amount of another account to create a net balance.

Define overhead in terms of accounting?

It is the indirect expenditure of a company such as salaries, rent dues etc.

Define trade bills?

We know that all types of transactions need to be documented. The trade bills are the documents, generated against each transaction.

Define 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.

Explain what is compound journal entry?

A compound journal entry is just like other accounting entry where there is more than one debit, more than one credit, or more than one of both debits and credits. It is essentially a combination of several simple journal entries.

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.

Mention 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

Mention what are the rules for debit and credit for different accounts to increase the amount in your business accounts?

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

List out the Stages of Double Entry System?

Recording of transactions in the journal Posting of journal entry in to the respective ledger accounts and then preparing a trial balance Preparing final accounts and closing of books of accounts.

Mention what is the disadvantage of double entry system?

The disadvantage of double entry system, If there is any compensatory errors, it is difficult to find out

by this system This system needs more clerical labour It is difficult to find the errors if the errors are in the transactions recorded in the books It is not preferable to disclose all the information of a transaction, which is not properly recorded in the journal.

Mention what is General ledger account?

The General ledger account is an account where the company records all the information for its various expenses and income types into separate accounts. Such that all the debits and credits pertaining to that particular type of transaction can be entered in one place and kept balanced.

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

Mention 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 Interest debited by bank Banks direct payment not entered in Cash book.

Under the accrual basis of accounting, when revenues are reported in the accounting period?

When service or goods have been delivered, then revenues are reported in the accounting period.

Under what type of account does the unearned revenues fall?

The unearned revenues falls under “Liability” account.

Mention whether the account “Cash” will be credited or debited, when a company pays a bill?

The account “Cash” will be credited when a company pays a bill.