Accounting Interview Questions with Answers Set 1
Categories: Accountancy
When do you capitalize rather than expense a purchase?
An item’s cost is capitalized if it is expected to be consumed by the company over a long period. This way their economic value does not depreciate.
When does goodwill increase?
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.
What are Revenue Recognition and Matching Principles?
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 company to report an expense on its income statement at the time the related revenues are earned. It is associated with the accrual basis of accounting.
Name different accounting concepts.
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
What is the owner’s equity?
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 the equity of creditors from the total equity.
What is a debit note?
A 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.
What is a credit note?
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.
Explain Contingent Liabilities.
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.
What is GST?
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.
Can you name some common errors in accounting?
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
What is project implementation?
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.