Accountancy Interview Question Set 11
Categories: Accountancy
What are the three Important Financial Statements?
The balance sheet shows the company’s assets, liabilities, and shareholder’s equity. The income statement outlines the company’s revenues and expenses. The cash flow statements show the cash flow from operating investing and financial activities.
Name the one Statement to Review the Overall Health of a Company, Which statement would I use, and why?
Cash is King. It’s a cash flow statement that gives a picture of how much cash the company is generating. It’s important to know all the 3 statements truly required to get a full picture of the health of a company. The three financial statements are linked.
What Happens to the Inventory if the income Statement Goes up by $10?
It’s a very tricky question the only impact will be on the balancer sheet and cash flow statement.
Define Working Capital?
Working capital is defined as present assets with fewer liabilities, in banking working capital is normally defined hardly as current assets (excluding cash) less current liabilities (excluding interest-bearing debt).
What is Negative Working Capital Mean?
Negative capital is very common in some industries such as Hotels and Grocery retail businesses. In grocery shops customers pay upfront, inventory moves relatively quickly but suppliers give 30 days (o more) credit. This means that the company receives cash from customers before it needs cash to pay suppliers. Negative working capital Is efficiency in business with low inventory and accounts receivable? In other trades, undesirable working capital is an indicator a company is facing financial trouble.
Cash Collected From the Customer is not Recorded as Revenue what Happens to it?
It generally goes into a Differed Revenue on the balance sheet as a liability if the revenue has not been earned yet.
Difference Between Deferred Revenue and Accounts Receivable?
Deferred revenue shows the cash received from the customer for services or goods not yet provided. Accounts receivable signify cash due from consumers for goods/services already provided.
How does Capitalize Rrather than Expense a Purchase?
When the purchase is used in the business for more than one year it is capitalized and depreciated.
What Circumstance good will Increase?
When a company buys another business for more than the fair value of its tangible and intangible assets, goodwill is created.
How do we record PPE and its importance?
The main four areas to consider when accounting for PPE on the balance sheet, intimal purchase, depreciation, additions (capital expenditure), and dispositions. In addition to these four, you may also have considered revaluation. For many businesses, PPE is the main capital asset that generates revenue, profitability, and cash flow.