Accounting Interview Question
Categories: Accountancy
What are the three main types of accounts?
They are Real, Personal, and nominal but wait. If don’t want to sound artificial and stand out from the gang then confirm you’re explaining your answer in short (one line about each is ideal)
- Real – All assets in the company any material or indefinite number as existing records
- Personal – Accounts associated with an individual, entity or any legal body, etc. are called personal accounts
- Nominal – Any records connected with costs & needs or benefits & profits come into this section.
Why is Depreciation not charged on Land?
Oh! This is a classic and one that fascinates the operations manager more than often. There is no scope for leaving this one out of any list of finance and accounting interview questions. The reason why you’ll never see depreciation being charged ashore is that land has an infinite useful life. Without knowing what percentage of years a hard and fast asset will last depreciation can’t be charged.
The formula to calculate straight-line depreciation is (Cost of Fixed Asset – Scrap Value)/Useful life and you don’t have a variety to fill the denominator here.
What is Amortization?
Amortization is merely finished Intangible assets, unlike depreciation which is for tangible assets. Reduction in value by prorating the value of an intangible over multiple accounting periods is named amortization.
Example – A small-sized technology company Unreal Corp. spends 500,000 on R&D which is expected to sustain for 5 years so it may decide to amortize this & show 1,00,000 each year for 5 years in the financial statements.
If you may wish to deep dive into the topic here is our detailed article on Amortization with an example
How is Closing Property not registered in Trial Balance?
Not all goods purchased in beginning & during the accounting period are sold until the top of that period, this leads to a remainder balance referred to as closing stock.
Closing stock may be a part of purchases & balance already(Trial balance) includes purchases, hence if the closing stock is shown as a separate item it’ll double count and result in an error.
Example: Investing for a while = 60,000, Closing Stock (remainder out of investing) = 10,000, if both of these articles do exist clearly displayed inside balance the result will grow up & claim balance will error out.
The unit too reaches high amongst best investment and accounting interview questions asked in technical rounds by hiring managers.
What are the three main Financial Statements?
This is another quite common question asked in finance and accounting interviews, especially with entry-level roles. Three main financial statements are earnings report, record, and income Statement.
Again, follow the i.e. to add one brief statement to every one among them, but don’t over-talk it’ll only cause you to susceptible to more questions.
Income Statement – It presents a summarized view of revenue, income, profit, and loss of a specific accounting period.
Balance Sheet – B/S would give them as on time assets, accounts & centre area of a company.
Cash Flow Statement – It shows the movement of money and cash equivalents for a business during an accounting period.
What’s Capital, sort of account & where is it shown within the financial statements?
Also called net worth or owner’s equity, capital is that the money brought in by the owner of the business as an investment to start the operations. Capital may be a Personal Account because it belongs to a private or a firm (owner).
What are Fictitious Assets?
Bind this to your memory fictitious assets are not assets they are fake or deceptive they are expenses & losses which for some reason couldn’t be written off during the accounting period incurred. Both are signed off in many later accounting terms.
What’s the Journal Entry for Goods Given in Charity?
When a business decides to offer goods in charity it also must account for those goods within the appropriate financial statement(s), during this case, purchases are reduced with the exact cost of goods donated.
Charity AccountDebit
To Purchase AccountCredit
What’s the Journal Entry for free of charge Samples?
When a business wants to advertise a replacement product or a replacement line of product it’s going to plan to distribute free samples to the customer. In this case purchase a/c is credited and advertisement a/c is debited.
Advertisement AccountDebit
To Purchase AccountCredit
What’s Depreciation, differing types of depreciation & its journal entry?
The reduction in the value of a tangible fixed asset due to normal usage, wear, and tear, new technology, or unfavorable market conditions is called Depreciation.
Depreciation AccountDebit
To Asset AccountCredit
Types of Depreciation:
- Straight Line Method
- Diminishing Value Method
- Annuity method
- Machine hour rate method
- Revaluation method
- Sum-of-the-years’ digit method
What are Contingent Liabilities?
Contingent liabilities are those liabilities that will or might not be incurred by a business counting on the result of a future event. The existence of this type of liability is hooked into the occurrence of a probable event in the future.