Accounting Interview Questions with Answers
1)What do Debit and Credit terms mean to a financial accountant?
Answer:On 1st January 1998 the provision for Bad Debts stood at Rs.1, 100/-. During the year Bad Debts totaled to Rs.900/-. At the end of the year the Sundry Debtors were Rs.24, 000/-. The firm wishes to maintain the provision for Bad Debts @ 5% on Debts. In the year 1999 Bad Debts totaled to Rs.1, 600/- and at the end of the year the Debtors were Rs.42, 000/-. At the end of year 2000, the sundry Debtors were Rs.48, 500/- out of which Rs.500 were bad and had to be written off. In all the three years mentioned above firm was maintaining the provision @ 5% Debtors. You are required to choose the correct answer from the question from the options given below: (all working should a part of your answer). a) The provision for bad debts account at the end of 1998 shows a balance of : i) Rs.1, 100 ii) Rs.1, 200 iii) Rs.1, 155 iv) Rs.1, 400 b) The sundry debtors amount shown in the balance sheet of 31Dec., 1998 was ---- i) Rs.23, 100 ii) Rs.21, 900 iii) Rs.22, 800/- iv) Rs.21, 945 c) The amount of Bad Debts and provision for Bad Debts put together charged to the Profit and Loss A/c for the year ended 31st December 1999 was ---- i) Rs.2, 500 ii) Rs.3, 77 iii) Rs.2, 020 iv) Rs.3, 620 d) The provision for Bad Debts account at the end of the year 2000 shows a balance of ---- i) Rs.2, 400 ii) Rs.4, 000 iii) Rs.2, 425 iv) Rs.1, 900 e) The Sundry Debtors shown in the Balance Sheet of 31st December 2000 amounts to ---- i) Rs.48, 500 ii) Rs.48, 000 iii) Rs.45, 600 iv) Rs.46, 075. Ans to Q.No.2. a) ii) PBD – 5% of Rs.24, 000 = Rs.1, 200 b) iii) S.Debtors – Rs.24, 000 less Rs.1, 200 = Rs.22, 800 c) i) Rs.2, 500 (Bad debts Rs.1, 600 plus new PBD Rs.2, 100 minus old PBD Rs.1, 200) Note: Bad Debts are already written off in the year 1998 and 1999. d) i) Rs.2, 400 (Debtors Rs.48, 500 less Bad Debts Rs.500 and then 5% PBD) e) iii) Rs.45, 600 (Debtors Rs.48, 500 less Bad Debts Rs.500 and PBD Rs.2, 400).
2)What do Accrual Accounting System term mean to a financial accountant?
Answer:Accrual Accounting System: Accounting is normally done on accrual basis i.e. income and expenses are recorded as and when they become due and as and when they are actually received and paid. b. Debit and credit: Debit means an entry made on the left hand side of an account prepared in the horizontal format, an account which receive the benefit of a transaction. And credit made an entry made on the right hand side of an account prepared in the horizontal format, an account that gives the benefit of transaction. c. Transposition error: An error made in accounts while entering the total of debit to credit or vice-versa before calculating the balance or when wrongly an amount is carried forward to the next page of the same account. d. Capital Work in progress: The value of unfinished project or construction work as on date of balance sheet, whose work is still in progress. e. Statutory Reserves: Compulsory reserve to be maintained by an organization according to the statutes governed by it. f. Fluctuating capital method: Under this method, all the transaction relating to a partner are entered in only one capital account maintained for him. No current account is opened as in the Fixed Capital Method. Capital account is credited not only with the amount contributed by him as capital but other transactions such as interest on capital, drawings and share of profits are also recorded in the same capital account. g. Non-performing assets: Assets, which do not bring any revenue to the firm, is known as non-performing assets
3)Does the fixed capital of partners also change?
Answer:Yes. The fixed capital of partners also changes in the following two conditions:i. When a partner introduces additional amount as capital in the firm i.e. additional capital
ii. When a partner withdraws an amount of capital invested in the firm i.e. drawings against capital/drawings out of capital.
4)Is written partnership agreement necessary to form a partnership firm?
Answer:No. A partnership firm can be constituted with a partnership agreement implied between/among the partners while it is advisable only to have a written partnership agreement to avoid future disputes and also to produce to the income tax authorities and other interested parties dealing with the firm.
5)Give four items that may appear on the credit side of a Partner’s Current Account?
Answer:The four items that may appear on the credit side of a Partner’s Current Account are:
i.Salary payable to the Partner;
ii.Commission payable to the partner;
iii.Profit-share of the partner;
iv.Interest on Partner’s Capital.
6.What do you mean by past adjustments?
Answer:Past adjustments refer to the journal entries passed to adjust the effect of the transactions either recorded erroneously or omitted in the past. Past adjustments may also occur as a consequence of change in the terms of the partnership agreement with retrospective effect. For example; interest on drawings charged excessively, interest on capital omitted or treating manager as a partner with retrospective effect.
7.What is called average capital?
Answer:The weighted average with reference to time the partner’s capital has been used in the business is computed to determine the ratio in which profit or loss will be shared by the partners. This is called Average Capital.