Accounting Interview Questions - An interviewhelper.org blog

What do the following terms mean to a financial accountant?

2009-03-03T03:11:00.000-08:00

Question :What do the following terms mean to a financial accountant?
b. Debit and Credit
Answer :2. 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).

What do the following terms mean to a financial accountant

2009-03-03T03:07:00.000-08:00

Question :What do the following terms mean to a financial accountant?
a. Accrual Accounting System
Answer :a. 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

Does the fixed capital of partners also change

2009-03-03T03:06:00.002-08:00

Question :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.

Is written partnership agreement necessary to form a partnership firm

2009-03-03T03:06:00.001-08:00

Question :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.

Give four items that may appear on the credit side of a Partner’s Current Account

2009-03-03T03:05:00.000-08:00

Question :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.

What do you mean by past adjustments

2009-03-03T03:04:00.000-08:00

Question :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.

What is called average capital

2009-03-03T03:03:00.000-08:00

Question :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.

Where will you charge the interest on partner’s loan

2009-03-03T03:02:00.000-08:00

Question :Where will you charge the interest on partner’s loan?
Answer :Interest on partner’s loan is a charge against profit and hence, charged in the Profit and Loss Account.

Name the methods applied to compute the chargeable interest on drawings provided that the unequal amount is withdrawn at different dates

2009-03-03T03:01:00.000-08:00

Question :Name the methods applied to compute the chargeable interest on drawings provided that the unequal amount is withdrawn at different dates.
Answer :When drawings of unequal amount are made at different dates throughout the accounting period, interest on drawings is calculated using any of the following methods:

i. Simple Method
ii. Product Method

What is the rate of interest applicable on drawings of fixed amount made by the partner at the end of each quarter in the absence of a partnership dee

2009-03-03T03:00:00.000-08:00

Question :What is the rate of interest applicable on drawings of fixed amount made by the partner at the end of each quarter in the absence of a partnership deed?
Answer :As per the provisions of Indian partnership Act, 1932, interest on partner’s drawings is not chargeable in the absence of partnership deed.

For how many months is the interest on total drawings calculated at the given rate of interest provided that a fixed amount is withdrawn in the beginn

2009-03-03T02:59:00.000-08:00

Question :For how many months is the interest on total drawings calculated at the given rate of interest provided that a fixed amount is withdrawn in the beginning of each month?
Answer :When drawings of a fixed amount are made in the beginning of each month whole of the accounting period, interest is charged at the given rate for a period of 61/2 months on the total drawings.

Where will you record the Loss-share of a partner if the partners’ capitals are fluctuating

2009-03-03T02:58:00.000-08:00

Question :Where will you record the Loss-share of a partner if the partners’ capitals are fluctuating?
Answer :If the partner’s capitals are fluctuating, loss-share of a partner is recorded on the debit side of Partner’s Current Account.

Where will you record the drawings made out of capital if the partners’ capitals are fixed

2009-03-03T02:48:00.000-08:00

Question :Where will you record the drawings made out of capital if the partners’ capitals are fixed?
Answer :If the partner’s capitals are fixed, drawings made out of capital are recorded on the debit side of Partner’s Capital Account.

Does the principal agent relationship among the partners hold good for all the acts in a firm

2009-03-03T02:44:00.000-08:00

Question :Does the principal agent relationship among the partners hold good for all the acts in a firm?
Answer :No, all the acts of a partner do not bind the firm. As per the provisions of Indian Partnership Act,1932 following are the acts to which all the partners must give their express consent to do :

i. Submit a dispute relating to the business of the firm to arbitration;
ii. Withdraw a suit filed on behalf of the firm;
iii. Acquisition of immovable property on behalf of the firm;
iv. Transfer of immovable property on behalf of the firm;
v. Enter into partnership on behalf of the firm.

What is a partnerhip at will

2009-03-03T02:42:00.000-08:00

Question :What is a partnerhip at will?
Answer :Partnership at will refers to the partnership where the partnership agreement between/among the partners does not provide for either the duration of the partnership or the determination of the partnership

There are 20 partners in a partnership firm carrying on a retail business of readymade garments. Mr. Parekh, one of the partners, suggests the admissi

2009-03-03T02:39:00.000-08:00

Question :There are 20 partners in a partnership firm carrying on a retail business of readymade garments. Mr. Parekh, one of the partners, suggests the admission of his friend Farooq to which all the partners have agreed. You are required to advise on the admission of Mr. Farooq?
Answer :No, Mr. Farooq cannot be admitted to the firm. The reason being that The Companies Act, 1956 limits the maximum number of partners to 20 in firm carrying on a non-banking business.

. There are 10 partners in a partnership firm carrying on a banking business. Mr. Ramesh, one of the partners, suggests the admission of his friend Ma

2009-03-03T02:36:00.000-08:00

Question :There are 10 partners in a partnership firm carrying on a banking business. Mr. Ramesh, one of the partners, suggests the admission of his friend Mahesh to which all the partners have agreed. You are required to advise on the admission of Mr. Mahesh?
Answer :No, Mr. Mahesh cannot be admitted to the firm in spite of the consent of all the partners. The reason being that The Companies Act,1956 limits the maximum number of partners to 10 in a firm carrying on a banking business.

Red, Blue and Yellow are partners in a firm without any partnership deed. Red and Yellow want to purchase goods from Green Ltd. but Blue does not agre

2009-03-03T02:34:00.000-08:00

Question :Red, Blue and Yellow are partners in a firm without any partnership deed. Red and Yellow want to purchase goods from Green Ltd. but Blue does not agree. Can the goods be purchased or not?
Answer :Yes, the goods can be purchased. The reason being that as per the provisions of Indian Partnership Act,1932 any difference arising as to ordinary matters connected with the business may decided by a majority of the partners provided no change may be made in the nature of the business without the consent of all the partners.

T,R and G are partners in a firm. R used Rs. 10,000 belonging to the firm and made a profit of Rs. 1,000. T and G want the amount to be given to the f

2009-03-03T02:28:00.000-08:00

Question :T,R and G are partners in a firm. R used Rs. 10,000 belonging to the firm and made a profit of Rs. 1,000. T and G want the amount to be given to the fir
Answer :Yes, T and G are correct. R must pay Rs.11,000 to the firm. The reason being that as per the provisions of Indian Partnership Act, 1932 if a partner derives any profit from the use of the property or business connection of the firm or the firm name, he shall account for that profit and pay it to the firm.

L,M and N are partners in a firm. M used Rs.10,000 belonging to the firm and suffered a loss of Rs.1,000. He wants the firm to bear the loss. State wh

2009-03-03T02:25:00.000-08:00

Question :L,M and N are partners in a firm. M used Rs.10,000 belonging to the firm and suffered a loss of Rs.1,000. He wants the firm to bear the loss. State whether M is correct or not.
Answer :No, M is not correct. M must pay Rs.11,000 to the firm. The reason being that where a partner uses the firm’s property for the purposes other than in the due course of the firm’s business, he is liable to pay for any losses incurred.

Rekha, Ritu and Reena are partners in a partnership firm involved in the business of saree manufacturing. Ritu incurs an expense of Rs.10,000 for the

2009-03-03T02:23:00.000-08:00

Question :Rekha, Ritu and Reena are partners in a partnership firm involved in the business of saree manufacturing. Ritu incurs an expense of Rs.10,000 for the repairs of a machinery and wants the firm to reimburse the amount to her. State whether Ritu is eligible to get the amount?
Answer :Yes, Ritu is entitled to get the amount. The reason being that a partner has a right to be indemnified of the expenses incurred for the firm’s business or payments made by the partner on behalf of the firm.

Mr Sohan Lal and Mr. Mohan Lal are partners in a firm. Mr. Sohan Lal suggests the admission of his friend Mr. Madan Lal but Mr. Mohan Lal does not agr

2009-03-03T02:22:00.000-08:00

Question :Mr Sohan Lal and Mr. Mohan Lal are partners in a firm. Mr. Sohan Lal suggests the admission of his friend Mr. Madan Lal but Mr. Mohan Lal does not agree to the same. Can Mr. Madan Lal be admitted in the firm ?
Answer :No, Mr. Madan Lal cannot be admitted in the firm. The reason being that every partner has a right not to allow the admission of a new partner and hence, a new partner can be admitted into the firm only upon the consent of all the partners.

Which rate of interest is applicable on partner’s loan in the absence of partnership deed

2009-03-03T02:17:00.000-08:00

Question :Which rate of interest is applicable on partner’s loan in the absence of partnership deed ?
Answer :As per the provisions of Indian Partnership Act, 1932, a partner is entitled to interest @ 6% p.a. on his loan advanced to the firm in the absence of partnership deed.

Which Act’s provisions are applied in the absence of partnership deed

2009-03-03T02:15:00.000-08:00

Question :Which Act’s provisions are applied in the absence of partnership deed?
Answer :The provisions contained under The Indian Partnership Act, 1932 are applied in the absence of partnership deed.

Which act limits the maximum number of partners in a firm

2009-03-03T02:14:00.000-08:00

Question :Which act limits the maximum number of partners in a firm?
Answer :The Companies Act, 1956 limits the maximum number of partners in a firm.

. Which section of Partnership is there in Indian Partnership Act, 1932

2009-03-03T02:13:00.002-08:00

Question :Which section of Partnership is there in Indian Partnership Act, 1932 ?
Answer :Partnership is defined under Section 4 of The Indian Partnership Act, 1932.

Define bond

2009-03-03T02:13:00.001-08:00

Question :Define bond?
Answer :A form of debt security a government or corporation issues, promising payment of the original investment plus interest on specifiedfuture dates

What is a balance sheet

2009-03-03T02:12:00.001-08:00

Question :What is a balance sheet?
Answer : A financial statement that reports a company’s assets and the claims against them — liabilities and stockholders’ equity — at a set date noted on the statement. Also called statement of financial position.style='width:.75pt;height:9.75pt'> o:href="http://www.ibm.com/annualreport/2003/flash/images/sp.gif" />

What is backlog

2009-03-03T02:11:00.001-08:00

Question :What is backlog?
Answer :The amount of a company’s unfilled orders at the end of the year. When the company fills the orders the following year, it records the revenue on the statement of earnings. Frequently, a company will give its perspective on backlog in the management discussion section in the annual report.style='width:.75pt;height:9.75pt'> o:href="http://www.ibm.com/annualreport/2003/flash/images/sp.gif" />

What is auditors’ report

2009-03-03T02:10:00.000-08:00

Question :What is auditors’ report?
Answer : A summary of the findings of a firm of certified public accountants that audits, or examines, a company’s financial statements. This report is included in the company’s annual report. Also called auditors’ opinion and report of independent accountants.

What is auditors’ opinion

2009-03-03T02:05:00.000-08:00

Question :What is auditors’ opinion?
Answer : A summary of the findings of a firm of certified public accountants that audits, or examines, a company’s financial statements. This report is included in the company’s annual report. Also called auditors’ report and report of independent accountants.style='width:.75pt;height:9.75pt'> o:href="http://www.ibm.com/annualreport/2003/flash/images/sp.gif" />

What is an auditor

2009-03-03T02:04:00.000-08:00

Question :What is an auditor?
Answer :A firm of certified public accountants a company hires as an independent third party to review its financial information. The auditor’s main purpose is to make sure the statement of earnings, statement of financial position and statement of cash flows fairly present the company’s financial condition, and that they comply with GAAP.style='width:.75pt;height:9.75pt'> o:href="http://www.ibm.com/annualreport/2003/flash/images/sp.gif" />

What are assets

2009-03-03T02:03:00.000-08:00

Question :What are assets?
Answer : Anything companies own. These things might be physical assets such as buildings, trucks, inventories of products, equipment, and cash. Or these things might be intangible assets such as goodwill, trademarks and patents. Listed as a category on the statement of financial position.style='width:.75pt;height:9.75pt'> o:href="http://www.ibm.com/annualreport/2003/flash/images/sp.gif" />

What is annual report

2009-03-03T02:02:00.000-08:00

Question :What is annual report?
Answer :A report a company publishes for its stockholders at the end of each fiscal year. The report includes required elements such as an auditors’ report and the company’s statement of earnings, statement of financial position and statement of cash flows. The report also includes elements such as letters and articles by the company’s executives, information on its financial condition and significant events.style='width:.75pt;height:9.75pt'> o:href="http://www.ibm.com/annualreport/2003/flash/images/sp.gif" />

What are accounts receivable

2009-03-03T02:01:00.000-08:00

Question :What are accounts receivable?
Answer :Amounts customers owe a company from sales of goods or services that the company expects to collect within one year. Listed in the current assets section on the statement of financial position.style='width:.75pt;height:9.75pt'> o:href="http://www.ibm.com/annualreport/2003/flash/images/sp.gif" />

What is accounts payable

2009-03-03T01:57:00.000-08:00

Question :What is accounts payable?
Answer :Amounts companies owe suppliers for goods and services. Listed in the current liabilities section on the statement of financial position.o:preferrelative="t" path="m@4@5l@4@11@9@11@9@5xe" filled="f" stroked="f"> o:href="http://www.ibm.com/annualreport/2003/flash/images/sp.gif" />