1) Why did you select accounting as your profession?

Well, I was quite good in accounting throughout but in my masters, when I got distinction I decided to adopt this field as a profession. 2) Do you have any professional experience of this field? Yes, I have worked as an accountant at two different places. 3) Did you use accounting applications at your previous companies or prefer working manually?? Yes, I have used Advanced Business Solutions and AME Accounting Software in my previous jobs. 4) Can you name any other accounting application? Yes, I am familiar with CGram Software, Financial Force, Microsoft Accounting Professional, Microsoft Dynamics AX and Microsoft Small Business Financials. 5) Which accounting application you prefer most and why? I think all are good though but Microsoft Accounting Professional is best because it offers reliable and fast processing of accounting transactions that saves time and increases proficiency. 6) What is the abbreviation for the accounting terms debit and credit? Debit abbreviation is dr and credit abbreviation is cr. 7) How many types of business transactions are there in accounting? There are two types of transactions in accounting i.e. revenue and capital. 8) What is balance sheet?

It is a statement that states all the liabilities and assets of the company at certain point. 9) Have you ever heard about TDS, what it is?

Yes, TDS abbreviates Tax Deduction at Source. 10) In balance sheet, where do you show TDS?

It is shown on the assets section, right after the head current asset. 11) Do you have any idea about Service Tax or Excise?

It is a kind of hidden tax that is included in the service provided by the service provider and paid by the service receiver. 12) Do you think there is any difference between inactive and dormant accounts?

Yes, both are different terms in accounting. Inactive accounts means that accounts have been closed and will not be used in future as well. While, dormant accounts are those that are not functional today but may be used in future. 13) What is tally accounting?

It is the software used for accounting in small business and shops for managing routine accounting transactions. 14) How can you define departmental accounting?

It is a type of accounting in which separate account is created for departments. It is managed separately as well as shown independently in the balance sheet. 15) Define fictitious assets? These are the assets that cannot be shown or touch. Fictitious assets can only be felt such as good will, rights etc. 16) By saying, perpetual or periodic inventory system; what do we mean? In the first one i.e. the perpetual inventory system, the accounts are adjusted on continual basis. In the periodic inventory system, the accounts are adjusted periodically. 17) In accounting, how do you define premises? Premises refer to fixed assets that are shown in the balance sheet. 18) In accounting, VAT abbreviates what? VAT means Value Added Tax. 19) Do you possess any knowledge about accounting standards? Yes, as per my knowledge there are total 33 accounting standards published so far by ICAI. The purpose of these standards is to implement same policies and practices in any country. 20) What is ICAI? It is the abbreviation of Institute of Chartered Accountants in India.

21) How can you explain the basic accounting equation? We know that accounting is all about assets, liabilities and capital. Therefore, the accounting equation is: Assets = Liabilities + Owners Equity.

22) Define Executive accounting? It is a type of accounting that is specifically designed for the business that offers services to users. 23) Define Public accounting? Public accounting offers audits and CPAs to review company financial records to ensure accountability. It is for general public. 24) What is a CPA? CPA stands for Certified Public Accountant. To become a CPA, one should have to do many other qualifications as well. It is a qualification with 150 hour requirement; it means that one should complete 150 credit hours at any accredited university. 25) What do you think is bank reconciliation statement? A reconciliation statement is prepared when the passbook balance differs from the cashbook balance. 26) Differentiate Public and Private Accounting? Public accounting is a type of accounting that is done by one company for another company. Private accounting is done for your own company. 27) What is project implementation? Project implementation involves six steps in total such as:

Identify Need Generate and Screen Ideas Conduct Feasible Study Develop the Project Implement the Project Control the Project

28) Do you think Accounting Standards are mandatory and why? Yes, I do believe that accounting standards play a very important role to prepare good quality and accurate financial reports. It ensures reliability and relevance in financial reports. 29) Can you name different branches of accounting? There are three branches of accounting named as Financial Accounting, Management Accounting and Cost Accounting.

30) Differentiate Accounting and Auditing? Accounting is all about recording daily business activities while auditing is the checking that whether all these events have been noted down correctly or not. 31) Define dual aspect term in accounting? As the name implies, the dual aspect concept states that every transaction has two sides. For example, when you buy something, you give the cash and get the thing. Similarly, when you sale something, you lose the thing and gets the money. So this getting and losing is basically two aspects of every transaction. 32) What do we mean by purchase return in accounting? It is the term introduced in the records for every defective or unsatisfactory good returned back to its supplier. 33) Define the term material facts in accounting? Material facts are the bills or any document that becomes the base of every account book. It means that all those documents, on which account book is prepared, are called material facts. 34) Have you ever prepared MIS reports and what are these? Yes, I have prepared few MIS reports during my previous jobs. MIS reports are created to identify the efficiency of any department of a company. 35) Define companys payable cycle? It is the time required by the company to pay all its account payables. 36) Define retail banking? It is a type of banking that involves a retail client. These clients are the normal people and not any organizational customers. 37) How much mathematics knowledge is necessary or required in accounting? Not much knowledge but basic mathematical background is required in accounting for operations like addition, subtraction, multiplication and division. 38) Define bills receivable? All types of exchange bills, bonds and other securities owned by a merchant that is payable to him are said as bills receivable. 39) Define depreciation and its types?

By depreciation we mean that a value of an asset is decreasing as it is in use. It has two types such as Straight Line Method and Written Down Value Method. 40) Differentiate between consignor and consignee? Consigner is the owner of the goods or you can say he is the person who delivers the goods to the consignee. The consignee is the person who receives the goods. 41) Define balancing in accounting? Balancing means to equate both sides of the T-account i.e. the debit and credit sides of a T-account must be equal/balanced. 42) How much statistics knowledge is necessary or required in accounting? You must be very good at statistics if you want to do well in accounting. Otherwise, with minimum knowledge you cannot manage your day to day transactions effectively in accounting. 43) Define Scrap value in accounting? It is the residual value of an asset. The residual value is the value that any asset holds after its estimated life time. 44) Define Marginal Cost? Suppose you have to produce an additional unit of output. The estimated cost of additional inputs to produce that output is actually the marginal cost. 45) Define Partitioning in accounting? It is a kind of groups made on the basis of same responses by a system. 46) Differentiate between provision and reserve? Provisions are the liabilities or the anticipated items such as depreciation. You can say provisions are expenses. Reserves are the profits of any company and a part of that profit is placed back to the business to keep it sustainable in tough times of a company. 47) Define Offset accounting? Offset accounting is one that decreases the net amount of another account to create a net balance. 48) Define overhead in terms of accounting? It is the indirect expenditure of a company such as salaries, rent dues etc. 49) Define trade bills?

We know that all types of transactions need to be documented. The trade bills are the documents, generated against each transaction. 50) Define fair value accounting? As per fair value accounting, a company has to show the value of all of its assets in terms of price on balance sheet on which that asset can be sold.

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NOW ON TO ACCOUNTING QUESTIONS Accounting is the language of business, so dont underestimate the importance of accounting questions. Some are easy, some are more challenging, but of all of them allow interviewers to gauge your knowledge level without the need to ask more complex valuation/finance questions.Below we have selected most common accounting questions you should expect to see during the recruiting process.

Q: Why do capital expenditures increase assets (PP&E), while other cash outflows, like paying salary, taxes, etc., do not create any asset, and instead instantly create an expense on the income statement that reduces equity via retained earnings? A: Capital expenditures are capitalized because of the timing of their estimated benefits the lemonade stand will benefit the firm for many years. The employees work, on the other hand, benefits the period in which the wages are generated only and should be expensed then. This is what differentiates an asset from an expense.

Q: Walk me through a cash flow statement. A. Start with net income, go line by line through major adjustments (depreciation, changes in working capital and deferred taxes) to arrive at cash flows from operating activities.

Mention capital expenditures, asset sales, purchase of intangible assets, and purchase/sale of investment securities to arrive at cash flow from investing activities. Mention repurchase/issuance of debt and equity and paying out dividends to arrive at cash flow from financing activities. Adding cash flows from operations, cash flows from investments, and cash flows from financing gets you to total change of cash.

Beginning-of-period cash balance plus change in cash allows you to arrive at end-of-period cash balance.

Q: What is working capital? A: Working capital is defined as current assets minus current liabilities; it tells the financial statement user how much cash is tied up in the business through items such as receivables and inventories and also how much cash is going to be needed to pay off short term obligations in the next 12 months. Q: Is it possible for a company to show positive cash flows but be in grave trouble? A: Absolutely. Two examples involve unsustainable improvements in working capital (a company is selling off inventory and delaying payables), and another example involves lack of revenues going forward.in the pipeline

Q: How is it possible for a company to show positive net income but go bankrupt? A: Two examples include deterioration of working capital (i.e. increasing accounts receivable, lowering accounts payable), and financial shenanigans.

Q: I buy a piece of equipment, walk me through the impact on the 3 financial statements A: Initially, there is no impact (income statement); cash goes down, while PP&E goes up (balance sheet), and the purchase of PP&E is a cash outflow (cash flow statement) Over the life of the asset: depreciation reduces net income (income statement); PP&E goes down by depreciation, while retained earnings go down (balance sheet); and depreciation is added back (because it is a non-cash expense that reduced net income) in the cash from operations section (cash flow statement).

Q: Why are increases in accounts receivable a cash reduction on the cash flow statement? A: Since our cash flow statement starts with net income, an increase in accounts receivable is an adjustment to net income to reflect the fact that the company never actually received those funds.

Q: How is the income statement linked to the balance sheet? A: Net income flows into retained earnings.

Q: What is goodwill?

A: Goodwill is an asset that captures excess of the purchase price over fair market value of an acquired business. Lets walk through the following example: Acquirer buys Target for $500m in cash. Target has 1 asset: PPE with book value of $100, debt of $50m, and equity of $50m = book value (A-L) of $50m.

Acquirer records cash decline of $500 to finance acquisition Acquirers PP&E increases by $100m Acquirers debt increases by $50m Acquirer records goodwill of $450m

Q: What is a deferred tax liability and why might one be created? A: Deferred tax liability is a tax expense amount reported on a companys income statement that is not actually paid to the IRS in that time period, but is expected to be paid in the future. It arises because when a company actually pays less in taxes to the IRS than they show as an expense on their income statement in a reporting period. Differences in depreciation expense between book reporting (GAAP) and IRS reporting can lead to differences in income between the two, which ultimately leads to differences in tax expense reported in the financial statements and taxes payable to the IRS.

Q: What is a deferred tax asset and why might one be created? A: Deferred tax asset arises when a company actually pays more in taxes to the IRS than they show as an expense on their income statement in a reporting period.

Differences in revenue recognition, expense recognition (such as warranty expense), and net operating losses (NOLs) can create deferred tax asset

Basic accounting interview questions : last updated Aug 05, 2011 What is Journalizing? What are the columns of a journal? Explain Compound Journal Entry. List the type of transactions entered in Journal proper. Explain Purchase day book. What are control ledgers? What are the purposes of maintaining it? What is Trial Balance? What does an accurate Trial Balance suggest? What are the reasons which cause pass book of the bank and your bank book not tally? What steps would you take to locate the errors in case Trial Balance disagrees?

What is Journalizing? What are the columns of a journal?

Journalizing is the process of recoding business transactions in the Journal in chronological order, as and when the transactions take place. Journal is also known as Book of Original Entry or the Book of Prime Entry. Journal has following five columns:

-Date -Particulars -Ledger Folio -Amount Debited -Amount Credited

Explain Compound Journal Entry.

In day to day business, various similar transactions take place on the same day and every account is either debited or credited. Thus instead of passing different entries, a compound entry can be passed, which involves more than one debit or more than one credit or both. This makes the journal less bulky and avoids duplication.

List the type of transactions entered in Journal proper.

The Journal proper is used to record following transactions:-Opening Entries : are the entries which are made at the starting of the financial year. -Closing Entries : At the close of the accounting period balances from the various accounts are transferred in order to balance the books of accounts. Thus, this process of transferring balances of the trading and profit and loss account at the end of year is called closing the books and entries passed at that time are called closing entries. -Transfer Entries : are the entries which are passed in order to transfer one account to another account. - Adjustment Entries : are passed at the end of an accounting period in order to modify the accounts. -Rectification Entries : are passed to rectify the error detected the books through an entry in journal proper. -Entries for rare transactions : Journal proper is used for rare transactions. -Entries for which there is no special journal : When the transactions cannot be recorded in the above sub journals then the same are entered in the journal proper. Examples of such transactions are: Distribution of goods as free sample, Goods destroyed by fire, etc

Explain Purchase day book.

Purchase Day book (Purchase Register)is the book of original entry in which all the transactions relating to only credit purchase are recorded. Cash purchases do not find place in purchase day book as they are recorded in Cash book. At the end of every month purchase day book is totalled. The total amount show the total goods purchased on credit. The total of purchase book is debited to the purchase account and the accounts of the suppliers of goods are credited with the amount standing against their names. Ruling of purchase day book is different from a journal. There are five columns in a purchase day book: first column records Date, second column records name of the supplier, quantity supplied, Rate at which quantity supplied, description, etc. , third column records Invoice number, fourth column records Ledger Folio, fifth column records total amount to the supplier.

What are control ledgers? What are the purposes of maintaining it?
In a business, sometimes it is not feasible to carry accounts of all the suppliers and customers in the main ledger. In such cases apart from General or main ledger, the control ledgers are maintained. Control ledgers records the individual accounts. In the end of the period, balance shown in the main ledger has to tally with the balance in the individual ledger accounts maintained in the control ledger. Purposes of maintaining control ledgers are:

- Sundry Debtors - Sundry Creditors - Advances to Staff

What is Trial Balance? What does an accurate Trial Balance suggest?

Trial Balance is a summary of all the balances of various ledger accounts and Cash/Book accounts of an organisation at any given date. For the preparation of Trial Balance the entire Ledger accounts and Cash book/Bank book are required to be balanced to get the closing balance. Assets and Expenses accounts having debit balance are posted on debit side whereas Income and Liability accounts having credit balance are posted on credit side of the Trial Balance. An accurate Trial Balance is an evidence that all the transactions are recorded and posted in the General Ledger account as per the accounting principles. It also ensures arithmetical accuracy of the process of ledger posting.

What are the reasons which cause pass book of the bank and your bank book not tally?
* Cheques deposited into the bank but not yet collected * Cheques issued but not yet presented for payment * Bank charges * Amount collected by bank on standing instructions of the concern. * Amount paid by the bank on standing instructions of the concern. * Interest debited by the bank * Interest credited by the bank * Direct payment by customers into the bank account * Dishonour of cheques * Clerical errors

What steps would you take to locate the errors in case Trial Balance disagrees?
In case Trial Balance disagrees, following steps should be taken to locate the errors: -Totalling of all the subsidiary books and trial balance should be checked carefully. -Opening balances of all the accounts are properly brought down in the current years books of account. -Ledger accounts have been properly balanced and the balances of ledger accounts have been correctly shown in the trial balance. -To locate some errors the difference in the trial balance in halved. -Another way is dividing the difference in the trial balance by 9. -If the difference gets divisible without leaving any reminder that indicates the transposition of the amounts. -To locate certain other errors, current year trial balance can be compared with the trial balance of the previous year. Capital structure What is capital structure? What are the principles of capital structure management? Explain following principles of cost structure management: a.) Cost Principle b.) Risk Principle c.) Control Principle d.) Flexibility Principle e.) Timing Principle

What are the internal factors affecting capital structure? Marginal costing What is Marginal Costing? What are its features? What are the basic assumptions made by Marginal Costing? How is the concept of marginal costing practically applied? What are the limitations of Marginal Costing? What is Cost Volume-Profit relationship? Basics financial accounting Explain the following: a)Business Entity Concept b)Dual Aspect Concept c)Going Concern Concept d)Accounting Period Concept e)Cost Concept f)Money Measurement Concept g)Marketing Concept..............