Accounting Manager Interview Preparation Guide

Download PDF

Account payable is referred as the amount company owes to its suppliers, its employees, and its partners. In other words, it is the basic cost levied on the company to run business process that is outstanding. Account payable for one company may be account receivable for another firm or company.

A Master Account has subsidiary accounts. A master account receivable could be anything, it could be account receivable for various individual receivable accounts.

A bank reconciliation is a process done by a company to ensure that the company’s records (check register, balance sheet, general ledger account, etc.) are correct and that the bank’s records are also correct.

Accrual Accounting is a method for measuring the performance and position of the company by identifying economic events regardless of when cash transaction happened. In this method, revenue is compared with the expenditures, at the time in which the transaction happens rather than when the payment is made.

The General ledger account is an account where the company records all the information for its various expenses and income types into separate accounts. Such that all the debits and credits pertaining to that particular type of transaction can be entered in one place and kept balanced.

Working capital is a financial metric that calculates the resources available to the company to finance its day-to-day operations. It is typically calculated by deducting current liabilities from current assets.

A deposit in transit is a checks and cash that have been received and recorded by an entity, but which have not yet been entered in the records of the bank where the funds are deposited.

The disadvantage of double entry system,

☛ If there is any compensatory errors, it is difficult to find out by this system
☛ This system needs more clerical labour
☛ It is difficult to find the errors if the errors are in the transactions recorded in the books
☛ It is not preferable to disclose all the information of a transaction, which is not properly recorded in the journal

A ledger can be referred as an accounting book that keeps the record of journal entries in a chronological order to individual accounts. The process of recording this journal entries is known as posting.

A deferred asset refers to a deferred debit or a deferred charge. An example of a deferred charge is bond issue costs. These costs involves all of the fees or charges that an organization incurs in order to register and issue bonds. This fees are paid in a near time when the bonds are issued but it will not be expensed at that time.

It is the residual value of an asset. The residual value is the value that any asset holds after its estimated life time.

GAAP means Generally Accepted Accounting Principle; it is a framework of accounting, standards, procedures & rules determined by the professional accounting industry and practiced by publicly traded U.S companies all over the U.S.A.

The equation for Acid-Test Ratio in accounting

Acid-Test Ratio = (Current assets – Inventory) / Current Liabilities

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.

A compound journal entry is just like other accounting entry where there is more than one debit, more than one credit, or more than one of both debits and credits. It is essentially a combination of several simple journal entries.

Reversing journal entries are entries made at the beginning of an accounting period to cancel out the adjusting journal entries made at the end of the previous accounting period.

A standard journal entry includes, date of business transaction, name of the accounts affected, amounts to be debited or credited and a brief description of the event.

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”.

In accounting, trial balance is an accounting report that lists the balances in each of an organization’s general ledger accounts. This is done at the end of posting journal entry to ensure that there are no posting errors.

☛ Recording of transactions in the journal
☛ Posting of journal entry in to the respective ledger accounts and then preparing a trial balance
☛ Preparing final accounts and closing of books of accounts

All types of exchange bills, bonds and other securities owned by a merchant that is payable to him are said as bills receivable.

An over accrual is a condition where the estimate for an accrual journal entry is too high. This estimate may apply to an accrual of expense or revenue.

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.

We know that all types of transactions need to be documented. The trade bills are the documents, generated against each transaction.

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.