28 Basic Accounting Interview Questions | Accountant Interview Questions | Freshers & Experienced

Summary

This video is a comprehensive guide to accounting interview preparation, covering essential concepts and practical questions for both fresh graduates and experienced professionals. It explains key topics such as accrual vs cash accounting, vouchers, invoices, journal entries, ledgers, trial balance, subsidiary books, bank reconciliation, depreciation, and final accounts. The video also addresses common errors, tricky scenarios like dishonored checks, and distinctions between credit/debit notes. Each question is enhanced with examples, practical tips, and extra insights to help candidates stand out. By following this carefully curated content, viewers can confidently prepare to excel in accounting interviews.

Takeaways

• 😀 The main difference between accrual accounting and cash accounting is the timing of recognizing revenue and expenses. Accrual accounting recognizes them when they are incurred, while cash accounting does so when the money is received or paid.
• 😀 A voucher is a document that supports a payment made by a business. There are two types of vouchers: internal (prepared by the organization) and external (generated by external agencies).
• 😀 A tax invoice is a document used by a seller when supplying goods, detailing the quantity sold, rates, terms of payment, taxes like CGST and SGST, and the total amount payable.
• 😀 A check has three parties: the drawer (the person who writes the check), the drawee (the bank on whom the check is drawn), and the payee (the person to whom the check is issued).
• 😀 A combined journal entry is made when multiple accounts need to be debited or credited in a single journal entry, such as when starting a business with various assets.
• 😀 A ledger is the main book of accounts where all transactions are categorized and summarized. It provides a clear record of all accounts like assets, liabilities, income, and expenses.
• 😀 Trial balance is prepared to ensure the arithmetic correctness of the books. It includes the balances of all ledger accounts and helps in the preparation of final accounts.
• 😀 The difference between gross trial balance and net trial balance is that the gross trial balance lists the total debit and credit amounts, while the net trial balance shows only the balances of individual accounts.
• 😀 Subsidiary books are specialized journals used to record specific transactions such as sales, purchases, cash transactions, etc., making the accounting process more efficient.
• 😀 A bank reconciliation statement compares the balance in the company’s books with the bank’s records, identifying discrepancies like bank charges, unrecorded transactions, or outstanding checks.

Q & A

What is the difference between accrual accounting and cash accounting?

Accrual accounting recognizes revenues and expenses when they are earned or incurred, regardless of when cash is received or paid. Cash accounting recognizes revenues and expenses only when cash is actually received or paid. Accrual accounting is preferred for large businesses with complex transactions, while cash accounting suits small businesses due to its simplicity.

What is a voucher, and what are its types?

A voucher is a document supporting a payment made by a business. Types include internal vouchers, prepared within the organization (e.g., travel bills), and external vouchers, issued by outside parties (e.g., debit notes, electricity bills).

Who are the three parties to a check?

The three parties are: 1) Drawer – the person writing the check; 2) Drawee – the bank on which the check is drawn; 3) Payee – the person receiving the check.

What is a combined or compound journal entry?

A combined journal entry is made when more than one account is to be debited or credited in a single entry. For example, starting a business with multiple assets like goods, cash, and equipment involves recording all transactions in one combined journal entry.

What is a ledger, and what information does it provide?

A ledger is the main book of accounts that summarizes all business transactions. It contains accounts for assets, liabilities, revenue, expenses, and capital. It allows tracking of balances in specific accounts and helps prepare financial statements.

What is a trial balance, and why is it prepared?

A trial balance is a statement listing the balances of all ledger accounts to check arithmetic accuracy. It ensures that total debits equal total credits, helps identify discrepancies, and serves as a basis for preparing final accounts.

What are subsidiary books, and why are they used?

Subsidiary books are specialized journals created to record specific types of transactions, such as cash book, purchase book, and sales book. They save time, provide better internal control, and allow easier reference and management of accounts.

What is a bank reconciliation statement, and what causes discrepancies?

A bank reconciliation statement compares the balance in a company's books with the bank statement to identify differences. Discrepancies may arise from bank charges, outstanding checks, recording errors, interest credits, dishonored checks, or timing differences in recording transactions.

What is depreciation, and is it necessary for unused assets?

Depreciation is the decrease in an asset's value due to wear and tear, obsolescence, or passage of time. It must be recorded even for unused assets to reflect the true value of the business, except for land, which typically appreciates.

Can errors exist even if the trial balance agrees?

Yes, a trial balance only checks arithmetic equality. Errors such as omissions, commissions, principles, or compensating errors can still exist. These errors may not affect the trial balance but require correction through journal entries or adjustments.

What is a profit and loss (P&L) account?

A P&L account summarizes a company's revenues and expenses, showing net profit or loss. The credit side includes indirect incomes, and the debit side includes indirect expenses. The net profit or loss is transferred to the capital account, and the P&L account is a nominal account.

What is the difference between a debit note and a credit note?

A credit note is issued by the seller to reduce the buyer's payable amount when goods are returned. A debit note is issued by the buyer to increase the amount owed to the seller, usually when goods are returned or adjustments are needed.

What are one-sided and two-sided accounting errors?

One-sided errors affect only one account and impact trial balance agreement. They can be rectified using a suspense account. Two-sided errors affect two or more accounts but do not disturb the trial balance, and are corrected through journal entries.