Question 1. Define Accounting?
According to American Institute of Certified Public Accountants (AICPA), "Accounting is the artwork of recording, classifying and summarizing in a sizeable manner and in phrases of money transactions and occasions which might be, in part at least, of a monetary person and deciphering the consequences there of."
American Accounting Association (AAA) has described accounting as "the method of identifying, measuring and speaking economic statistics to allow knowledgeable decisions and choices via customers of the facts."
Question 2. What Are Its Objectives?
To report the business transactions in a scientific way.
To decide the gross profit and net income earned by a firm at some stage in a particular duration.
To recognise the monetary position of a firm at the close of the financial 12 months by means of manner of getting ready the stability sheet.
To facilitate management manipulate.
To determine the taxable earnings and the income tax liability.
To offer considered necessary statistics to different parties, i.E., proprietors, lenders, personnel, management, Government, traders, financial institutions, banks etc.
Financial Accounting Interview Questions
Question 3. What Are Its Characteristics?
Accounting is the artwork of recording and classifying special business transactions.
The business transactions may be completely or partially of financial nature.
Generally the commercial enterprise transactions are described in monetary terms.
In accounting system, the business transactions are summarized and analyzed so that it will arrive at a meaningful interpretation.
The analysis and interpretations as a result obtained are communicated to folks that are accountable to take sure selections to determine the destiny path of commercial enterprise.
Question 4. What Are Its Limitations?
Accounting data is expressed in phrases of cash. Non financial events or transactions, but important, are absolutely not noted.
Fixed assets are recorded in the accounting information at the authentic fee, this is, the actual amount spent on them plus all incidental costs. In this manner the impact of inflation (or deflation) is not considered.
Accounting statistics is once in a while primarily based on estimates; estimates are often erroneous.
Accounting statistics cannot be used because the handiest test of managerial performance on the basis of greater income.
Accounting facts isn't always neutral or impartial. Accountants calculate profits as excess of revenues over costs. But they don't forget only decided on sales and expenses.
Question five. What Are The Various Functions Of Accounting?
Recording: Accounting information enterprise transactions in terms of cash. It is largely involved with ensuring that all business transactions of financial nature are well recorded.
Classifying: Accounting additionally helps class of all enterprise transactions recorded in journal. Items of similar nature are classified underneath suitable heads.
Summarizing: Accounting summarizes the categorised records. It is finished in a manner, that is beneficial to the internal and outside users. Internal customers inquisitive about these information’s are the persons who control the commercial enterprise.
Interpreting: It implies analyzing and decoding the financial facts embodied in final debts. Interpretation of the records facilitates the control, outsiders and shareholders in decision making.
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Question 6. Explain The Different Systems Of Accounting?
Cash Basis Accounting: According to this device, most effective actual cash receipts and payments are recorded in the books. The credit score transactions are not recorded in any respect, till real coins is obtained or paid.
Mercantile or Accrual System: According to this machine, all the commercial enterprise transactions touching on the particular duration, whether or not of coins or credit nature, are recorded in the books. This gadget of accounting is based on accrual concept, which states that revenue is diagnosed when it's far earned and rate is diagnosed whilst duty of fee arises.
Mixed System: Mixed machine is modified shape of pure-coins-foundation accounting. Because of the fact that natural cash basis might result in stability sheet and income assertion with restrained use, it necessitates the want of blended accounting in which some objects (particularly income and duration prices are handled on cash basis and some objects (specially product charges and lengthy-lived belongings) are treated on accrual foundation.
Question 7. What Is Financial Accounting ?
Financial or traditional accounting consists of the type, recording, and evaluation of the transactions of a enterprise in a subjective manner in step with the nature of expenditure that allows you to permit the presentation at periodic periods, of statements of profit or loss of the business and, on a particular date, of its financial state of affairs.
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Question eight. What Is Management Accounting ?
Management accounting consists of all those accounting offerings via which assistance is rendered to the control at all stages, in system of coverage, fixation of plans, control of their execution, and dimension of performance. Management accounting is typically worried with the supply of records which is beneficial to the control in decision making for the efficient running of the business and for that reason, in maximizing profit.
Question nine. What Is Social Responsibility Accounting ?
Social duty accounting is a brand new section in the development of accounting and owes its start to increasing social awareness, which has been particularly noticeable over the past many years or so. Social responsibility accounting widens the scope of accounting by way of thinking about the social consequences of commercial enterprise selections, similarly to the financial consequences. The role of commercial enterprise in society is an increasing number of coming below greater scrutiny.
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Question 10. What Is Human Resource Accounting ?
It is some other new field of accounting which seeks to file and emphasize the significance of human sources in a agency's profits. It is primarily based on the reality that the only actual durable asset which an business enterprise possesses is the nice of the people running in it. This system of accounting is involved with " the procedure of identifying and measuring information about human resources and communicating this information to involved events."
Question eleven. How Does Management Accounting Differs From Financial Accounting?
Financial or conventional accounting includes the class, recording, and evaluation of the transactions of a business in a subjective way according to the character of expenditure a good way to enable the presentation at periodic durations, of statements of income or lack of the business and, on a specific date, of its economic scenario. The day-to-day transactions journalized or recorded in subsidiary books are posted within the various ledgers and at the stop of the accounting length, a Profit and Loss Account and a Balance Sheet are prepared.
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Question 12. What Is The Difference Between Expenses And Expenditure?
Expense is the outflow from a earnings oriented employer at the same time as expenditure is the outflow from non-income business enterprise.
Financial Accounting Interview Questions
Question 13. What Are Differences Between Financial Accounting And Management Accounting?
Financial Accounting: Financial accounting depicts the past role of the concern, whilst management accounting stresses at destiny. Financial accounting is mandatory for all joint inventory organizations and commercial enterprise businesses however this isn't the case with management accounting.
Management Accounting: Management accounting provides statistics to managers to help them in making choices about the future. To the contrary, monetary accounting goals at assembly the requirements of out of doors parties who have monetary stake within the enterprise.
Question 14. Discuss The Role Of Accountants In Modern Business Organization?
Role of Accountants in Modern Business Organization:
Writing up Accounts for Preparing Financial Statements
Audit of Accounts
Role as Management Accountant
Help to authorities, Revenue Department and Tax Payer
Role as Cost Accountant
Role in Merger, Liquidation
Question 15. Write A Short Note On Finance Officer?
Finance is the life blood of business. Procuring monetary resources and their sensible usage are the 2 crucial sports of economic management that's a specialized characteristic. The finance supervisor has to strike a stability between the present day needs of the enterprise for coins and the desires of the shareholders for ok return. Often finance supervisor and controller are inter-changeable phrases and simplest this type of positions can be located in a employer.
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Question 16. What Do You Mean By Basic Accounting Concepts?
Accounting has come to give repute after a period of several hundred years. During this period sure accounting assumptions, concepts and conventions have emerged. Accountants universally in the recording, type, summarization and reporting of the transactions comply with these. Accounting assumptions, ideas and conventions are called Generally Accepted Accounting Principles (GAAP) in view that they were typically ordinary with the aid of expert accounting world as preferred hints for preparing economic statements and reviews.
Question 17. List The Basic Accounting Concepts?
The Institute of Chartered Accountants of India in its Accounting Standard-I (AS-I) has said that going situation, accrual and consistency are essential accounting assumptions. For the sake of comfort all accounting principles are discussed underneath two headings:
Basic accounting ideas.
Accounting ideas associated with earnings size.
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Question 18. What Are Basic Accounting Concepts?
Basic Accounting Concepts are:
Money Measurement Concept.
Going Concern Concept.
Dual Aspect Concept.
Full Disclosure Concept.
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Question 19. What Are Accounting Concepts Related To Income Measurement?
Accounting standards related to earnings size are:
The Time Period Concept (Periodicity Concept).
The Revenue Recognition (Realization) Concept.
The Matching Concept.
The Materiality Concept.
The Consistency Concept.
The Conservatism (Prudence) Concept.
Question 20. Discuss The Importance Of Setting Accounting Standards?
Following is the significance of accounting requirements:
Standards reduce or take away all collectively confusing versions within the accounting treatment used to put together monetary statements.
With exceptional groups following equal requirements, comparison in their financial guidelines and financial consequences becomes simpler.
Accounting requirements deal with valuing inventories, contingencies, creation contracts, constant costs, and so forth. They cover all aspects of economic sports of corporation.
The requirements assist the traders for taking selection on investment.
Setting requirements is beneficial to each the business enterprise & and the investor.
Question 21. What Are The Purposes Of Accounting Information?
The rating-retaining feature is one the number one functions of accounting information. It essentially deals with the monetary health of the organization.
Attention Directing :
Attention directing is not anything but the technique of giving a sign to the user of accounting records about the want to take a choice. As such the accounting facts supplied the person’s attention to take decision.
The trouble fixing feature of accounting information involves provisions of such data, which permits the manager to discover solutions to the issues.
Question 22. What Are The Uses Of Earnings Information?
Problem Identification Using Earning Data.
Determining the Market Value of a Firm.
Question 23. What Is A Balance Sheet?
After ascertaining the income or lack of the commercial enterprise, the businessman wants to realize the financial role of his enterprise. For this purpose he prepares a assertion of Assets and Liabilities, which is known as Balance Sheet.
Question 24. What Are The Objectives Of Preparing Balance Sheet?
The principal purpose of getting ready balance sheet is to realize the monetary position of the business at a selected date.
Though the primary goal is to understand the exact financial position of the company at a particular date, yet it serves other purpose as well.
It gives statistics about the real and actual proprietor’s equity. Though the capital of the proprietor suggests owner’s fairness, yet a few different liabilities are to be accounted for against it additionally.
It enables the company to make provisions against possible destiny losses. A provision is made in the form of the Reserves.
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Question 25. Explain Its Characteristics Of Balance Sheet?
The Balance Sheet as awesome from different financial statements has the subsequent traits:
It is a assertion and not an account. Although balance sheet is part of the final debts and prepared with the help of debts, yet it isn't always an account but a announcement.
It is usually organized on a selected date, and therefore shows the position at that date and not for a length.
It has no debit facet and credit facet. Nor the phrases ‘To’ and ‘By’ are used before the names of the accounts proven therein. The headings are Liabilities and Assets.
It indicates the economic position of the business difficulty.
It suggests what the company owes to others and additionally what others owe to the company.
The totals of Liabilities and Assets continually are same.
Question 26. Write A Short Note On Uses Of Balance Sheet?
It indicates the monetary position of the commercial enterprise problem.
It indicates what the firm owes to others and also what others owe to the company.
It indicates the nature and price of the property.
It also reflects the liquidity of a firm.
Question 27. What Is A Balance Sheet And What Information Does It Convey To An Outsider?
The stability sheet is a declaration, which shows the financial function of a enterprise on a specific date. It is a assertion of balances of all of the money owed real and personal, debit balances of all such debts represent property and credit balances constitute the liabilities.
1. Principal Objective:
The primary purpose of getting ready balance sheet is to understand the economic function of the commercial enterprise at a particular date.
2. Subsidiary Objectives:
Though the main intention is to recognise the exact monetary role of the firm at a particular date, but it serves other reason as well.
It offers data approximately the actual and real owner’s equity. Though the capital of the owner shows proprietor’s equity, yet a few other liabilities are to be accounted for towards it also.
It facilitates the company to make provisions against possible destiny losses. A provision is made inside the form of the Reserves.
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Question 28. What Information Does It Convey To An Outsider?
Balance sheet is prepared that allows you to measure the proper financial position of a enterprise issue at a selected factor in time. It indicates the financial role of a business in a systematic form. It is a screenshot of the economic position of the business. At one look, the location of the enterprise, at a selected factor of time, may be understood. The numerous businesses interested by the corporation can draw useful inferences from an analysis of the statistics contained in the stability sheet.
Question 29. Explain The Meaning Of Owner's Equity?
Owner’s Equity is the residual interest in the belongings of the employer. Therefore the owner’s equity phase of the stability sheet indicates the amount the proprietor have invested inside the entity. However, the terminology ‘proprietor’s equity’ varies with unique types of enterprise depending upon whether the organization is a joint stock company or sole proprietorship/partnership subject.
Question 30. Explain The Meaning Of Assets?
"The entire assets of a wide variety possessed by way of or attributable to a person or organisation is referred to as belongings. Assets are valuable assets owned by way of a commercial enterprise and purchased at a measurable cash price".
Question 31. Explain The Meaning Of Fixed Assets?
These are the ones property, that are received for distinctly lengthy intervals for carrying at the business of the organisation. Such belongings aren't intended for resale. For example, Land and Building, Plant and Machinery and many others.
Question 32. Explain The Meaning Of Accrued Liabilities?
Accrued liabilities represents expenses or responsibilities incurred inside the preceding accounting period but the price for the same could be made in the next length. In many cases where bills are made periodically, together with wages, lease and comparable gadgets, the remaining month’s fee many seem as collected liabilities (specially if the practice is to pay the equal on the primary working day of a month). This obligation proven on the stability sheet shows that the firm owed the said quantity on the balance sheet date.
Question 33. Explain The Meaning Of Contingent Liability?
These are liabilities to be able to exist or now not, will rely on any future incident. For the sake of shareholders, it's miles proven inside the footnote in the Balance Sheet. The gadgets, which may come under this sub-heading, are:
Claims against company, that are nonetheless not widespread by using the organisation.
Liability for quantity uncalled on in part paid shares.
Arrears of fixed cumulative dividends.
Estimated amount of incomplete contracts (capital expenses), association of which isn't made.
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Question 34. What Do You Mean By Capital Expenditure And Revenue Expenditure?
All expenditure incurred in obtaining fixed assets, or improving the existing ones via increasing its performance (e.G. By way of supplying substitution, alteration or protection), or effecting economy in operation of present assets (e.G. Through attaching energy motor at hand pushed gadget) are called capital expenditure.
They are all such prices, which are incurred on the organization and for going for walks the business. The benefits of such charges are limited to the accounting period handiest. They are incurred to preserve the earning capacity of the enterprise, whereas capital expenditure are incurred to enhancing the earning ability of the enterprise.
Question 35. Explain Deferred Revenue Expenditure?
Sometimes a few expenditure is incurred which by nature is revenue expenditure, however its advantages are likely to be derived over some of years. If sales expenditure is incurred at some stage in the current year however paid as boost for the approaching yr(s), such expenditure is called 'Deferred Revenue Expenditure'.
Question 36. Explain Capital Receipts And Revenue Receipts?
Capital receipts, like capital prices do now not have an effect on earnings, and are either proven as a liability or extra often as a discount from the belongings. Any excess cognizance over the ebook value of an asset may, however, be treated as a sales receipt and accounted for as such. It is, therefore, vital to understand the distinction.
Examples of Capital Receipts:
Capital invested with the aid of the proprietors of the business.
Amount obtained from income of fixed assets or investments.
Conversion into Cash of any Asset besides inventory.
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Question 37. What Is Capital Loss And Revenue Loss?
Capital loss is that loss which happens due to sale of a few fixed asset. For examples, loss due to trouble of stocks or debentures at a reduction, loss due to misappropriation of Cash from the office or forfeiture of protection deposited for buying an company.
Revenue losses are those losses, which arise because of sale and purchase of products. For example, Bad Debts, loss because of fall in the rate of goods etc.
Question 38. Explain The Importance Of Preparing Trading Account?
It presents records approximately gross profit. The contemporary figure may be in comparison with in advance ones and reasons located for versions. Accordingly plan may be launched for destiny boom of the firm.
Ratio of gross profit to sales can assist the dealer to improve his commercial enterprise management.
Ratio of direct expenses to income will assist the trader to control and rationalize the prices.
Comparison of 'stock in hand' of the contemporary year with the ones of the previous years. Reasons for variant can be determined out and steps may be taken to alter matters more profitably.
Ratio of cost of products offered to general sale proceeds can assist the trader in solving the charges of his products.
Precautionary measures can be taken to avoid possible losses by using analyzing the items of direct costs.
Question 39. What Is A Profit & Loss Account?
"A Profit and Loss account is an account into which all profits and losses are accrued if you want to confirm the excess of profits over the losses or vice versa".
Question forty. Differences Between Management Accounting And Financial Accounting?
The differences among management accounting and economic accounting include:
Management accounting gives records to humans within an agency whilst monetary accounting is mainly for those outside it, which include shareholders.
Financial accounting is needed through regulation while management accounting isn't. Specific requirements and codecs can be required for statutory money owed which include International Financial Reporting Standards.
Financial accounting covers the entire organization even as management accounting may be concerned with precise products or price centres.
Accounting Reports Interview Questions
Question 41. What Is Demat Account? What Is The Use Of It?
Demat means Dematerialisation of share, in simple it is an account with which a person can trade in protection market with out which someone can not purchase or promote any proportion in safety market.
Question forty two. What Are The Basic Requirements Of Preparing Profit & Loss Account?
Change in accounting guidelines.
Accrual basis of accounting.
Question forty three. Distinguish Between Straight Line And Written Down Method Of Providing Depreciation?
Difference among Straight Line Method and Written Down Value Method:
Amount of Depreciation: The amount of depreciation stays the same all of the years under immediately-line approach, even as it is going on reducing each year beneath the written down price method.
Computation of Depreciation: Under instantly line approach of depreciation, depreciation is charged on the original price of the asset, while it is charged on the lowering stability every yr under written down cost technique.
Value of Asset: Under the straight line approach the fee of the asset turn out to be nil at the give up of its operating lifestyles however it never will become nil underneath the written down price approach.
Rate of Depreciation: Normally, the charge of depreciation is decrease beneath straight-line method whereas it's far better under the diminishing stability technique.
Recognition: The directly line technique of depreciation isn't recognized by using the earnings tax authorities whilst the later method is properly identified by using them.
Question forty four. Explain The Following Gross Profit?
Gross Profit is acquired by subtracting the price of goods offered from Net sales.
Gross Profit = Net Sales – Cost of Goods Sold.
Cost of Goods Sold = Opening Stock + Net Purchases + Direct Expenses – Closing Stock.
And Net Sales = Total Sales – Sales Return.
Question forty five. Explain The Following Operating Profit?
Operating Profit manner earnings earned through the concern from its business operation and no longer from the alternative sources. While calculating the internet income of the concern all incomes both they're no longer part of the commercial enterprise operation like Rent from tenants, Interest on Investment etc. Are brought and all non-operating costs are deducted.
Question forty six. Define The Terms 'fund' And 'waft' In The Context Of The Funds Flow Statement. How Is A Funds Flow Statement Prepared?
Meaning of the term ‘Fund’: -
The time period ‘Fund’ has been assigned extraordinary meanings by way of specific people. In narrow sense ‘Funds’ method cash and Bank balance. To many human beings price range is nothing however having the net effect of diverse enterprise activities on the basis of cash. This explains the fashion in the direction of the training and presentation of "Cash Flow Statement" in posted report of bills.
Funds = Current Assets – Current Liabilities = Working Capital
Meaning of the time period ‘Flow’: -
The term ‘Flow’ manner alternate. Therefore flow of price range approach exchange in operating capital. The trade in price range can be both high-quality or terrible. It can be influx of budget or outflow of finances.
Question forty seven. Write A Short Note On Cost Accounting?
Cost accounting is concerned with the utility of costing ideas, techniques and strategies for ascertaining the costs with a view to controlling them and assessing the profitability and performance of the company. In the initial levels price accounting turned into simply considered to be a technique for ascertainment of prices of services or products on the premise of historical information. In course of time it turned into found out, due to aggressive nature of the marketplace, that ascertaining of value become now not so critical as controlling fees was.
The goals of cost accounting are:
Ascertaining the charges.
Controlling the prices.
Reducing the fees.
Question 48. Explain The Meaning Of Fixed Cost?
These are the prices which stay constants regardless of the quantum of output within and up to the capability that has been constructed up. Examples of such fees are: rent, insurance charges, control revenue and so on.
Fixed Cost is split into :
(i) devoted fixed expenses and
(ii) discretionary constant prices.
Committed Fixed Costs: This is composed in large part of those fixed fees that get up from the possession of plant, system and a fundamental organizational shape. For example, once a building is built and plant is set up noting a great deal may be executed to lessen the fees which include depreciation, property taxes, coverage and salaries of the key employees and so forth.
Discretionary Fixed Costs: These are the ones costs, which are set at fixed quantity for particular time periods with the aid of the management within the budgeting method. These costs directly replicate top management guidelines and don't have any specific courting with extent of output. These prices can consequently be reduced or eliminated totally, if the circumstances so require.
Question forty nine. Explain The Meaning Of Shut Down Costs?
Those expenses which continue to be incurred even if a plant is briefly close-down, e.G. Lease, fees, depreciation, and so on. These prices cannot be removed with the closure of the plant. In other words, all constant charges, which cannot be prevented for the duration of the transient closure of a plant, might be known as close down fees.
Question 50. Explain The Meaning Of Sunk Costs?
Historical expenses incurred inside the past are known as sunk fees. They play no role in selection making within the modern-day duration. For instance, in the case of a choice relating to the alternative of a gadget the written down price of the prevailing gadget is a sunk value .
Question fifty one. Explain The Meaning Of Opportunity Cost?
This fee refers back to the value of sacrifice made or advantage of possibility foregone in accepting an alternative route of motion. For instance, a company financing its growth plans through taking flight cash from its financial institution deposits. In such a case the lots of hobby at the bank deposit is the possibility cost for carrying out the enlargement plant.
Question fifty two. Explain The Meaning Of Controllable Costs?
These are charges, which can be motivated with the aid of the movement of a exact member of an business enterprise. For example, the foreman of a production branch can control the usage of electricity or raw cloth in his department. These are, therefore, controllable expenses as a long way as he is involved.
Question 53. Explain The Meaning Of Uncontrollable Costs?
These are expenses that cannot be inspired through the movement of a designated member of an project. For example, the foreman of a manufacturing branch can manipulate the wastage of strength in his department, but he can't control the strength, that is being wasted within the powerhouse itself resulting in better fee consistent with unit of energy to him.
Question 54. Explain The Meaning Of Variable Costs?
Variable expenses have a tendency to differ with the quantity of output. Any boom inside the quantity of manufacturing result in an boom in the variable price and vice-versa. For instance, cost of cloth; value of exertions, and many others.
Question 55. Explain The Meaning Of Imputed Or Hypothetical Costs?
These sorts of prices are not recorded inside the books of accounts. These fees aren't simply incurred but are taken into consideration at the same time as you make a decision. For instance, in accounting, interest and lease are diagnosed simplest as expenditure whilst they may be truly paid. But in costing they're charged on a notional foundation while ascertaining the cost of a product.
Question fifty six. What Is A Cost Sheet?
A Cost Statement or Cost Sheet is "a document which presents for the assembly of the unique Cost of a Cost Center or Cost Unit".It is an in depth announcement depicting the subdivision of value organized in a logical order below distinctive heads.
Question 57. Explain The Meaning Of Absorption Costing?
Absorption costing approach is likewise termed as Traditional or Full Cost Method. According to this technique, the cost of a product is decided after thinking about both constant and variable costs. The variable expenses, such as the ones of direct substances, direct exertions, and so on. Are directly charged to the goods, even as the fixed expenses are apportioned on a appropriate foundation over specific product synthetic for the duration of a duration.
Question 58. Explain The Meaning Of Marginal Costing?
Marginal costing is a special method used for managerial selection making. The approach of marginal costing is used to provide a foundation for the interpretation of cost records to degree the profitability of different merchandise, approaches and price centers within the path of decision making.
Question fifty nine. Explain The Meaning Of Break Even Point?
The smash-even point is the point or nation of a commercial enterprise at which there is neither a income nor a loss. In other phrases, it's miles at this factor where the contribution is equal to constant costs.
Question 60. Explain The Meaning Of Marginal Cost?
The approach of marginal costing is worried with marginal fee. The Institute of Cost and Management Accountants, London, has described Marginal Cost as "the quantity at any given volume of output by means of which combination fees are modified if the quantity of output is expanded or decreased with the aid of one unit". Therefore, Marginal Cost refers to increase or lower in the amount of cost due to increase or decrease of manufacturing by a unmarried unit. Marginal Cost in general is equal to the increase in total variable value due to the fact in the current production capability an boom of 1 unit in manufacturing will motive an boom in variable fee simplest.
Question sixty one. Examine The Relevance Of Marginal Costing In The Present Say Context Of Global Business Environment, With Suitable Illustrations, Comparing It With Other Techniques?
Marginal costing is a special approach used for managerial decision making. The method of marginal costing is used to offer a basis for the interpretation of value statistics to degree the profitability of various merchandise, tactics and price centers in the path of selection making. It can, consequently, be used in conjunction with the extraordinary strategies of costing along with activity costing, system costing and so forth., or even with different strategies which include preferred costing or budgetary manipulate.
Question 62. What Are The Advantages Of Marginal Costing ?
The marginal price stays constant according to unit of output whereas the constant fee remains constant in total. Since marginal price consistent with unit is consistent from length to length inside a quick span of time, firm choices on pricing policy can be taken.
Overheads are recovered in marginal costing on the basis of pre-determined costs. If constant overheads are included on the basis of pre-determined costs, there could be underneath-healing of overheads if manufacturing is less or if overheads are more.
Advocates of marginal costing argue that under the marginal costing technique, the inventory of finished items and work in progress are carried on marginal value foundation and the constant fees are written off to income and loss account as length fees.
Marginal costing helps in sporting out wreck-even analysis, which shows the impact of increasing or decreasing production activity at the profitability of the agency.
Marginal costing enables the control in taking a number of commercial enterprise choices like make or purchase, discontinuance of a specific product, substitute of machines, etc.
Question 63. What Are Limitations Of Marginal Costing?
It is hard to categorise costs precisely into constant and variable. Most of the expenses are neither totally variable nor absolutely constant.
Contribution itself isn't a manual until it's miles related with the key factor
Sales staff may additionally mistake marginal value for general value and sell at a fee, as a way to result in loss or low income. Hence, income body of workers should be advised whilst giving marginal cost.
Overheads of constant nature can not altogether be excluded specifically in massive contracts whilst valuing the paintings-in-progress. In order to expose the precise role constant over heads ought to be blanketed in paintings-in-progress.
Some of the assumptions concerning the behavior of numerous charges and so forth., aren't necessarily genuine in a practical situation. For instance, the belief that fixed cost will remain static during is not correct.
Question sixty four. What Is Cvp Analysis?
Profit is the maximum essential measure of the company’s performance. In the unfastened-marketplace financial system, income is a guide for allocating sources correctly. An evaluation of the effects of various factors on income is an essential step within the economic planning and selection-making. The analytical approach used to take a look at the behavior of profit in reaction to the adjustments in volume, costs and charges is called the cost-volume-earnings (CVP) evaluation.
Question sixty five. Explain Briefly The Meaning Of Margin Of Safety?
The margin of protection represents the difference among the income at wreck-even factor and the whole income. It may be expressed as a percentage as well as in cost. The size of the margin of safety suggests the energy of the commercial enterprise. If the margin of safety is small, it can suggest that the company has big constant expenses and is greater prone to changes in income. In different words, if the margin of protection is huge a mild fall in income may not affect the enterprise very plenty but if it small even a mild fall in income may additionally adversely affect the enterprise.
Question 66. What Is Variance In The Context Of Financial Management?
A Variance is the difference between the actual value and popular price. If the effect of the variance is to boom the income, the variance is said to be favorable. In the opposite case, it's miles adverse or adverse.
Question 67. Distinguish Between Direct Material Price Variance And Direct Material Usage Variance?
Direct Material Price Variance:
It is that part of the direct cloth fee variance that's because of the difference between the usual price specified and the actual price paid.
DMPV = Actual Quantity x (Standard fee- Actual price)
If the actual price is greater than the same old rate, the variance could be negative and vice versa.
Direct Material Usage or Quantity Variance:
It is triggered because of the distinction between the same old quantity detailed (for the output performed) and the real amount used.
DMUV = Standard rate x (Standard quantity for actual output - Actual quantity).
Question 68. What Do You Mean By Ratio Analysis?
Ratio evaluation is one of the strategies of financial evaluation to assess the financial situation and performance of a enterprise challenge. Simply, ratio way the assessment of 1 determine to other relevant figure or figures.
Question sixty nine. What Is Meant By Accounting Ratios?
A relationship among diverse accounting figures, which can be related with every different, expressed in mathematical phrases, is called accounting ratios.
Question 70. Classify The Various Turnover/activity/overall performance Ratios. Also Explain The Meaning, Method Of Calculation And Objective Of These Ratios?
Classification of Turnover/Activity/Performance Ratios:
Capital Turnover Ratio
Fixed Assets Turnover Ratio
Working Capital Turnover Ratio
Stock Turnover Ratio
Debtors Turnover Ratio
Debt Collection Period
Question seventy one. What Do You Understand By Capital Structure?
Capital structure selections objectives at determining the sorts of budget a organisation must seek to finance its investment possibility and the coaching in which these price range must be raised.
Question seventy two. What Is The Relationship Between Financial And Operating Leverage?
Relationship among economic and working leverage: In business terminology, leverage is used in senses: Financial leverage & Operating Leverage.
Question seventy three. What Do You Understand By "budgeting"?
A finances is a plan expressed in quantitative, typically financial term, overlaying a selected time period, normally 12 months.
Question seventy four. What Do You Understand By Zero-based Budgeting?
The approach of 0 base budgeting gives a solution for overcoming the limitations of traditional budgeting via enabling pinnacle control to focus on priorities, key regions and options of action for the duration of the agency.
Question seventy five. What Do You Understand By Cash Flow Statement?
A Cash Flow Statement is just like the Funds Flow Statement, however while getting ready budget waft declaration all of the modern-day assets and current liabilities are taken into consideration.
Question 76. What Is Business Process Execution Language (bpel)?
Business Process Execution Language is a language that is executable for interaction specification together with Web services. The processes of BPCL will export and import information through making use of completely internet carrier interfaces.
Question 77. Explain Bpel And Workflow Foundation?
BPEL is manner-centric, wherein as workflow basis is human centric. BPEL internet services based language for business system behavior which may be used for composite net offerings, in which as workflow basis is a programming model for speedy constructing workflow enabled applications which might be user interface-centric.
Question seventy eight. What Is Role Of Bpel?
BPEL is a language for exceptionally easy description of how internet offerings are composed into enterprise procedures. BPEL is the primary of its type.
Allows abstract and executable procedures.
Gained aid with the aid of Majority of businesses.
Allows software program to exist and similar processes may be completed and developed.
Question seventy nine. Explain About Bpel Orchestration And Choreography?
The manage over the internet offerings which are concerned and coordinating the execution of different operations on the internet services invoked inside the operation is taken by the significant method in orchestration as per the requirements. The worried internet services are blind to this process. With operations which can be explicitly defined and the order of invocation of the web offerings, the orchestration is centralized.
Choreography does now not rely on a crucial coordinator. The web offerings concerned in the choreography is conscious precisely the execution of its operations and whom to have interaction with. Choreography is a collaborative effort. It makes a speciality of messages trade. The awareness of enterprise manner, operations to execute, messages to change, and the time of message trade are wished for all contributors of choreography.
Question 80. Explain About Bpel Executable And Abstract Processes?
The specific information of business procedures can be designated with the aid of executable methods. These may be completed by orchestration engine. An executable process is used in most instances of BPEL. The public message trade among parties is best allowed by using abstract commercial enterprise technique. The internal information of procedure flows do now not encompass and are not executable.
Question 81. What Is Oracle Bpel Process Manager?
Oracle BPEL Process Manager is a BPEL engine. It is a member of Oracle Fusion middleware circle of relatives of merchandise. Orchestration disparate programs and web offerings are enabled companies by using Oracle BPEL Process Manager. Quick building and deploying this processing capacity in a requirements-based way gives you vital functionality for growing SOA.
Question eighty two. What Is Bpmn Standard For Business Process Modeling And Analysis?
The BPMN specifies a graphical notation for expressing enterprise methods in a Business Process Diagram. Both technical customers and business customers are supported for commercial enterprise techniques the use of BPMN. BPMN presents a standardized, easy method of system data communique to different commercial enterprise users, customers, providers and procedure implementers.
Question eighty three. What Is Gaap?
Generally Accepted Accounting Principles.
Question eighty four. What Is The Classification Of Allowance For Uncollectible Accounts?
Contra-Asset to Accounts Receivable.
Question 85. What Is The Classification Of Prepaid Rent And Prepaid Insurance?
Question 86. What Is The Classification Of Accumulated Depreciation?
Question 87. What Is The Classification Of Unearned Revenue?
Question 88. What Is The Purpose Of The Closing Entries?
To switch the transient account balances to the Owner’s Capital account.
Question 89. What Is The Purpose Of Adjusting Entries?
To make certain account balances properly replicate outcomes of enterprise operation.
Question 90. What Is The Purpose Of The Statement Of Owner's Equity?
To update the Owner’s Capital account (Retained Earnings).
Question ninety one. What Accounts Are Listed On The Income Statement?
Question ninety two. What Accounts Are Listed On The Balance Sheet?
Owner’s Equity/Retained Earnings/Contributed Capital.
Question 93. Tell Me How Can We Use E4x In Mozilla And Mozilla Based Browers?
Question 94. What Accounts Increase With A Credit?
Capital/Retained Earnings/Contributed Capital.
Question 95. What Accounts Increase With A Debit?
Question ninety six. What Does Accrual Accounting Mean?
Record revenues whilst earned and expenses when incurred no matter cash flow .
Question 97. What Are The Four Financial Statements?
Statement of Owner’s Equity/Retained Earnings.
Statement of Cash Flows.
Question ninety eight. Explain The Accounts Payable Cycle.
Demonstrate your understanding of this cycle - the period of time it takes the organization to pay its money owed payable - and what the consequences of the period of this cycle are for the employer, as an instance coins glide.
Question 99. What Is The Distinction Between Cost Accounting And Management Accounting?
Cost accounting is involved with value accumulation for stock valuation to satisfy the necessities of external reporting and inner income measurement. Management accounting pertains to the supply of suitable statistics for decision-making, planning, manipulate and overall performance assessment.
Question one hundred. What Is An Ea In Accounting?
EA stands for Enrolled Agent. It is a certification by means of the Internal Revenue Service given to the ones certified to practice before them. To become an EA, one ought to bypass a take a look at given via the IRS, the purpose of which is to attempt to ensure that handiest qualified humans practice earlier than the IRS. You might not be a Power of Attorney for the IRS except you are an EA or a few other certified individual together with a CPA or an attorney.
Question 101. What Are The Different Branches Of Accounting?
Following are exclusive branches of accounting:
Question 102. Is Financial Accounting Necessary?
Yes, the accounting calculates the cost of capital to the commercial enterprise. It compares the current, anticipated, and historic fees of go back. Suppose a enterprise is making 12% returns but borrowing money by means of using the proprietor’s credit score card at 22% be right to understand that.
Question 103. What Is Accounting Normalization?
It is disposing of objects from the earnings statement or balance sheet that don't generally arise at some stage in the route of enterprise to better estimate the price of a corporation.
Question 104. What Are The 4 Phases Accounting?
Question 105. What Are The Functions Of Accounting?
Accounting entails the creation of economic facts of business transactions, flow of finance, the technique of getting cash in an organization, and summarizing the economic function of a enterprise at a given second in time.