Question 1. What Are The Various Streams Of Accounting?
There are three streams of accounting:
Financial Accounting: is the system wherein commercial enterprise transactions are recorded systematically in the numerous books of accounts maintained with the aid of the corporation with the intention to put together financial statements. These economic statements are essentially of sorts: First is Profitability Statement or Profit and Loss Account and 2d is Balance Sheet.
Cost Accounting: is the technique of classifying and recording of expenditure incurred throughout the operations of the company in a scientific manner, as a way to as sure the cost of a fee middle in order to control the fee.
Management Accounting: is the manner of analysis, interpretation and presentation of accounting facts amassed with the help of economic accounting and fee accounting, that allows you to assist control inside the procedure of decision making, creation of policy and each day operation of an organization. Thus, it is clean from the above that the control accounting is based totally on monetary accounting and price accounting.
Question 2. Explain Financial Accounting. What Are Its Characteristic Features?
Financial Accounting is the process wherein enterprise transactions are recorded systematically inside the numerous books of bills maintained through the organization with a view to put together monetary statements. These monetary statements are basically of two sorts: First is Profitability Statement or Profit and Loss Account and 2nd is Balance Sheet.
Following are the characteristics capabilities of Financial Accounting:
Monetary Transactions: In monetary accounting only transactions in economic terms are considered. Transactions not expressed in economic phrases do not locate any vicinity in financial accounting, howsoever crucial they may be from business factor of view.
Historical Nature: Financial accounting considers best the ones transactions which can be of ancient nature i.E the transaction which have already taken area. No futuristic transactions find any region in financial accounting, howsoever crucial they'll be from enterprise factor of view.
Legal Requirement: Financial accounting is a criminal requirement. It is necessary to keep the monetary accounting and prepare economic statements there from. It is also obligatory to get those economic statements audited.
External Use: Financial accounting is for the ones people who are not part of selection making method regarding the corporation like traders, customers, suppliers, economic establishments etc. Thus, it is for outside use.
Disclosure of Financial Status: It discloses the economic popularity and monetary overall performance of the enterprise as a whole.
Interim Reports: Financial statements that are based totally on financial accounting are interim reports and can not be the final ones.
Financial Accounting Process: The manner of economic accounting receives affected because of the extraordinary accounting policies accompanied by the accountants. These accounting policies differ particularly in two areas: Valuation of inventory and Calculation of depreciation.
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Question 3. Explain Cost Accounting. What Are The Objectives Of Doing It?
Cost Accounting is the technique of classifying and recording of expenditure incurred at some point of the operations of the corporation in a scientific way, a good way to ascertain the value of a fee center in an effort to manipulate the value.
Following are the fundamental 3 goals of Cost Accounting:
Ascertainment of Cost and Profitability
Presentation of information for managerial choice making.
Question four. What Are The Characteristic Features Of Cost Accounting?
Following are the characteristic features of Cost Accounting:
Cost accounting views the entire organisation from the character component of the organisation like a activity, a procedure and so forth.
Cost accounting pursuits at ascertaining the profitability of character components of the corporation.
It is meant for those folks who are part of the decision making procedure of the corporation. Thus, it's miles simplest for internal use.
It isn't a criminal requirement. It isn't always compulsory to maintain fee accounting records.
In Cost Accounting, data is immediately to be had which enables in decision making technique.
Cost Accounting considers every and every transaction, whether related to beyond or destiny so one can have an impact at the business.
Question 5. Define Management Accounting. What Are Its Objectives?
Management Accounting is the process of analysis, interpretation and presentation of accounting statistics collected with the help of financial accounting and cost accounting, a good way to assist control in the manner of choice making, advent of policy and day to day operation of an employer. Thus, it is clean from the above that the control accounting is based on financial accounting and cost accounting.
Following are the targets of Management Accounting:
Measuring performance: Management accounting measures two styles of overall performance. First is employee performance and the second is efficiency measurement. The actual performance is measured with the standardized overall performance and a document of deviation from the standard performance is reported to the control for the powerful selection making and additionally to indicate the effectiveness of the strategies in use. Both types of performance control are used to make corrective movements so as to improve overall performance.
Assess Risk: The purpose of control accounting is to evaluate risk with the intention to maximize chance.
Allocation of Resources: is an important goal of Management Accounting.
Presentation of diverse economic statements to the Management.
Auditing Interview Questions
Question 6. What Are The Limitations Of Management Accounting?
Limitations of Management Accounting:
Management Accounting is primarily based on monetary and price accounting, wherein ancient data is used to make destiny choices. Thus, power and weakness of the managerial choices are primarily based on the energy and weak point of the accounting facts.
Management Accounting is useful best to those people who are within the selection making system.
Tools and strategies utilized in management accounting most effective provide facts and no longer equipped made selection. Thus, it's miles only a supplementary service.
In Management Accounting, selection is based on the supervisor’s group as management try to avoid lengthy publications of medical decision making.
Personal prejudices and bias affect the selections as the translation of economic statistics is based totally on private judgment of the interpreter.
Question 7. What Is The Scope Of Management Accounting?
Following is the scope of Management Accounting:
Financial Planning and
Break Even Analysis
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Question eight. What Are The Various Techniques Used To Discharge The Function Of Management Accounting?
Following are the approach used to discharge the feature of management accounting:
Question nine. Compare Financial Accounting And Cost Accounting?
Financial Accounting protects the pastimes of the outsiders handling the company e.G shareholders, creditors and many others. Whereas reports of Cost Accounting is used for the internal motive with the aid of the control to allow the identical in discharging numerous features in a proper manner.
Maintenance of Financial Accounting information and preparation of financial statements is a prison requirement while Cost Accounting isn't always a prison requirement.
Financial Accounting is involved approximately the calculation of profits and situation of the company as complete while Cost accounting deals in price ascertainment and calculation of profitability of the man or woman products, departments and so forth.
Financial Accounting considers most effective transactions of ancient financial nature while Cost Accounting considers no longer simplest historical statistics however also future occasions.
Financial Accounting reports are organized within the trendy codecs in accordance with GAAP whereas Cost accounting facts is suggested in whatever shape management desires.
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Question 10. Compare Financial Accounting And Management Accounting?
Financial Accounting reviews are used by outdoor parties including lenders, shareholders, tax authorities etc. Whereas Management Accounting reports are utilized by managers within the enterprise for planning, directing, controlling and taking decisions.
In Financial Accounting, only ancient economic transactions are taken into consideration and do no longer recall non monetary transactions whereas in Managerial Accounting emphasis is on selections affecting the destiny, for this reason it can don't forget future facts as well as non economic factors.
Maintenance of economic accounting records and guidance of economic statements is a prison requirement while Management Accounting is not at all prison requirement. Moreover, those systems have their very own reporting codecs.
In Financial Accounting, precision of information is required while in Management Accounting timeliness of information is required.
In Financial Accounting, only summarized records is prepared for the whole company whereas in Management Accounting unique reports are prepared about merchandise, departments, personnel and patron.
Preparation of Financial Accounting is based totally of Generally Accepted Accounting Principles whereas Management Accounting does no longer follow such standards to put together reviews.
Financial reviews generated with the aid of the Financial Accounting are required to be accurate whereas accuracy isn't always the prerequisite of management accounting.
Question eleven. Compare Cost Accounting And Management Accounting?
The scope of control accounting is broader than that of fee accounting.
Both the accounting streams are not a legal requirement.
Cost accounting affords only price facts for managerial use while management accounting gives all forms of accounting statistics i.E., price accounting as well as economic accounting data.
In Cost accounting, the primary emphasis is on price ascertainment and fee control whereas in control accounting the primary emphasis is on selection-making.
The diverse strategies utilized by fee accounting are wellknown costing, budgetary control, marginal costing and price-volume-income analysis, uniform costing and inter-firm comparison, and so on. While control accounting also makes use of these strategies however additionally makes use of strategies like ratio evaluation, budget float declaration, statistical evaluation and so forth.
Cost Accounting is part of Management Accounting whereas Management accounting is an extension of managerial elements of fee accounting with the ultimate purpose to shield the hobbies of the commercial enterprise.
Finance Interview Questions
Question 12. What Do You Mean By Accounting Concepts? List Them.
Accounting concepts are those foundation assumptions upon which primary procedure of accounting is based totally.
Following are the fundamental accounting ideas:
Business Entity Concept
Dual Aspect Concept
Going Concern Concept
Concept Cost Concept
Money Measurement Concept
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Question thirteen. Explain Business Entity Concept?
Business Entity Concept:
According to this concept, the business has a separate felony identification than the person that owns the enterprise. The accounting technique is done for the commercial enterprise and now not for the person that is carrying out the business. This concept is applicable to both, corporate and non corporate groups.
Question 14. Explain Dual Aspect Concept?
Dual Aspect Concept:
According to this concept, every transaction has impacts. This simple dating among property and liabilities which means that that the property are same to the liabilities remains the identical.
Question 15. Explain Going Concern Concept?
Going Concern Concept:
According to this concept, the agency goes to be in lifestyles for an indefinite time frame and isn't in all likelihood to shut down the business within the shorter time frame. This affects the valuation of belongings and liabilities.
Oracle fashionable ledger (GL) Interview Questions
Question 16. Explain Accounting Period Concept?
Accounting Period Concept:
According to this concept, the indefinite time frame is split into shorter time periods, every one being within the form of Accounting period, so that it will facilitate the preparation of economic statements on periodical foundation. Selection of accounting duration depends on characteristics like commercial enterprise organisation, statutory necessities etc.
Question 17. Explain Cost Concept?
According to this idea, an asset is recorded at the fee at which it's far obtained rather than taking modern market charges of diverse belongings.
Ledger Interview Questions
Question 18. Explain Money Measurement Concept?
Money Measurement Concept:
According to this concept, only those transactions discover region in the accounting information, which may be expressed in phrases of cash. This is the predominant drawback of financial accounting and economic statements.
Auditing Interview Questions
Question 19. Explain Matching Concept?
According to this idea, at the same time as calculating the earnings for the duration of the accounting length in a correct manner, all the expenses and charges incurred at some stage in the length, whether paid or no longer, should be matched with the profits generated in the course of the duration.
Question 20. Explain Convention Of Conservation?
Convention of Conservation:
This accounting conference is normally expressed as to “expect all the future losses and expenses, without considering the destiny earning and profits until they're definitely found out.” This concept emphasizes that profits need to never be overstated or predicted. This conference usually applies to the valuation of contemporary property as they're valued at value or market price whichever is decrease.
Fixed Deposit Interview Questions
Question 21. Explain Convention Of Materiality?
Convention of Materiality:
This accounting convention proposed that whilst accounting only the ones transactions can be taken into consideration which have material impact on financial repute of the business enterprise and different transactions that have insignificant effect will be not noted.. It offers relative importance to an object or event.
Question 22. Explain Convention Of Consistency?
Convention of Consistency:
This accounting convention proposes that the identical accounting principles, procedures and policies need to be used consistently on a period to period basis for making ready monetary statements to facilitate comparison of monetary statements on duration to length basis. If any adjustments are made in the accounting approaches or guidelines, then it should be disclosed explicitly even as getting ready the monetary statements.
Question 23. What Are The Various Systems Of Accounting? Explain Them.
There are two structures of Accounting:
Cash System of Accounting: This gadget data most effective cash receipts and bills. This device assumes that there are no credit transactions. In this gadget of accounting, expenses are considered simplest when they are paid and incomes are considered when they may be sincerely obtained. This system is utilized by the corporations which can be installed for non earnings purpose. But this machine is taken into consideration to be faulty in nature as it does now not show the real income earned and the cutting-edge scenario of the corporation.
Mercantile or Accrual System of Accounting: In this system, costs and incomes are considered all through that duration to which they pertain. This machine of accounting is taken into consideration to be ideal but it may result into unrealized earnings which may reflect in the books of the accounts on which the enterprise must pay taxes too. All the organization sorts of corporation are legally required to observe Mercantile or Accrual System of Accounting.
General Ledger Interview Questions
Question 24. What Are The Different Types Of Expenditures Considered For The Purpose Of Accounting?
For the accounting cause fees are classified in three kinds:
Capital Expenditure is an quantity incurred for obtaining the long term property along with land, constructing, equipments which are always used for the purpose of earning sales. These are not meant for sale. These prices are recorded in debts particularly Plant, Property, Equipment. Benefits from such expenditure are spread over several accounting years.
E.G. Interest on capital paid, Expenditure on purchase or installation of an asset, brokerage and commission paid.
Revenue Expenditure is the expenditure incurred in one accounting year and the benefits from which is also loved in the same period most effective. This expenditure does not boom the incomes potential of the business but maintains the prevailing incomes capacity of the business. It protected all the charges which are incurred at some point of each day walking of business. The benefits of this expenditure are for brief period and aren't forwarded to the following 12 months. This expenditure is on habitual nature.
Eg: Purchase of raw fabric, selling and distribution expenses, Salaries, wages and so on.
Deferred Revenue Expenditure is a sales expenditure which has been incurred all through an accounting 12 months but the benefit of which may be extended to a number of years. And these are charged to earnings and loss account.
E.G. Development expenditure, Advertisement etc.
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Question 25. What Are Capital Expenditures? Is It Ok To Consider These Expenditures While Calculating The Profitability Of During A Certain Period?
Capital Expenditure is an amount incurred for obtaining the long term property along with land, building, equipments which might be usually used for the motive of earning revenue. These aren't supposed on the market. These fees are recorded in money owed particularly Plant, Property, Equipment. Benefits from such expenditure are unfold over numerous accounting years.
E.G. Interest on capital paid, Expenditure on purchase or set up of an asset, brokerage and fee paid.
No, Capital expenditure ought to not be taken into consideration at the same time as calculating profitability as blessings incurred from the capital expenditure are long term benefits and can not be shown inside the identical financial years in which they have been paid for. They need to be unfold over a number of years to reveal the authentic function in balance sheet as well as earnings and loss account.
Question 26. Explain Revenue Expenditure. Does It Affect The Profitability Statement In A Period? Explain.
Revenue Expenditure is the expenditure incurred in a single accounting year and the advantages from which is also loved within the equal period best. This expenditure does not boom the earning capability of the commercial enterprise but maintains the existing incomes ability of the business. It included all the charges which are incurred for the duration of day after day running of commercial enterprise. The advantages of this expenditure are for brief duration and aren't forwarded to the subsequent yr. This expenditure is on recurring nature.
As the go back on sales expenditure is received inside the same period accordingly the entries referring to the revenue expenditure will have an effect on the profitability statements as all the entries are handed inside the equal accounting year, the year in which they have been incurred.
Question 27. Explain Deferred Expenditures. How Are These Expenses Dealt With In Profitability Statement?
Deferred Revenue Expenditure is revenue expenditure, incurred to obtain benefits over a number of years say 3 or five years. These prices are neither incurred to accumulate capital belongings nor the blessings of such expenditure is received within the identical accounting duration for the duration of which they were paid. Thus they don’t affect profitability assertion as they're now not transferred to the profitability statement in the period at some point of which they're paid for. They are charged to income and loss account over a number of years relying upon the advantage collected.
Taxation Interview Questions
Question 28. What Is A Balance Sheet? Why Is It Prepared?
Balance Sheet is a Statement displaying economic position of the commercial enterprise on a selected date. It has side one source of finances i.E Liabilities, the left aspect of the stability sheet and alertness of budget i.E belongings, the right aspect of the balance sheet. It is ready after preparing trading and income and loss account and has balances of real and private debts grouped and organized in a right way as belongings and liabilities. It is prepared to understand the exact monetary role of the commercial enterprise at the ultimate date of the monetary 12 months.
Question 29. List The Type Of Items Which Appear Under The Liability Side Of A Balance Sheet?
Items which appear underneath the liability aspect of Balance Sheet are:
Long Term Liabilities
Loan from financial institution
Advance from Customers
Income Received in Advance.
Question 30. What Types Of Items Appear Under The Assets Side?
Items which seem underneath the property side of Balance Sheet are:
Question 31. What Are Adjustment Entries? Why Are They Passed?
Adjustment entries are the entries which can be passed on the give up of each accounting duration to modify the nominal and other accounts so that accurate net income or net loss is indicated in income and loss account and stability sheet may additionally constitute the authentic and truthful view of the financial situation of the enterprise.
It is essential to bypass those adjustment entries earlier than making ready final statements. Otherwise within the absence of these entries the income and loss assertion may be misleading and stability sheet will not display the true economic circumstance of the enterprise.
Question 32. Explain Bank Reconciliation Statement. Why Is It Prepared?
Bank Reconciliation Statement is a announcement organized to reconcile the balances of cash e-book maintained through the priority and skip ebook maintained by means of the financial institution at periodical intervals. At the end of each month entries inside the coins ebook are in comparison with the entries within the pass book. The causes of variations in balances of both the books are scrutinized and then reconciliation announcement is prepared. This declaration is prepared for a unique reason and as soon as in a month. It is prepared with a view to indicate gadgets which purpose distinction between the balances as consistent with the financial institution columns of the coins e-book and the financial institution pass e book at a specific date.
Question 33. What Are The Reasons Which Cause Pass Book Of The Bank And Your Bank Book Not Tally?
Cheques deposited into the financial institution however now not yet collected
Cheques issued however now not yet presented for payment
Amount collected via bank on standing commands of the concern.
Amount paid via the financial institution on standing commands of the concern.
Interest debited through the bank
Interest credited by the bank
Direct fee via customers into the financial institution account
Dishonour of cheques
Finance Interview Questions
Question 34. What Are The Important Things To Be Remembered While Preparing A Bank Reconciliation Statement?
While preparing a financial institution reconciliation assertion following crucial factors want to be remembered:
Bank Reconciliation Statement is prepared both via beginning with the Bank pass book stability or Cash e-book stability.
If the balance of the Cash e-book is taken as a place to begin then Cash e-book stability is to be adjusted in accordance with the entries passed in the Bank bypass ebook and vice versa. For example: If the balance is taken as in line with the Cash ebook then the subsequent items could be introduced:
Cheques issued however not offered for charge;
Amount credited in Passbook however no longer in Cash e-book;
Deposits made inside the bank directly;
Wrong credits given by bank;
Interest credited within the Passbook.
The following items can be subtracted:
Cheques deposited but not cleared;
Interest/Bank Charges debited through bank
Direct payments made through bank not entered in Cash book
Cheques dishonoured now not recorded in cash e-book
Wrong debits given by means of bank
If it is prepared with the Bank stability as in step with the bank passbook, then the above system may be reversed i.E the gadgets may be delivered to the pass book which have been deducted from the cash e book stability and people items will be deducted from the financial institution pass ebook stability which have been introduced to the cash ebook balance.
Question 35. What Are The Groups Under Which Errors In Accounting Are Placed?
Errors in accounting are placed inside the following foremost agencies:
Error of Omission
Error of Commission
Error of Principle
Question 36. What Are The Types Of Errors Which Have An Effect On Trial Balance?
Following are the styles of mistakes which have an effect on agreement of Trial Balance:
Wrong totaling of subsidiary books
Posting on the wrong facet of the account
Posting of the wrong amount
Omission of posting an amount in the ledger
Error of balancing.
Oracle standard ledger (GL) Interview Questions
Question 37. What Type Of Errors Do Not Affect The Trial Balance?
Following are the kinds of errors which do now not affect the Trial Balance:
Errors of Principle
Errors of Omission
Errors of Commission
Wrong quantity recorded inside the subsidiary books.
Question 38. What Steps Would You Take To Locate The Errors In Case Trial Balance Disagrees?
In case Trial Balance disagrees, following steps ought to be taken to discover the errors:
Totalling of all of the subsidiary books and trial balance ought to be checked carefully.
Opening balances of all of the debts are nicely added down inside the modern year’s books of account.
Ledger money owed had been properly balanced and the balances of ledger money owed had been successfully shown within the trial balance.
To discover a few errors the difference within the trial stability in halved.
Another way is dividing the distinction inside the trial balance through nine.
If the distinction receives divisible without leaving any reminder that suggests the transposition of the quantities.
To discover certain different mistakes, current yr trial stability may be compared with the trial stability of the preceding 12 months.
Question 39. What Is Cost Accountancy? What Are The Objects Of Cost Accountancy?
Cost accountancy is the utility of costing and value accounting ideas, techniques and strategies to the technological know-how, art and practice of cost manipulate and the ascertainment of profitability in addition to the presentation of statistics for the reason of managerial decision making.
Following are the gadgets of Cost Accountancy:
Ascertainment of Cost and Profitability
Determining Selling Price
Facilitating Cost Control
Presentation of facts for powerful managerial choice
Provide foundation for working policy
Facilitating preparation of financial or other statements.
Question forty. What Is The Difference Between Costing And Cost Accounting?
Costing is the procedure of ascertaining fees while cost accounting is the procedure of recording numerous costs in a systematic manner, in order to prepare statistical date to examine fee.
Ledger Interview Questions
Question 41. What Is Cost Centre?
Cost centre is described as a vicinity, machine, individual, department, department, or any equipment or group of those, on the subject of which direct and oblique charges can be ascertained and used for the reason of value manage. Thus, an organisation for the costing functions is split in convenient gadgets and one of the convenient devices is referred to as cost centre. Example: amassing, sorting, washing of garments are the numerous sports which might be separate fee centre in a laundry. The price centre allows this feature of cost manipulate. Thus, correct identification of price centre is a prerequisite for the successful implementation of fee accounting system. This additionally facilitates the fixation of duty in the correct way.
Question forty two. Explain Direct Cost And Indirect Cost?
Direct Cost are all the expenses which can be diagnosed with the man or woman product, provider or activity price centre. In the manufacturing system of products, substances are purchased, labors are hired and wages are paid to them. All these take lively and direct component inside the production manner.
Indirect Cost are all of the charges which can not be recognized with the character product, carrier or activity value centre. The totals of oblique expenses are termed as overheads. Example: salaries of storekeepers, foremen, paintings manager’s profits and so forth.
Fixed Deposit Interview Questions
Question 43. Explain Fixed, Variable And Semi-variable Costs?
Fixed Cost is the fee which remains steady or unaffected with the aid of variations within the quantity of output inside a given period of time. Example: Rent or charges, Insurance costs, and so on.
Variable Cost is the price which varies at once in share with each increase or lower within the volume of output with a given a time frame. Example: Wages paid to labours, price of direct cloth, consumable shops, and so forth.
Semi-variable Cost is the fee which is neither fixed nor variable in nature. These stay fixed at sure degree of operations while may additionally vary proportionately at different ranges of operations. Example: upkeep cost, upkeep, energy, and many others.
Question forty four. Explain Controllable And Uncontrollable Costs?
Controllable Cost are the prices which can be influenced by means of the motion of a precise member of the project. They are incurred in a particular responsibility facilities may be influenced by the movement of the government heading that duty centre. For instance: Direct hard work price, direct fabric price, direct charges controllable by using the shop stage control.
Uncontrollable Cost are the costs which cannot be encouraged by the action of a unique member of the challenge. For example: a foreman in fee of a device room can only manage expenses concerning the equal branch and the matters which come at once underneath his manage, not the prices apportioned to different department. The expenditure that is controllable through an individual can be uncontrollable by another person.
Question forty five. Explain Normal And Abnormal Costs?
Normal Cost are the ordinary or ordinary fees which are incurred in the regular conditions for the duration of the ordinary operations of the company. They are the sum of real direct substances fee, actual exertions value and different direct cost. Example: maintenance, renovation, salaries paid to personnel.
Abnormal Cost are the fees which can be uncommon or abnormal which are not incurred due to ordinary situations of the operations or productions. Example: destruction because of hearth, close down of equipment, lock outs, etc.
Question forty six. Explain Opportunity Cost And Differential Cost?
Opportunity Cost is the cost incurred through the company whilst one alternative is selected over any other. For example: A man or woman has Rs. A hundred thousand and he has two options to invest his money, either invests in constant deposit scheme or purchase a land with the cash. If he comes to a decision to position is cash to shop for the land then the loss of hobby which he should have obtained on constant deposit could be an opportunity price.
Differential Cost is the distinction among the charges of two alternatives. It consists of each cost growth and fee decrease. It can be either variable or fixed. Example: Cost of first alternative = 10000; Cost of 2d opportunity = 5000; Differential Cost = ten thousand – 5000 = 5000.
Question 47. Explain Sunk Cost?
Sunk Cost is the sum that has already been incurred and can't be recovered by way of any decision made now or in future. This value is likewise known as stranded value. Example: A unique purpose system become sold through a organization for Rs. 100000. The system become used to make the product for which it become sold and now it is out of date and can't be offered. And it is going to be unwise to hold using that out of date product to recover the authentic fee of the device. In order phrases, Rs. One hundred thousand already spent on that system can't be recovered in destiny. Such charges are said to be sunk expenses and ought to be unnoticed in choice making manner.
Question 48. What Things Would You Take Into Consideration While Installing A Costing System?
Following matters ought to be taken into consideration even as installing a costing device:
Nature of the Product is a totally crucial finding out thing in putting in an effective costing machine.
Nature of the Organization must be considered earlier than installing costing machine.
Objectives of the Organization have to be met with the mounted costing gadget.
Manufacturing Process: Before putting in the costing machine the technicalities of the producing technique ought to be studied carefully.
Technical Details of the enterprise must be studied before introducing new costing gadget.
The gadget must be informative and easy. The machine ought to be easy and easy to use that allows you to hold numerous cost data.
Reporting Systems: The costing machine need to be designed in this kind of way that reviews are generated in a right way to facilitate the fee manage decisions.
The costing system ought to be elastic and able to adapting in line with the converting environment.
Question 49. What Problems You May Face While Installing A Costing System?
While putting in a Costing System an Organization may additionally face the following problems:
Lack of Support from Top Management Resistance and non cooperation from the Staff.
Shortage of skilled staff.
Non suitability for the nature of product and nature of enterprise.
The cost concerned in installing this machine may be too high.
Question 50. What Are The Various Elements Of Costs?
There are three elements of value:
Material Cost: This is the cost of fabric or the commodity used by the employer for its production reason. Material is the substance, from which a product is made. Thus, it can be in a uncooked or a manufactured state. It can be direct or oblique.
Direct Material Cost forms an indispensable part of the completed product and is diagnosed with the individual value centre. It is likewise defined as manner cloth, stores fabric, manufacturing fabric, and so on. Example: Raw substances bought or purchased primary packing material, and so on.
Indirect Material Cost is used for ancillary functions of the enterprise and cannot be with ease diagnosed with the man or woman fee centre. Example: Consumable shops, oil and waste, printing and stationery fabric and many others.
Labour Cost: This is the value, incurred in the shape of remuneration paid to the personnel or labours of the agency. The staff required to transform cloth into finished product is known as labour. It may be direct or oblique.
Direct Labour Cost is the fee incurred on those personnel who immediately take part inside the production method and without problems recognized with the individual value centre.
Indirect Labour Cost is the cost incurred on the ones personnel who do not without delay participate within the production technique and can't identified with the man or woman cost centre. Example: profits of foreman, salesmen, director’s earnings, and so forth.
Expenses: are the prices of offerings furnished to the corporation. It may be direct or oblique.
Direct Expenses are the charges which may be at once diagnosed with the character price centres. Example: hire costs of equipment, fee of defective work for a selected task or settlement and so on.
Indirect Expenses are the fees which can not be directly identified with the character cost centres. Example: lease, lighting fixtures, cellphone charges, etc.
Question 51. What Are Overheads? How Are They Classified?
Overheads are the mixture of Indirect Material price, Indirect Labour and Indirect Expenses. Thus, sum of all oblique charges are overheads. They are of three kinds:
Office and Administration Overheads
Selling and Distribution Overheads.
Question fifty two. Explain Gross Profit?
Gross Profit is a company’s revenue minus its value of products sold. It is also known as gross margin and gross earnings. It is calculated by means of subtracting all prices related to sales i.E. Production costs, uncooked substances, labour, promoting and advertisement expenses from income. It is a sign of the managements’ performance to apply labour and fabric inside the production technique.
Gross Profit = Net Sales – Cost of Goods Sold
Question 53. Explain Net Profit?
Net Profit/ Operating Profit Net income, also called working income is real profits of the organisation in a given period of time. It is a measure of the profitability after accounting for all expenses. In easy phrases, net earnings is the money left over after paying all of the expenses such as taxes and interest. It is the calculated by using subtracting total prices from overall sales. Net profits may be both disbursed among shareholders of the employer or held by using the company as retained earnings for the destiny motive .
Net Profit = Gross Profit – Total Operating Expenses – Taxes – Interest.
Question fifty four. What Are The Steps In Procurement Of Material?
Following are the steps in procurement of fabric:
Purchase Requisition is an indication to the purchase branch to buy sure cloth required for the manufacturing. Following details seem in the acquisition requisition:
Material to be bought
When it is required
How lots to be purchased
Selection of Source of Supply
Description of Materials to be provided
Quantity to be furnished
Cash and trade discount Rates at which substances are furnished
Additional charges e.G. Excise responsibility, Sales tax, packing fees, insurance Instructions in recognize of shipping
Method of agreement of disputes
Terms of payment Receipt and Inspection
After the receipt of materials, inspection of the cloth is finished. Inspection of substances means that the quantity certainly received is as compared with the quantity ordered; additionally the nice of the material is inspected.
Invoice received from the supplier is in comparison along with the purchase order, items obtained be aware and inspection notice.
Question 55. Why Should Over Stocking Be Avoided?
Due to the following effects over stocking ought to be prevented:
Funds get blocked which could be used elsewhere
More storage centers are required
High fees of storage and maintenance
Deterioration of best and obsolescence of stock
High Insurance fee More safety and protection measures.
Question fifty six. What Can Be The Consequences Of Under Stocking?
The following may be the effects of beneath stocking:
Production system can not be operated effectively, ensuing shipping schedules.
Firm might also emerge as paying an idle labour pressure due to the production maintain ups.
Organisation may free its critical clients, due to the postpone in assembly clients’ orders.
Unfavourable fees and fine Increased administration costs.
Due to under stocking it will now not be smooth for the employer to meet the unexpected needs of clients.
Question fifty seven. Explain Following Types Of Tenders?
Single Tender : When handiest one source of deliver is available then single gentle is addressed to the selected provider.
Limited Tender : This form of tender is addressed to a limited number of suppliers, who are the reliable supply of supply.
Open Tender : is open to all the suppliers in the country who can deliver the desired quantity and high-quality of materials. Such invitation is made through advertising in newspapers, journals and so forth.
Global Tender : is open to absolutely everyone from any a part of the arena to deliver the required quantity and satisfactory of materials.
Question 58. What Can Be The Discrepancies In Material Receipt?
There are two categories of material discrepancies:
First category consists of:
Quantity obtained in extra
Quantity acquired in quick
Receipt of wrong quantity of cloth.
These discrepancies are generally as a result of the transportation gadget.
Second class includes:
Discrepancies in satisfactory of cloth provided.
These discrepancies are as a result of the manufacturer.
Question fifty nine. Differentiate Between Bin Card And Stores Ledger?
Bin Card is a quantitative record of the character object of its receipts, troubles and final stability whereas Stores Ledger records each the quantity and fee of receipts, issues and balances of item of cloth obtained.
Bin Card is prepared by means of shops branch while Stores Ledger is ready by way of costing branch.
In Bin Card gadget, entries are made at once after every transaction. In Store Ledger, entries are made periodically.
In Bin Card, postings are made earlier than a transaction. In Store Ledger, posting is made after a transaction.
Bin Card is kept connected to the bins internal the shop as to permit to pick out the inventory. Store Ledger is kept outdoor the shop.
Question 60. What Can Be The Reasons For Bin Card And Stores Ledger Not Getting Reconciled?
The following may be the motives for bin card and shops ledger for now not getting reconciled:
Arithmetical mistakes in calculating balances of the sheets.
If posting of the transaction has been made on wrong bin card or shops ledger sheet.
If problems transactions are dealt with as receipt transaction or vice versa, then this will create the difference in both the balances.
Non posting of sure quantity in any of the sheets.
Question sixty one. Explain Valuation Of Receipts?
Valuation of receipts is the fee billed in the invoices by the provider. Following factors need to be saved in thoughts for this purpose:
The change bargain is deducted from the primary fee and all other quantities as billed by way of the dealer are added, like excise obligation, sales tax, octroi obligation, and so forth.
Joint charges can be dispensed on the premise of the basic price of the cloth.
In case of imported fabric, the fee of the fabric consists of a basic rate, customs duty, clearing costs, delivery chares, and many others.
Question sixty two. Explain Valuation Of Issues And Valuation Of Returns?
Valuation of issues is a complex system due to the fact the material can be issued out of diverse masses which might have been bought at various fees. Following techniques are used for this purpose:
First in First out(FIFO)
Last in First out (LIFO)
Average Price Method
Simple Average Method
Weighted Average Method
Highest in First out
Valuation of returns suggests the fabric returned with the aid of the manufacturing department to stores branch. This valuation is completed on foundation:
At the identical rate at which issued
At the current charge of issues.
Question sixty three. Explain Average Price Method?
Average Price Method - is the method by means of which the fee of overall property or fees is believed to be identical to the average price of the entire assets or fees. Under this technique, it is assumed that the cost of stock is primarily based on the common fee of the products available for sale during the period. It is computed by using dividing the whole fee of goods by using the total devices which offers a weighted average unit price for the gadgets of the remaining inventory.
Question sixty four. Explain Weighted Average Method?
Weighted Average Method - is the method of calculation wherein the weighted average of each the lot sizes as well as the expenses of the lot. This method is first-class for valuing material issues. This approach is very useful wherein the costs and portions of objects vary. Practically, this technique is very simple to calculate.
Question 65. What Are The Techniques Of Inventory Control?
The strategies of inventory manage are:
Economic Order Quantity
Fixation of Inventory Levels
Question 66. What Is Meant By Spin-off?
Spin off is growing new business enterprise via selling or dispensing the shares of current company.
Question sixty seven. What Is Difference Between Budget & Budgeting?
An estimation of the sales and charges over a unique destiny period of time. A finances can be made for a person, own family, group of human beings, commercial enterprise, authorities, usa, multinational organisation or just about some thing else that makes and spends cash. A budget is a microeconomic concept that indicates the tradeoff made whilst one properly is exchanged for every other.
Budgeting lies at the inspiration of each economic plan. It doesn’t matter in case you’re dwelling paycheck to paycheck or earning six-figures a year, you need to know in which your cash is going in case you need to have a handle on your finances. Unlike what you might believe, budgeting isn’t all approximately limiting what you invest in and slicing out all of the fun in your lifestyles. It’s genuinely approximately expertise how lots cash you have, in which it is going, after which making plans the way to high-quality allocate the ones price range. Here’s the whole thing you need to help you create and preserve a finances.
Question 68. What Is The Difference Between Journal Voucher And Contra?
journal voucher is the voucher in which all of the adjustment associated entries and non cash non bank transactions are entered in journal eg-dep, a number of them e-book the payments in magazine and while they make a payment they record in price eg-contractor invoice.
Contra appears two times in two sides of a account an account might be dealt with as contra when:
coins deposited in financial institution
coins with drawn from financial institution for office use
cheques deposited in bank
cheques withdrawn for workplace use
transfers from one account to any other account.
Question sixty nine. What Is Tds And Sale Tax Return?
TDS (tax deducted at assets) .The man or woman whilst making payments of profits, included with the aid of the scheme are accountable to deducted TDS and deposit the identical in government treasury with stipulated time . Exp-salary, activity paintings, hire, commission and so on.
Sale Tax go back means annual return towards your earnings.
Question 70. What Is The Difference Of Fund Flow Statement And Cash Flow Statement?
Fund flow deals with transaction within economic year (One yr) while Cash glide Statement document best cash transaction.
Question seventy one. What Is Goodwill?
Goodwill is an intangible asset of a organisation which includes corporation recognition, reputation etc., through goodwill agency share value can also increases.
Question seventy two. What Is Golden Rules Of Account?
private a/c - debit the receiver, credit score the giver.
Real a/c - debit what’s is available in, credit score what’s goes out.
Nominal a/c - debit all charges & losses, credit all earning and gains.
Question seventy three. Definition Of 'normally Accepted Accounting Principles - Gaap'?
The common set of accounting ideas, requirements and processes that corporations use to compile their monetary statements. GAAP are a aggregate of authoritative requirements (set through coverage boards) and really the typically generic ways of recording and reporting accounting facts.
Question 74. What Is General Accounting Service?
General accounting includes bookkeeping methods used for recording of monetary transactions of a business or a enterprise. Companies use the double entry e-book maintaining gadget for recording all economic transactions.
It consists of preserving and retaining a record of various accounting day books which includes:
Purchase e book
A ebook keeper writes up and keeps numerous "Daybooks" . He is accountable for making sure that accurate transactions are recorded in the ideal daybook. A trial balance is in the end made with the help of those accounting books and ledgers.
Question seventy five. What Does A General Accountant Do?
As a General Accountant, you'll:
Perform a diffusion of accounting or auditing work;
Receive and method for charge all invoices following established tactics and pointers;
Assist other processing team of workers as wished;
Independently interpret terms of charge and exercise sound judgement and choice making in processing dealer payments;
Establish lengthy-term cooperative relationships with Purchasing personnel, receivers of goods and different regions of the corporation who are Accounts Payable clients;
Establish extremely good running relationships with Manitoba Hydro's suppliers;
Maintain cutting-edge know-how of Corporate rules, processes and regulations associated with the processing of invoices for charge;
Practice continuous development by means of analyzing internal strategies and being alert for progressive possibilities in each day work.