A. There are three types of ledger
General ledger
Debtors ledger
Creditors ledger
Q) Explain what is GAAP?
A. GAAP means Generally Accepted Accounting Principle; it is a framework of accounting, standards, procedures & rules determined by the professional accounting industry and practiced by publicly traded U.S companies all over the U.S.A.
Q) what is double-entry accounting?
A. Double entry accounting is an accounting system that requires recording business transaction or event in at least two accounts. It is the same concept of accounting, where every debit account should be matched with a credit account.
Q) List out some of the accrued expenses and the accounts in which you would record them?
A. Wage accrual is entered with a credit to the “wages payable account” Interest accrual is entered with a credit to the “interest payable account” Payroll tax accrual is entered with a credit to the “payroll taxes payable account”
Q) Deferred taxation is a part of which equity?
A. Deferred taxation is a part of owner’s equity.
Q) Mention what does the investment of personal assets by the owner will do?
A. The investment of personal assets by the owner will increase total assets and increase owner’s equity.
Q) What is the equation for Acid-Test Ratio in accounting?
A. The equation for Acid-Test Ratio in accounting Acid-Test Ratio = (Current assets – Inventory) / Current Liabilities
Q) List out things that fall under intangible asset?
A. Things that fall under intangible asset are, Patents Copyrights Trademarks Brand names
Q) Mention what is trial balance in accounting?
A. In accounting, trial balance is an accounting report that lists the balances in each of an organization’s general ledger accounts. This is done at the end of posting journal entry to ensure that there are no posting errors.
Q) Where a cash discount should be recorded in journal entry?
A. A cash discount should be recorded in journal entry as a reduction of expense in “cash account”.
Q) Mention why some asset accounts have a credit balance?
A. Some asset accounts have a credit balance due to following reasons,
Receiving and posting an amount that was higher than the recorded receivable Expenses occurred faster than the agreed upon prepayments
Q) Define what is Bad debt expense?
A. A Bad debt expense is the amount of an account receivable that is considered to NOT be collectible.
Q) Explain the meaning of long-term notes payable is or long term liabilities?
A. Long-term notes payable or liabilities are referred for that loan that is not supposed to due for more than a year. These are the loans from banks or financial institution that are secured against various assets on the balance sheet, such as inventories.
Q) Explain what is the Master Account?
A. A Master Account has subsidiary accounts. A master account receivable could be anything; it could be account receivable for various individual receivable accounts
Q) Mention in which account does the unpresented cheque will get recorded?
A. The unpresented cheque will get recorded as a credit to the cash account in the company’s General ledger.
A. A certified financial accountant should have knowledge about Accounting principles and practices
Reporting and analysis of financial data Auditing practices and principles Account management
Budgets Software knowledge dealing with Accounting Knowledge of relevant laws, codes and
regulations
Q) What are the three factors that can affect your cash flow and business profitability?
A. The three factors that can affect your cash flow and business profit includes Cash flows from investing activities: It includes shares, bonds, physical property, machineries, etc. Cash flows from operating activities: It does not include cash received from other sources like investments. Cash flow from financing activities: It includes any activities that involve dividend payments that the company made to its shareholders, any money that includes stock to the public, any money borrowed from the lender etc. in other words, it is a report that tells the firm about the money borrowed and paid out in order to finance its activities.
Q) Explain what is accrual accounting?
A. Accrual Accounting is a method for measuring the performance and position of the company by identifying economic events regardless of when cash transaction happened. In this method, revenue is compared with the expenditures, at the time in which the transaction happens rather than when the payment is made.
Q) Explain the term account payable?
A. Account payable is referred as the amountcompany owes to its suppliers, its
employees, and its partners. In other words, it is the basic cost levied on the company to run business process that is outstanding. Account payable for one company may be account receivable for another firm or company.
Q) Explain what is working capital?
A. Working capital is a financial metric that calculates the resources available to the company to finance its day-to-day operations. It is typically calculated by deducting current liabilities from current assets.
Q) Explain what is ledger?
A. A ledger can be referred as an accounting book that keeps the record of journal entries in a chronological order to individual accounts. The process of recording this journal entries is known as posting.
A. Asset: What financial institute (bank) or people owe you Liabilities: It is something you owe people or organization
Equity: It is something you own, for example, the amount of your house loan you paid off.
