1.

Depreciation meaning and method

>>Decreasing the value of the fixed assets.

Depreciation Methods:

 Straight-line Depreciation Method: It is also called has Fixed Instalment method, under this
method, an equal amount of depreciation is charged on fixed assets of each financial year.

 Written down value method: It is also known as reducing the balance and Double declining
balance, under this method, an equal percentage of amount of depreciation is charged on Net
balance of Fixed assets in each financial year.

2. Depletion meaning

>>Decreasing the value of the nature resource such as Oil, Timber and minerals from the earth.

3. Amortization meaning and journal entry

>>Amortization is the process of allocating the cost of an Intangible assets over a period of time.
Debit the Amortization expenses

Credit the Intangible Assets

4. Amalgamation

>>Amalgamation is a completely new entity is formed to house the combined assets and liabilities of
both companies.

5. Accumulated Depreciation meaning and journal entry

>>Accumulated depreciation is the total amount of a plant asset's cost that has been allocated to
depreciation expense or to manufacturing overhead since the asset was put into service.

Debit the Depreciation expenses

Credit the Accumulated depreciation

(Accumulated Depreciation is credited when Depreciation Expense is debited each accounting period.)

6. Deferred revenue

>>Deferred revenue refers to payments received in advance for services which have not yet been
performed or goods which have not yet been delivered. These revenues are classified on the
company's balance sheet as a liability and not as an asset.

Debit the Deferred revenue

Credit the Revenue

 Example: Rent payments received in advance, prepaid insurance, prepayment received for the
newspaper subscription.

(It is reflected as “Advance from Customers” in the Liability side of the Balance sheet and
considered as Revenue as & when its earned. For Example, If a Company receives $100,000
from a Customer for a Product to be made and delivered. In this case, $100,000 would be
recorded as Liability in the Balance Sheet and the same shall be considered as Income by
writing off the Liability only when the product is actually been delivered to the Customer.)

(When you receive the money, you will debit it to your cash account because the amount of cash
your business has increased. And, you will credit your deferred revenue account because the
amount of deferred revenue is increasing.)

7. Deferred expenses

>>A deferred expense is a cost that has already been incurred, but which has not yet been
consumed. The cost is recorded as an asset until such time as the underlying goods or services are
consumed; at that point, the cost is charged to expense.

Debit the expense or cash

Credit the Deferred expenses

Example: Advertisement, advance received for the insurance coverage.

 Rent on office space

 Startup costs
 Advertising fees
 Advance payment of insurance coverage
 An intangible asset cost that is deferred due to amortisation
 Tangible asset depreciation costs

 (Your company purchases £4,000 of packing materials but only uses £1,000 within the
month they were purchased
 By charging the full amount of £4,000 to your profit/loss account in that month, you
would be distorting your figures)

8. Deferred revenue expenditure

>>Deferred Revenue Expenditure is an expense which is incurred while accounting period. And the
result and benefits of this expenditure are obtained over the multiple years in the future. For
example, revenue used for advertisement is deferred revenue expenditure because it will keep
showing its benefits over the period of two to three years.
 (The balance in “Deferred Advertisement Expense A/c” is in debit balance. Hence, shown on asset
side of balance sheet.)

Debit the Deferred revenue expenditure a/c

Credit the Cash a/c

9. Provisions and types of

>>provisions is a set of amount that aside from the companies’ Profits and losses to cover a future
liability (Expense) and reducing in the value of asset. The uncertain amount to be estimated.

Example: Provision for bad debts, sales allowance, inventory obsolescence.

Types of Provisions

1. Provision for Bad bests

2. Depreciation
3. Accruals
4. Pension

10. Difference between Depreciation and Amortization

Depreciation> Decreasing the value of the Tangible assets

Amortization> Decreasing the value of Intangible assets

11. Accrued Expenses meaning and journal entry

>>Accrued expenses are expenses which are incurred but not yet been paid and also due
Debit the expenses A/c
Credit the Accrued Expenses a/c(Payable) Liabilities

Example: Salaries payable, interest paid,

Interest is a expenses which is incurred but not yet been paid.

12. Accrued Income meaning and journal entry

>>Accrued income is a income which is incurred but not yet been received and also due.

Debit the Accrued income a/c

Credit the income a/c(Receivable)

Example: Rent received, commission received, interest on investment.

Rent earned but not yet been received.

13. Capital Revenue

>>Capital Income it is a income which is generated on the asset overtime rather than work down using
the assets.

Exp: Machinery. Land

14. Capital expenditure

>>Capital expenditure is a expenditure which in incurred for long term advantage .

Exp: Building, computer, equipment’s

15. Preliminary expense and journal entry

>>Preliminary expenses are a expenses which are incurred before incorporate or commencement of
business.

Exp: Statutory, Stamp, registration fees

(Preliminary expenses are shown on the asset side of the balance sheet)

16. Contingent Liabilities meaning and journal entry

>>Contingent liability is a potential liability that are occur, depending upon the uncontained future
event. the amount of the liability can be reasonably estimated

(This means that a loss would be recorded (debit) and a liability established (credit) in advance of
the settlement.)

17. Bank Reconciliation statement

>>BRS is a statement which shows the balance as per bank book and balance as per cash book
>>for matching the cash book and bank book we prepare BRS

18. Bad debts meaning and journal entry

>>Unrecoverable amount from the debtor is called Bad debts.

Debit the Bad debts

Credit the Account receivable (Sundry Debtors)

19. Trial Balance

>>Trial balance shows the balance of each and every account to ensure the sum of debit amount is
equal to the sum of credit value.

20. Trading and profit & loss account meaning

>>An account which shows the gross profit and loss made by an organization for a given period is called
Trading account, after adding other incomes and deducting expenses it shows the profit or loss of the
business.

21. Profit and Loss appropriation account

>>It is a special account, the form prepared to shows the distribution of profit/loss among the partner or
partner’s capital.

22. Direct expenses

>>Direct expenses is a expenses which is incurred at the time of producing the product or service
rendered.

Exp: direct labor, direct materials, commissions, piece rate wages, and manufacturing supplies.

23. Indirect expenses

>>Indirect expenses are expenses which is incurred after producing the product or service rendered.

Exp: Rent, Supervisors salaries, office expenses, Insurance and depreciation

24. Expenses meaning

>>Expenses are those cost which is incurred for earning the revenue.

Exp: Rent, Salaries

25. Expenditure meaning

>>Expenditure are those cost which is spent on purchasing or growing of the fixed assets.

Exp: Building, Land

26. Difference between expenses & Expenditure

Expenses: The cost which are incurred to earn the revenue

Expenditure: The cost which is spent on purchasing or growth of fixed assets.

27. Cash flow statement

>>Cash flow statement Is a statement which shows the changed in inflow and outflow of the cash book.

28. Fund flow statement

>>Fund flow statement is a statement which shows the changes in the inflow and outflow of the funds.

29. Budget Meaning

>>The cost will be estimated for the future activities is called budget

30. Contra entries meaning

>>Which accounting transaction is recording in both debit and credit of cash

31. Ledger:

>> Ledger is a set of all accounts which contains in business including personal, real , nominal.

32. Journal

>>Journal entry is a detailed account that records all the financial transactions of a business, to be
used to further reconciling and transfer to other accounting records such as general ledger.

33. Ratio analysis

>> Ratio analysis is used to evaluate a number of issues with an entity, such as its liquidity, efficiency of
operations, and profitability.

34. Working capital

>>Working capital is a day to day expenses which shows the Assets-Liabilities=Working capital

35. Accounts Payable

>>The amount own by a company to its suppliers

(Purchasing the goods from the supplier on credit bases)

 Debit the Purchase a/c

Credit Accounts payable (Party)

36. Accounts receivable

>>The amount company owns to its customers

(Sale of goods on credit bases)

Debit the Accounts receivable (party)

Credit the Sales account

37. Bills Payable

>>It is a written promise issued to other traders for purchasing of goods

38. Bills receivable

>>It is a written promises received by the other trader for the sales of goods.

39. What are the common errors in accounting?

>>The common error in accounting is>Error in Omission , Error in Commission , Error of
compensating error.Error of Original entry, Error of Principle, Error in posting.

(Error of omission: an accounts payable account is not credited when goods are purchased
on credit. Error of commission: an account receivable is credited to the wrong
customer. Error of original entry: the wrong amount is posted to an account, Error of
principle -- a transaction that is not in accordance with generally
accepted accounting principles (GAAP)

40. What are some of the ways to estimate bad debts?

>>Some of the popular ways of estimating bad debts are – percentage of outstanding
accounts, aging analysis and percentage of credit sales.

41. What is a deferred tax liability?

>> Deferred tax liability signifies that a company may pay more tax in the future due to
current transactions
44. Balance sheet under what it will come

Liabilities: Equity shares and debentures, Current liabilities- Sundry Creditors, Accounts payable,
Loads and Advance.

Assets: Current Assets and Fixed assets, Investment, Sundry Debtors , Accounts receivable.

45. Provision meaning and example

A set of amount aside from companies profit for covering the future expense or liabilities and
reducing the value of assets.

Exp: Bad bets, Depreciation, pension.

46. if we received bad debtors and entry

Bad debts: Unrecoverable amount from the Debtors.

For bad debts- Debit the bad bets, Credit the Debtor(Account Receivable)

Bad debts recovered- Debit the Debtors(A/c Receivable), Credit the Bad bets recovered

47. Credit sales and purchase sales

Sales on Credit: Selling the goods on credit basis

Debit Account Receivable

Credit Sales revenue

After receiving the cash:

Debit the Cash

Credit the Account Receivable

Purchase on Credit: purchasing the goods on credit basis.

Debit the Purchase (services)

Credit the Account payable

After making the payment:

Debit the Accounts Payable

Credit the Cash

 48. BRS and example

BRS: Reconciliation between as per cash book and Pass book.

Example:1) Cheque is deposited into Bank but not yet recorded in company books

2)Cheque is written but not yet been paid to Bank

3) Cheque is deposited but amount is not been credited to us because cheque is dishonor.

49. Depth BRS example

50. What is balance sheet, P&L, and trail balance

51. Accounting concept and example

Accounting concept refers to the basic assumptions and rules and principles which work as
the basis of recording of business transactions and preparing accounts.

 Money Measurement Concept: ...

 Business Entity Concept: ...
 Going Concern Concept: ...
 Cost Concept: ...
 Dual Aspect Concept (Accounting Equation Concept): ...
 Accounting Period Concept: ...
 Matching Concept: ...
 Realization Concept:

52. Dep and methods

Depreciation: Reducing the value of the Fixed assets.

1) Straight line method

2) Written down value method

53. Working capital

>>Its a day to day expenses which includes Assets-Liabilities=Working capital.

54. Credit and debit note

Credit Note: Issued by a supplier for the return of goods which is been sold to the buyer, supplier
will get debit for the returns goods.
 Debit Note: Issued by a buyer to the supplier for return of goods which is been purchased, buyer will
get a credit of returned goods.

55golden rule with example

1) Personal accounts>> Debit the receiver and Credit the giver

2) Real accounts>>Debit what comes in and Credit what goes out

3) Normal accounts>>Debit all expenses and loss and Credit all incomes and gains.

56. What is ledger

>>it’s a set of all accounts of an organization which is includes personal , real, Nominal accounts.

57. What is petty cash

Petty cash is a small amount of money which available for paying the small expenditure without
writing any check.

58. What is Double entry book keep

Double entry means that every transaction will involve at least two accounts. For example,
if your company borrows money from the bank, the company's asset Cash is increased and
the company's liability Notes Payable is increased.

59. What is DSO(Days sales outstanding) ?

Day sales outstanding is measure of average number of days that it takes a company to collect payment
after a sale has been made.

60. What is intercompany accounting and intracompany accounting?

Intercompany accounting for transactions performed between separate legal entities

that belong to the same corporate enterprise.
Intracompany balancing for journals that involve different groups within the same
legal entity, represented by balancing segment values.
EZL Company accounting questions

1) How can you explain the basic accounting equation?

Fundamental accounting equation is also called as balance sheet equation, it represents the
relationship between Assets, Liabilities and Owner’s equity of a person or business. It is the
foundation for the double entry book keeping. For each transaction, the total debit equals to
total credit.

2) Have you ever made MSI reports and what are they?

Pretend you are the manager of a medium-sized company's customer service

department. Your staff takes phone calls and emails from over 300 customers
every day. For the most part, they do a very good job, but recently, customers
have started to complain that it takes too long to get their questions answered.
Upper management at your company is concerned about this and wants to know
what they can do to fix the problem. But before they make a decision, they need
you to give them more information. How will you do this?

This is where MIS reports come in. MIS stands for management information
system. Business managers at all levels of an organization, from assistant
managers to executives, rely on reports generated from these systems to help
them evaluate their business' daily activities or problems that arise, make
decisions, and track progress. MIS system reporting is used by businesses of all
sizes and in every industry.

Example: Process control systems, sales and marketing systems, accounts and finance system and
management reporting systems.

3 )Journal entry for Fixed assets addition, Depreciation and disposal in loss?

Depreciation a/c

To Fixed assets a/c

Disposal loss on sale of assets a/c

To fixed assets

4) Difference between provision and reserve?

Provision: a set of amount aside from the company’s profit to cover the future liability or expenses
and reducing the value of fixed assets.
Reserve: a set of amount aside from the company’s profit to retain from the earning for the future
use.

5) What is Deferred Revenue?

Deferred revenue refer to payment received in advance for services which is not been
performed or delivered the goods. This revenue are classified in balance sheet as a liability.

6) What is the difference between accumulated depreciation and depreciation?

Accumulated depreciation: Accumulated depreciation is the total amount of plant assets cost
has been allocated to depreciation expenses and manufacturing override since the assets was
put into services.

Depreciation: Decreasing the value of the fixed assets.

7) What are the activities included in cash flow statement?

Operating activities: this includes cash activities related to net income.

Investing activities: this includes cash activities related to noncurrent assets.

Financial activities:

8) List out things that fall under Intangible assets?

Goodwill, patent, copy rights, trademarks.

9) Explain Accrual concept with example

>>Accrual concept which requires recording revenue when they are earned and not when they are
received in cash, and recording expenses why they are incurred and not when they are paid.

10) Explain prepaid expense and Amortization?

Prepaid expenses: Amount which is paid in advance
Amortization: allocating the cost of an intangible assets over a period of time.

11) Explain balance sheet reconciliation?

Reconciliation of balance sheet simply means the reconciliation of
closing balances of all transactional and ledger entries and accounts
forming part of the balance sheet items for a respective financial
yearand whether it is being recorded and properly classified making up
 to the balances appropriately in the balance sheet. It is a final and crucial
activity that the company performs to ensure the accuracy of its financial
statements prior to the closing of its books at the end of the financial
cycle.

12) What is Goodwill?

Goodwill is the reputation of an organization and it shows the financial position of the company.

13) What is consolidating in financial accounting?

Consolidation accounting is the process of combining the financial results of several
subsidiary companies into the combined financial results of the parent company. This
method is typically used when a parent entity owns more than 50% of the shares of another
entity

14) What is income statement?

Income statement is a statement which includes earning revenue and incurred expenditure for a
particular financial period of an organization.

15) What is the difference and similarities between amortization and depreciation?

>>Amortization: decreasing the value of the intangible assets

>>Depreciation: Decreasing the value of the fixed assets.

16) What is the purpose of control accounts with example?

To find the amount that a specific customer owes, its recent payments, and its recent
purchases on credit, you will quickly get that information from the Accounts Receivable
Subsidiary Ledger. Control accounts could also be used for accounts payable, equipment,
and inventory.

17) What is payroll accounting?

Payroll Accounting is the function of calculating and distributing wages, salaries, and
withholdings to employees and certain agencies. It is generally done through different
documents such as time sheets, paychecks, and a payroll ledger.
 18) What is intercompany accounting?

Intercompany accounting for transaction performed between separate legal entities that belong to
the same corporate enterprise.

1) Explain the Accounts Receivable cycle or O2C cycle?

Accounts Receivable: Accounts receivable refer to the amount that a company owns to it customer
for sales of goods on credit.

Sales order>Delivery note>Rejection In>Sales>Credit note>Receipt invoice>reports

2) What is Factoring?

3) What is the golden rules of accounts?

Personal accounts: Debit the receiver and Credit the giver.

Real accounts: Debit what comes in and Credit what goes out.

Nominal accounts: Debit all expenses and loss and Credit all gain and incomes.

4) Explain the BRS and reason for why BRS is significant?

BRS: reconciliation between balance as per cash book and balance as per bank book.

Reason: Manipulating of records(user)

Dishonor of cheques ,

Cheque is deposited into bank but not yet been recorded in company books,

Cheque is written but not yet been submitted into bank.

5) After how many day an AR account can be considered delinquent?

>>90 Days
Delinquent accounts receivable means accounts receivable that as of effective time are 90 Days
delinquent or otherwise its uncollectible.

6) Explain the deferred revenue expenditure?

Deferred revenue expenditure is a expenses which is incurred while accounting period, the
results and benefits of this expenditure of this revenue will be obtain for multiple years.
 For example advertisement revenue expenditure this benefits can be used more than two or
three years.

7) Explain the types of sales

>>Cash sales: after making the sales immediate cash has been received.
>>Credit sales: sale the goods on credit basis.

8) Journalise the cash sales and credit sales.

Cash sales: Cash a/c
To Sales a/c

Credit sales: Accounts receivable a/c

To sales a/c

9) What is DOS?

>>Days outstanding sales, Is determined an a Monthly, quarterly or annual basis, and can be
calculated by dividing the amount of accounts receivable during a given period by the total value of
credit sale during the same period, and multiplying the result by the number of days in the period
measured.

10) Is DOS is applicable for both cash sales and credit sales?

>>Its applicable on Credit sales because on outstanding value we are calculating the DOS.

11) Explain the difference between provisions and reserves?

Provision: A set of amount aside from the company’s profit to cover the future liability or expenses
and reducing the value of the fixed assets.

Reserve: Retain from earning for future use.

12) Explain the Bad debts and Doubtful debts?

Bad debts: Unrecoverable amount from the debtor.
Doubtful debts: the amount of money that a business does not expect to collect from its client.

13) Journalise Bad debts and Provision for doubtful debts?

Bad debts: Debit Bad debts a/c

Credit Sundry Debtors

 Provision for doubtful debts:

Debit Provision for doubtful a/c

Credit the sundry debtor

14) Difference between the Debit memo and Credit memo?

Debit note: The debit note is issued by the buyer to the supplier for returning the goods for
purchasing, the buyer will get the credit of the returned goods.

Credit note: The credit note is issued by the supplier to the buyer for receiving the returned goods
for the sale, the supplier will get the debit for the returned goods.

15) What is the vendor reconciliation?

Vendor reconciliation is a statement received from vendor which contains details of invoices of that
vendor for a particular period. Vendor wants to confirm that these invoices has been paid or not,
the balance vendor has open for this invoices should match the payment made to that vendor.

P2P

>>Its also known as Purchase to Pay, it contains the details of procurement and supply chain process
within the company through goods received to payment made to the vendor.

P2P cycle:

1) Requirement planning: identify the business requirement

2) Request for Quotation: Need to request for quotation, purchase department may issue a request for
Quotation.

3) Create a Purchase order: Raise a purchase order invoice, company send a purchase order to the
vendor for sending the goods or delivering the goods.

4) Goods receipt: Receive the goods(Preparation of good receipt), the items will be checked to ensure
the quantity is same as the purchase order as well as checking the items for damage and quality.

If there is any issue with the items that are received, the customer will inform the vendor so that
either item can be returned or a discount arranged.

5) Invoice: Generate a invoice, The vendor can invoice the customer at any time after the items
are shipped. By using an electronic invoicing solution, the P2P process can be streamlined so
that the information is entered into the customer's accounts payable system.
 When the items are received, matched against the invoice and purchase order, the invoice
processing can commence.

6)Payment: made a payment

7)Reporting

>>The purchase department or procurement team will raise the purchase order.

Record to Report(R2)

>>Record to report or R2R is a Finance and Accounting (F&A) management process which
involves collecting, processing and delivering relevant, timely and accurate information used
for providing strategic, financial and operational feedback to understand how a business is
performing.

Steps In R2R

 data extraction
 data collection
 data validation
 data transformation

Process:
1) Journal accounting

2) Ledger

3) Trial Balance

4) Adjustments

5) Final Reports

What is utility expenses?

>>This accounts represents the cost of the electricity, heat, sewer, and water used
during the period indicated in the heading of the income statement.
Utilities used in the manufacturing process will be part of the cost of the product
manufactured.