Sample Questions
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What is Appreciation? Answer/Explaination: Appreciation is the increase in the value of an asset in excess of its depreciable cost, which is due to economic, and other conditions, as distinguished from increases in value due to improvements or additions made to it.
Define FIFO. Answer/Explaination: FIFO (first-in, first-out) is an inventory cost flow whereby the first goods purchased are assumed to be the first goods sold so that the ending inventory consists of the most recently purchased goods. Define Account Aging. Answer/Explaination: Account Aging usually refers to the methods of tracking past due accounts in accounts receivable based on the dates the charges were incurred. Account Aging can also be used in accounts payable, to a lesser degree, to monitor payment history to suppliers. What is an Accounting Event? Answer/Explaination: Accounting Event is when the assets and liabilities of a business increase/decrease or when there are changes in owner's equity. What are Accounts Payable? Answer/Explaination: Accounts Payable (AP) are trade accounts of businesses representing obligations to pay for goods and services received. What are Accrued Assets? Answer/Explaination: Accrued Assets are assets from revenues earned but not yet received.
Define Accounting Cycle. Answer/Explaination: Accounting Cycle is the sequence of steps in preparing the financial statements for a given period. What is EBITDA? Answer/Explaination: EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization, but after all product / service, sales and overhead (SG&A) costs are accounted for. Sometimes referred to as Operational Cash Flow. . What is a Ledger? Answer/Explaination: The record used to keep track of the increases and decreases in a financial statement items is termed as a ledger account. The entire group of accounts is kept together in an accounting record called ledger.
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What are Accounts Receivable? Answer/Explaination: Accounts Receivable is a current asset representing money due for services performed or merchandise sold on credit.
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Explain the difference(s) between a P&L and a Balance Sheet, and how the two relate. Answer/Explaination: The P&L is a detailed summary highlighting the operating and trading performance of a company over a certain period of time, whereas the balance sheet shows the net worth of the company focusing on its assets and liabilities. The relationship between the two is that the P&L is a representation on the balance sheet.
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What is Accrued Revenue? Answer/Explaination: Accrued Revenue is the accumulated revenue as they have been recognized over a given period. Define Accounting Period. Answer/Explaination: Accounting Period is the time period for which accounts are prepared, usually one year. What is Accounting Ratio? Answer/Explaination: Acounting Ratio is the result of dividing one financial statement item by another. Ratios help analysts interpret financial statements by focusing on specific relationships.
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Define Assets. Answer/Explaination: Assets are economic resources that are owned by a business. . What is the Accounting Equation? Answer/Explaination: Asserts = Liabilities + Owner’s Equity. What are the Debt-Credit rules that affect the Owner’s Equity? Answer/Explaination: Expenses decrease OE. Drawings decrease OE. Revenue increase OE. When presented with a box containing invoices, cashbook, chequebooks and bank statements, which would you look at first to establish a trial balance and why? Answer/Explaination: It depends if it's cash or credit business, but generally I would start by coding the cashbook, as all transactions must be recorded here.
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What is Accrued Interest? Answer/Explaination: Accrued Interest is interest earned but not paid since the last due date. Define Liabilities. Answer/Explaination: Liabilities are debts. They represent negative future cash flows for the enterprise.
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What is Absorption Costing?
Answer/Explaination: It is the method under which all manufacturing costs, both variable and fixed, are treated as product costs with non-manufacturing costs, e.g. selling and administrative expenses, being treated as period costs.
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Define Owner’s Equity. Answer/Explaination: It represents the owner’s claim to the assets of the business. What is Depreciation? Answer/Explaination: It means the systematic allocation of the cost of depreciable asset to expense over the asset’s useful life. What is Fair Market Value? Answer/Explaination: Testing What is Fair Market Value? Answer/Explaination: Fair Market Value is the price at which a willing seller will sell and a willing buyer will buy, in an arms- length transaction, when neither is under compulsion to sell or buy and both have reasonable knowledge of relevant facts. Can you give an example of work that you have carried out away from the audit side, in which you've had to liaise with senior managers? Answer/Explaination: I worked to design a new company structure for a fastgrowing telecommunications company. The process included meetings with client employees and workshops with senior management.
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What is your understanding of Management Accounting vs. Financial Accounting? Answer/Explaination: Management accounting is the preparation and review of figures of a company or a division of a company from a financial perspective. It involves collating figures into periodic reports that senior management can then use to make strategic decisions. Financial accounting concerns tax, statutory reports and day-to-day areas such as payroll.
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Who is an Auditor? Answer/Explaination: An Auditor is an accountant usually certified by a national professional association of accountants, if one exists in the corporation’s country, or certified by another country's recognized national association of accountants. Corporations will often work with both internal auditors and external auditors.
Define FIFO. Answer/Explaination: FIFO (first-in, first-out) is an inventory cost flow whereby the first goods purchased are assumed to be the first goods sold so that the ending inventory consists of the most recently purchased goods. Define Account Aging. Answer/Explaination: Account Aging usually refers to the methods of tracking past due accounts in accounts receivable based on the dates the charges were incurred. Account Aging can also be used in accounts payable, to a lesser degree, to monitor payment history to suppliers. What is an Accounting Event? Answer/Explaination: Accounting Event is when the assets and liabilities of a business increase/decrease or when there are changes in owner's equity. What are Accounts Payable? Answer/Explaination: Accounts Payable (AP) are trade accounts of businesses representing obligations to pay for goods and services received. What are Accrued Assets? Answer/Explaination: Accrued Assets are assets from revenues earned but not yet received.
Define Accounting Cycle. Answer/Explaination: Accounting Cycle is the sequence of steps in preparing the financial statements for a given period. What is EBITDA? Answer/Explaination: EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization, but after all product / service, sales and overhead (SG&A) costs are accounted for. Sometimes referred to as Operational Cash Flow. . What is a Ledger? Answer/Explaination: The record used to keep track of the increases and decreases in a financial statement items is termed as a ledger account. The entire group of accounts is kept together in an accounting record called ledger.
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What are Accounts Receivable? Answer/Explaination: Accounts Receivable is a current asset representing money due for services performed or merchandise sold on credit.
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Explain the difference(s) between a P&L and a Balance Sheet, and how the two relate. Answer/Explaination: The P&L is a detailed summary highlighting the operating and trading performance of a company over a certain period of time, whereas the balance sheet shows the net worth of the company focusing on its assets and liabilities. The relationship between the two is that the P&L is a representation on the balance sheet.
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What is Accrued Revenue? Answer/Explaination: Accrued Revenue is the accumulated revenue as they have been recognized over a given period. Define Accounting Period. Answer/Explaination: Accounting Period is the time period for which accounts are prepared, usually one year. What is Accounting Ratio? Answer/Explaination: Acounting Ratio is the result of dividing one financial statement item by another. Ratios help analysts interpret financial statements by focusing on specific relationships.
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Define Assets. Answer/Explaination: Assets are economic resources that are owned by a business. . What is the Accounting Equation? Answer/Explaination: Asserts = Liabilities + Owner’s Equity. What are the Debt-Credit rules that affect the Owner’s Equity? Answer/Explaination: Expenses decrease OE. Drawings decrease OE. Revenue increase OE. When presented with a box containing invoices, cashbook, chequebooks and bank statements, which would you look at first to establish a trial balance and why? Answer/Explaination: It depends if it's cash or credit business, but generally I would start by coding the cashbook, as all transactions must be recorded here.
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What is Accrued Interest? Answer/Explaination: Accrued Interest is interest earned but not paid since the last due date. Define Liabilities. Answer/Explaination: Liabilities are debts. They represent negative future cash flows for the enterprise.
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What is Absorption Costing?
Answer/Explaination: It is the method under which all manufacturing costs, both variable and fixed, are treated as product costs with non-manufacturing costs, e.g. selling and administrative expenses, being treated as period costs.
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Define Owner’s Equity. Answer/Explaination: It represents the owner’s claim to the assets of the business. What is Depreciation? Answer/Explaination: It means the systematic allocation of the cost of depreciable asset to expense over the asset’s useful life. What is Fair Market Value? Answer/Explaination: Testing What is Fair Market Value? Answer/Explaination: Fair Market Value is the price at which a willing seller will sell and a willing buyer will buy, in an arms- length transaction, when neither is under compulsion to sell or buy and both have reasonable knowledge of relevant facts. Can you give an example of work that you have carried out away from the audit side, in which you've had to liaise with senior managers? Answer/Explaination: I worked to design a new company structure for a fastgrowing telecommunications company. The process included meetings with client employees and workshops with senior management.
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What is your understanding of Management Accounting vs. Financial Accounting? Answer/Explaination: Management accounting is the preparation and review of figures of a company or a division of a company from a financial perspective. It involves collating figures into periodic reports that senior management can then use to make strategic decisions. Financial accounting concerns tax, statutory reports and day-to-day areas such as payroll.
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Who is an Auditor? Answer/Explaination: An Auditor is an accountant usually certified by a national professional association of accountants, if one exists in the corporation’s country, or certified by another country's recognized national association of accountants. Corporations will often work with both internal auditors and external auditors.
