Top 50 Accounts And Finance For Managers Interview Questions You Must Prepare 16.Aug.2022

The balance sheet is a statement, which shows the financial position of a business on a particular date. It is a statement of balances of all the accounts real and personal, debit balances of all such accounts represent assets and credit balances represent the liabilities.

@Principal Objective:
The main purpose of preparing balance sheet is to know the financial position of the business at a particular date.

@Subsidiary Objectives:
Though the main aim is to know the exact financial position of the firm at a particular date, yet it serves other purpose as well.

  • It gives information about the actual and real owner’s equity. Though the capital of the owner indicates owner’s equity, yet some other liabilities are to be accounted for against it also.
  • It helps the firm to make provisions against possible future losses. A provision is made in the form of the Reserves.

Balance sheet is prepared with a view to measure the true financial position of a business concern at a particular point in time. It shows the financial position of a business in a systematic form. It is a screenshot of the financial position of the business. At one glance, the position of the business, at a particular point of time, can be understood. The various groups interested in the company can draw useful inferences from an analysis of the information contained in the balance sheet.

  • Assets.
  • Expenses.
  • Withdrawals/Drawings/Dividends.

A Variance is the difference between the actual cost and standard cost. If the effect of the variance is to increase the profit, the variance is said to be favorable. In the reverse case, it is adverse or unfavorable.

A Cost Statement or Cost Sheet is "a document which provides for the assembly of the detailed Cost of a Cost Center or Cost Unit".It is a detailed statement depicting the subdivision of cost arranged in a logical order under different heads.

These types of costs are not recorded in the books of accounts. These costs are not actually incurred but are considered while making a decision. For example, in accounting, interest and rent are recognized only as expenditure when they are actually paid. But in costing they are charged on a notional basis while ascertaining the cost of a product.

BPEL is a language for relatively simple description of how web services are composed into business processes. BPEL is the first of its kind.

  • Allows abstract and executable processes.
  • Gained support by Majority of companies.
  • Allows software to exist and similar processes can be executed and developed.

To trfer the temporary account balances to the Owner’s Capital account.

  • Recording.
  • Classifying.
  • Summarizing.
  • Interpreting.

  • Capital loss is that loss which occurs due to sale of some fixed asset. For examples, loss due to issue of shares or debentures at a discount, loss due to misappropriation of Cash from the office or forfeiture of security deposited for getting an agency.
  • Revenue losses are those losses, which occur due to sale and purchase of goods. For example, Bad Debts, loss due to fall in the price of goods etc.

Relationship between financial and operating leverage: In business terminology, leverage is used in two senses: Financial leverage & Operating Leverage.

  • Materiality.
  • Prior-period items.
  • Extra-ordinary items.
  • Change in accounting policies.
  • Accrual basis of accounting.

Score Keeping:
The score-keeping function is one the primary purposes of accounting information. It basically deals with the financial health of the enterprise.

Attention Directing :
Attention directing is nothing but the process of giving a signal to the user of accounting information about the need to take a decision. As such the accounting information supplied  the user’s attention to take decision.

Problem Solving:
The problem solving function of accounting information involves provisions of such information, which enables the manager to find solutions to the problems.

Oracle BPEL Process Manager is a BPEL engine. It is a member of Oracle Fusion middleware family of products. Orchestration disparate applications and web services are enabled enterprises by Oracle BPEL Process Manager. Quick building and deploying this processing ability in a standards-based manner delivers critical functionality for developing SOA.

  1. The marginal cost remains constant per unit of output whereas the fixed cost remains constant in total. Since marginal cost per unit is constant from period to period within a short span of time, firm decisions on pricing policy can be taken.
  2. Overheads are recovered in marginal costing on the basis of pre-determined rates. If fixed overheads are included on the basis of pre-determined rates, there will be under-recovery of overheads if production is less or if overheads are more.
  3. Advocates of marginal costing argue that under the marginal costing technique, the stock of finished goods and work in progress are carried on marginal cost basis and the fixed expenses are written off to profit and loss account as period costs.
  4. Marginal costing helps in carrying out break-even analysis, which shows the effect of increasing or decreasing production activity on the profitability of the company.
  5. Marginal costing helps the management in taking a number of business decisions like make or buy, discontinuance of a particular product, replacement of machines, etc.

The BPMN specifies a graphical notation for expressing business processes in a Business Process Diagram. Both technical users and business users are supported for business processes using BPMN. BPMN provides a standardized, simple me of process information communication to other business users, customers, suppliers and process implementers.

Variable costs tend to vary with the volume of output. Any increase in the volume of production result in an increase in the variable cost and vice-versa. For example, cost of material; cost of labor, etc.

Capital Expenditure:
All expenditure incurred in acquiring fixed assets, or improving the existing ones by increasing its efficiency (e.g. by providing substitution, alteration or renovation), or effecting economy in operation of existing assets (e.g. by attaching power motor to hand driven machine) are called capital expenditure.
Revenue Expenditure:
They are all such expenses, which are incurred on the organization and for running the business. The benefits of such expenses are limited to the accounting period only. They are incurred to maintain the earning capacity of the business, whereas capital expenditure are incurred to improving the earning capacity of the business.

Owner’s Equity is the residual interest in the assets of the enterprise. Therefore the owner’s equity section of the balance sheet shows the amount the owner have invested in the entity. However, the terminology ‘owner’s equity’ varies with different forms of organization depending upon whether the enterprise is a joint stock company or sole proprietorship/partnership concern.

  • To record the business tractions in a systematic manner.
  • To determine the gross profit and net profit earned by a firm during a specific period.
  • To know the financial position of a firm at the close of the financial year by way of preparing the balance sheet.
  • To facilitate management control.
  • To assess the taxable income and the sales tax liability.
  • To provide requisite information to different parties, i.e., owners, creditors, employees, management, Government, investors, financial institutions, banks etc.

To ensure account balances properly reflect results of business operation.

Direct Material Price Variance:
It is that portion of the direct material cost variance which is due to the difference between the standard price specified and the actual price paid.

Mathematically:
DMPV = Actual Quantity x (Standard price- Actual price)
If the actual price is more than the standard price, the variance would be adverse and vice versa.

Direct Material Usage or Quantity Variance:
It is caused due to the difference between the standard quantity specified (for the output achieved) and the actual quantity used.

Mathematically:
DMUV = Standard rate x (Standard quantity for actual output - Actual quantity).

Yes, the accounting calculates the cost of capital to the business. It compares the current, expected, and historic rates of return. Suppose a company is making 12% returns but borrowing money by using the owner’s credit card at 22% be good to know that.

Absorption costing technique is also termed as Traditional or Full Cost Method. According to this method, the cost of a product is determined after considering both fixed and variable costs. The variable costs, such as those of direct materials, direct labor, etc. are directly charged to the products, while the fixed costs are apportioned on a suitable basis over different product manufactured during a period.

Principal Objective:
The main purpose of preparing balance sheet is to know the financial position of the business at a particular date.
 Subsidiary Objectives:
Though the main aim is to know the exact financial position of the firm at a particular date, yet it serves other purpose as well.

  • It gives information about the actual and real owner’s equity. Though the capital of the owner indicates owner’s equity, yet some other liabilities are to be accounted for against it also.
  • It helps the firm to make provisions against possible future losses. A provision is made in the form of the Reserves.

Those costs which continue to be incurred even when a plant is temporarily shut-down, e.g. rent, rates, depreciation, etc. these costs cannot be eliminated with the closure of the plant. In other words, all fixed costs, which cannot be avoided during the temporary closure of a plant, will be known as shut down costs.

Following is the importance of accounting standards:

  • Standards reduce or eliminate all together confusing variations in the accounting treatment used to prepare financial statements.
  • With different companies following same standards, comparison of their financial policies and financial results becomes easier.
  • Accounting standards take care of valuing inventories, contingencies, construction contracts, fixed costs, etc. They cover all aspects of financial activities of company.
  • The standards help the investors for taking decision on investment.
  • Setting standards is useful to both the company & and the investor.

The Institute of Chartered Accountants of India in its Accounting Standard-I (AS-I) has stated that going concern, accrual and consistency are fundamental accounting assumptions. For the sake of convenience all accounting concepts are discussed under two headings:

  • Basic accounting concepts.
  • Accounting concepts related to income measurement.

Financial or traditional accounting consists of the classification, recording, and analysis of the tractions of a business in a subjective manner according to the nature of expenditure so as to enable the presentation at periodic intervals, of statements of profit or loss of the business and, on a specified date, of its financial state of affairs. The day-to-day tractions journalized or recorded in subsidiary books are posted in the various ledgers and at the end of the accounting period, a Profit and Loss Account and a Balance Sheet are prepared.

Marginal costing is a special technique used for managerial decision making. The technique of marginal costing is used to provide a basis for the interpretation of cost data to measure the profitability of different products, processes and cost centers in the course of decision making.

It is removing items from the income statement or balance sheet that do not normally occur during the course of business to better estimate the value of a company.

Accounting involves the creation of financial records of business tractions, flow of finance, the process of creating wealth in an organization, and summarizing the financial position of a business at a given moment in time.

Management accounting includes all those accounting services by me of which assistance is rendered to the management at all levels, in formulation of policy, fixation of pl, control of their execution, and measurement of performance. Management accounting is primarily concerned with the supply of information which is useful to the management in decision making for the efficient running of the business and thus, in maximizing profit.

Record revenues when earned and expenses when incurred regardless of cash flow .

  • It provides information about gross profit. The current figure can be compared with earlier ones and reasons found for variations. Accordingly plan can be launched for future growth of the firm.
  • Ratio of gross profit to sales can help the trader to improve his business administration.
  • Ratio of direct expenses to sales will help the trader to control and rationalize the expenses.
  • Comparison of 'stock in hand' of the current year with those of the previous years. Reasons for variation can be found out and steps can be taken to adjust things more profitably.
  • Ratio of cost of goods sold to total sale proceeds can help the trader in fixing the prices of his products.
  • Precautionary measures can be taken to avoid possible losses by analyzing the items of direct expenses.

A relationship between various accounting figures, which are connected with each other, expressed in mathematical terms, is called accounting ratios.

According to American Institute of Certified Public Accountants (AICPA), "Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money tractions and events which are, in part at least, of a financial character and interpreting the results there of."

American Accounting Association (AAA) has defined accounting as "the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information."

After ascertaining the profit or loss of the business, the businessman wants to know the financial position of his business. For this purpose he prepares a statement of Assets and Liabilities, which is called Balance Sheet. 

Demonstrate your knowledge of this cycle - the length of time it takes the company to pay its accounts payable - and what the implications of the length of this cycle are for the company, for example cash flow.

A budget is a plan expressed in quantitative, usually monetary term, covering a specific period of time, usually one year.

Cost accounting is concerned with cost accumulation for inventory valuation to meet the requirements of external reporting and internal profit measurement. Management accounting relates to the provision of appropriate information for decision-making, planning, control and performance evaluation.

These are costs that cannot be influenced by the action of a specified member of an undertaking. For example, the foreman of a production department can control the wastage of power in his department, but he cannot control the power, which is being wasted in the powerhouse itself resulting in higher cost per unit of power to him.

These are liabilities which will exist or not, will depend on any future incident. For the sake of shareholders, it is shown in the footnote in the Balance Sheet. The items, which may come under this sub-heading, are:

  • Claims against company, which are still not accepted by the company.
  • Liability for amount uncalled on partly paid shares.
  • Arrears of fixed cumulative dividends.
  • Estimated amount of incomplete contracts (capital expenditures), arrangement of which is not made.

Following are different branches of accounting:

  • Cost Accounting.
  • Financial Accounting.
  • Management Accounting.

  • Income statement.
  • Statement of Owner’s Equity/Retained Earnings.
  • Balance Sheet.
  • Statement of Cash Flows.

  • Accounting information is expressed in terms of money. Non monetary events or tractions, however important, are completely omitted.
  • Fixed assets are recorded in the accounting records at the original cost, that is, the actual amount spent on them plus all incidental charges. In this way the effect of inflation (or deflation) is not taken into consideration.
  • Accounting information is sometimes based on estimates; estimates are often inaccurate.
  • Accounting information cannot be used as the only test of managerial performance on the basis of more profits.
  • Accounting information is not neutral or unbiased. Accountants calculate income as excess of revenues over expenses. But they consider only selected revenues and expenses.

These are the costs which remain constants irrespective of the quantum of output within and up to the capacity that has been built up. Examples of such costs are: rent, insurance charges, management salary etc.

Fixed Cost is divided into :
(i) committed fixed costs and
(ii) discretionary fixed costs.

Committed Fixed Costs: This consists largely of those fixed costs that arise from the possession of plant, equipment and a basic organizational structure. For example, once a building is constructed and plant is installed noting much can be done to reduce the costs such as depreciation, property taxes, insurance and salaries of the key personnel etc.
Discretionary Fixed Costs: These are those costs, which are set at fixed amount for specific time periods by the management in the budgeting process. These costs directly reflect top management policies and have no particular relationship with volume of output. These costs can therefore be reduced or eliminated entirely, if the circumstances so require.

The exact details of business processes can be specified by executable processes. These can be executed by orchestration engine. An executable process is used in most cases of BPEL. The public message exchange among parties is only allowed by abstract business process. The internal details of process flows do not include and are not executable.