Q) Define Marginal Cost?
A. Suppose you have to produce an additional unit of output. The estimated cost of additional inputs to produce that output is actually the marginal cost.
Q) Define Partitioning in accounting?
A. It is a kind of groups made on the basis of same responses by a system.
Q) Mention what is General ledger account?
A. The General ledger account is an account where the company records all the information for its various expenses and income types into separate accounts.
Q) What is the general classification of accounts that usually ledger account involve?
A. The general classification of accounts that usually ledger account involves are Assets- Cash, Accounts Receivable, Liabilities- Accounts Payable, Loans Payable Stockholders’ equity- Common Stock
Q) Mention what are things will not be included in bank reconciliation statement?
A. In a bank reconciliation statement, following thing can be excluded. Bank Charges or Interest debited by bank Banks direct payment not entered in Cash book.
Q) Under the accrual basis of accounting, when revenues are reported in the accounting period?
A. When service or goods have been delivered, then revenues are reported in the accounting period.
Q) Under what type of account do the unearned revenues fall?
A. The unearned revenues falls under “Liability” account.
Q) Mention whether the account “Cash” will be credited or debited, when a company pays a bill?
A. The account “Cash” will be credited when a company pays a bill.
Q) Mention what is assets minus liabilities?
A. Assets minus liabilities is equal to owners’ equity or stockholders equity.
Q) Entries to revenues accounts such as Service Revenues are usually?
A. Entries to revenues accounts such as Service Revenues usually go into credit side.
Q) Explain what the difference between accumulated depreciation and depreciation is expense?
A. The difference between accumulated depreciation and depreciation expense is that Accumulated depreciation: It is the total amount of depreciation that has been taken on a company’s assets up to the date of the balance sheet
Depreciation expense: It is the amount of depreciation that is reported on the income statement.
Q) Differentiate between provision and reserve?
A. Provisions are the liabilities or the anticipated items such as depreciation. You can say provisions are expenses. Reserves are the profits of any company and a part of that profit is placed back to
the business to keep it sustainable in tough times of a company.
Q) Define Offset accounting?
A. Offset accounting is one that decreases the net amount of another account to create a net balance.
Q) Define overhead in terms of accounting?
A. It is the indirect expenditure of a company such as salaries, rent dues etc.
Q) Define trade bills?
A. We know that all types of transactions need to be documented. The trade bills are the documents, generated against each transaction.
Q) Define fair value accounting?
A. As per fair value accounting, a company has to show the value of all of its assets in terms of price on balance sheet on which that asset can be sold.
Q) Explain what is compound journal entry?
A. A compound journal entry is just like other accounting entry where there is more than one debit, more than one credit, or more than one of both debits and credits. It is essentially a combination of
several simple journal entries.
Q) What are the accounting events that are frequently involved in compound entries?
A. The accounting events that are frequently involved in compound entries are; Record all deduction and payments related to a payroll Record the account receivable and sales taxes related to a customer invoice.
Q) Mention the types of accounts involved in double entry book-keeping?
A. Double entry book-keeping involves five types of accounts,
Income accounts
Expense accounts
Asset accounts
Liability accounts
Capital accounts
Q) Mention what are the rules for debit and credit for different accounts to increase the amount in your business accounts?
A. The rules for debit and credit for different accounts, for an expense account, you debit to increase it, and credit to decrease it, for an income account, you credit to increase it and debit to decrease it,
for an asset account, you debit to increase it and credit to decrease it, for a liability account, you credit to increase it and debit to decrease it.
Q) List out some of the examples for liability accounts?
A. Some of the examples for liability accounts
Accounts Payable
Accrued Expenses
Short-term Loans Payable
Q) Explain how you can adjust entries into account?
A. To adjust entries into account, you can sort entries into five categories.
Accrued expenses: Expenses have been incurred but the vendors invoices are not generated or processed yet
Accrued revenues: Revenues have been earned but the sales invoices are not generated or processed yet
Deferred revenues: Money was received in advance of having been paid or earned
Deferred expenses: Money was paid for a future expense
Depreciation expense: An asset purchased in one period must be allocated to expense in each of the accounting periods of the asset’s useful life
Q) Explain what a deferred asset is and give an example?
A. A deferred asset refers to a deferred debit or a deferred charge. An example of a deferred charge is bond issue costs. These costs involve all of the fees or charges that an organization incurs in order to
register and issue bonds.
Q) Mention what is Bank Reconciliation?
A. Bank reconciliation is a process done by a company to ensure that the company’s records (check register, balance sheet, general ledger account, etc.) are correct and that the bank’s records are also correct.
Q) Mention what is “deposit in transit”?
A. A deposit in transit is a checks and cash that have been received and recorded by an entity, but which have not yet been entered in the records of the bank where the funds are deposited.
Q) Explain what is an over accrual?
A. An over accrual is a condition where the estimate for an accrual journal entry is too high.
This estimate may apply to an accrual of expense or revenue.
Q) Mention what is account receivable?
A. A short term amounts due from buyers to a seller, who have purchased goods or services from the seller on credit is referred as account receivable.
Q) Explain what are the activities that includes in Cash Flow Statement?
A. The cash flow statement showcases the cash generated and used during the year or months. Various activities that are involved for the Cash Flow are
Operating activities – business activities accounting to cash
Investing activities – sale and purchase of equipment or property
Financial activities- purchase of stock and own bonds
Supplemental information- exchange of significant items that don’t involve cash
Q) Mention what happens to company’s “Cash Account” if it borrows money from the bank by signing a note payable?
A. Due to double entry, the “cash account” will increase as such the liability account increases.
Q) Mention which account is responsible for interest payable?
A. Account which is responsible or affected by the interest payable is “Current liability account”
Q) Mention what is reversing journal entries?
A. Reversing journal entries are entries made at the beginning of an accounting period to cancel out the adjusting journal entries made at the end of the previous accounting period.
Q) Mention where do generally accruals appear on the balance sheet?
A. Accrued expenses usually tend to be extremely short-term. So you would record them within the “current liabilities section” of the balance sheet.
