Clix Capital Services Interview Questions and Answers

Journal entry for cash sales involves debiting the cash account and crediting the sales revenue account.

• Debit the cash account to reflect the increase in cash due to the sales

• Credit the sales revenue account to record the revenue generated from the sales

• The journal entry would typically be: Cash (debit) and Sales Revenue (credit)

The journal entry for provision of bad debts is a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts.

• Bad Debt Expense is an expense account that represents the amount of uncollectible accounts receivable.

• Allowance for Doubtful Accounts is a contra-asset account that reduces the balance of accounts receivable to its net realizable value.

• The provision for bad debts is an estimate of the amount of accounts receivable that are expected to be uncollectible.

• E...read more

Prudence concept is the principle of exercising caution and good judgment in decision-making.

• It involves taking a conservative approach to financial management

• It requires considering potential risks and uncertainties before making decisions

• It is important for ensuring the long-term financial stability of an organization

• For example, a company may choose to hold onto excess cash reserves rather than investing them in risky ventures

Journal entry for bad debts

• Debit the bad debt expense account

• Credit the accounts receivable account for the amount of the bad debt

• If the bad debt has already been written off, credit the allowance for doubtful accounts account instead of accounts receivable

• Example: Debit Bad Debt Expense for $500, Credit Accounts Receivable for $500

The golden rules of accounting are basic principles that guide the recording of financial transactions.

• The first golden rule is the Debit-credit rule, which states that for every debit entry, there must be a corresponding credit entry.

• The second golden rule is the Real account rule, which states that all assets have a debit balance and all liabilities have a credit balance.

• The third golden rule is the Nominal account rule, which states that all revenue and expense accounts ha...read more

Prepaid rent is an advance payment made for rent expense before it is actually incurred.

• Prepaid rent is a type of prepaid expense where rent is paid in advance before it is due.

• It is recorded as an asset on the balance sheet until the rent is actually incurred.

• As the rent is used up, it is recognized as an expense on the income statement.

• Other examples of prepaid entries include prepaid insurance, prepaid taxes, and prepaid subscriptions.