American Express Interview Questions and Answers

Accrued expenses are expenses that have been incurred but not yet paid. Journal entries are used to record these expenses.

• Accrued expenses are recorded as liabilities on the balance sheet.

• They represent expenses that have been incurred but not yet paid.

• Accrued expenses are typically recognized at the end of an accounting period.

• Journal entries are used to record accrued expenses by debiting an expense account and crediting a liability account.

• Examples of accrued expenses incl...read more

Provisions are liabilities that are uncertain in timing or amount, while reserves are profits set aside for specific purposes.

• Provisions are recognized when there is a present obligation and it is probable that an outflow of resources will be required to settle the obligation.

• Provisions are measured at the best estimate of the amount required to settle the obligation.

• Examples of provisions include warranty provisions, legal provisions, and restructuring provisions.

• Reserves, o...read more

Prepaid expenses are advance payments made for goods or services that will be received in the future.

• Prepaid expenses are considered as assets on the balance sheet.

• They represent expenses that have been paid for but have not yet been used or consumed.

• Journal entry for prepaid expenses involves debiting the Prepaid Expense account and crediting the Cash or Accounts Payable account.

• As the prepaid expense is used or consumed, it is gradually recognized as an expense on the incom...read more

The journal entry for bad debts involves debiting the Bad Debts Expense account and crediting the Allowance for Doubtful Accounts or Accounts Receivable account.

• Bad debts are uncollectible accounts receivable that a company does not expect to recover.

• The Bad Debts Expense account is an expense account that represents the estimated amount of uncollectible accounts.

• The Allowance for Doubtful Accounts or Accounts Receivable account is a contra-asset account that reduces the valu...read more

The 3 golden rules for accounting are the rules of debit and credit, the rule of assets and liabilities, and the rule of income and expenses.

• Rule of debit and credit: Every transaction has equal debits and credits, ensuring that the accounting equation remains balanced.

• Rule of assets and liabilities: Assets increase with debits and decrease with credits, while liabilities increase with credits and decrease with debits.

• Rule of income and expenses: Income is recorded as a credi...read more

Accrued expenses are expenses that have been incurred but not yet paid, while prepaid expenses are payments made in advance for goods or services.

• Accrued expenses are recorded when the expense is incurred, regardless of when it is paid.

• Prepaid expenses are recorded when the payment is made, and the expense is recognized over time as the benefit is received.

• Journal entry for accrued expenses: Debit Expense account, Credit Accrued Expense account.

• Journal entry for prepaid expen...read more

M adjustments refer to modifications made to financial statements to ensure accuracy and compliance with accounting standards.

• M adjustments are typically made at the end of a reporting period to correct errors or account for missing information.

• These adjustments can include reclassifying expenses, updating depreciation schedules, or recognizing revenue that was previously deferred.

• M adjustments are crucial for providing stakeholders with a true and fair view of the company's ...read more