Befree Business Resourceing Interview Questions, Process, and Tips

Accounting methods refer to the rules and procedures used by companies to prepare financial statements.

• Accounting methods determine how revenue and expenses are recognized in financial statements.

• There are two main accounting methods: cash basis and accrual basis.

• Cash basis accounting records revenue and expenses when cash is actually received or paid.

• Accrual basis accounting records revenue when it is earned and expen...read more

Capital gain is the profit that results from a sale of a capital asset, such as stocks, bonds, or real estate.

• Capital gain is the difference between the purchase price and the selling price of a capital asset.

• It is considered a taxable event by the IRS in the United States.

• Short-term capital gains are taxed at a higher rate than long-term capital gains.

• Examples of capital assets include stocks, bonds, real estate, and

Accrual income and accrual expense are recognized when they are incurred, regardless of when cash is exchanged.

• Accrual income is income that has been earned but not yet received, while accrual expense is an expense that has been incurred but not yet paid.

• Accrual income and expense are recorded in the financial statements in the period in which they are earned or incurred, regardless of when the cash is actually receive...read more

Rent agreements are usually short-term, while lease agreements are long-term contracts.

• Rent agreements are typically month-to-month or for a fixed term, while lease agreements are usually for a longer period, such as one year or more.

• Rent agreements are more flexible and can be easily terminated with notice, while lease agreements are more binding and may have penalties for early termination.

• Rent agreements are common ...read more

Depreciation is the allocation of the cost of an asset over its useful life in the books of accounts.

• Depreciation is a non-cash expense that reflects the decrease in value of an asset over time.

• It is treated as an operating expense on the income statement, reducing the company's net income.

• Depreciation is recorded on the balance sheet to reduce the carrying amount of the asset.

• There are different methods of calculating...read more

Accounts receivables are amounts owed to a company by customers for goods or services provided, while accounts payable are amounts owed by a company to suppliers for goods or services received.

• Accounts receivables represent money owed to a company by customers, typically shown as an asset on the balance sheet.

• Accounts payable represent money owed by a company to suppliers or vendors, typically shown as a liability on t...read more

Journal entry for investment in businesses with $20,000 cash and $80,000 bank loan.

• Debit the investment account for $100,000 ($20,000 cash + $80,000 bank loan)

• Credit the cash account for $20,000

• Credit the bank loan account for $80,000

Capital expenses are for long-term assets while revenue expenses are for day-to-day operations.

• Capital expenses are for acquiring or improving long-term assets like buildings or equipment.

• Revenue expenses are for day-to-day operations like salaries, rent, and utilities.

• Capital expenses are usually depreciated over time while revenue expenses are fully expensed in the period incurred.

Bank reconciliation is the process of comparing a company's records to its bank statement to ensure they match.

• Bank reconciliation helps identify discrepancies between the company's records and the bank statement.

• It involves comparing transactions, such as deposits and withdrawals, in the company's records to those in the bank statement.

• Any differences found during the reconciliation process need to be investigated and...read more

Deferred revenue expenditure refers to expenses that are incurred in one accounting period but are recognized as assets and expensed over a period of time.

• Deferred revenue expenditure is recorded as an asset on the balance sheet and gradually expensed over the period of benefit.

• Examples include expenses incurred for setting up a new business, advertising costs, and research and development expenses.

• It helps in matching...read more

Accounting profit and tax profit are not the same. The key difference lies in the treatment of certain expenses and income.

• Accounting profit is based on the principles of accounting and includes all revenues and expenses recorded in financial statements.

• Tax profit is used for calculating taxes owed to the government and may have adjustments for tax purposes, such as depreciation and interest expenses.

• Key differences in...read more

Deemed dividend is a distribution of profits by a company that is not actually paid out, while block of assets refers to a group of assets treated as a single unit for tax purposes.

• Deemed dividend is a distribution of profits by a company to its shareholders, even if no actual dividend is declared or paid out.

• Block of assets refers to a group of assets that are treated as a single unit for the purpose of calculating de...read more

Five common deductions include medical expenses, charitable donations, mortgage interest, student loan interest, and state and local taxes.

• Medical expenses: Costs related to healthcare, such as doctor visits, prescriptions, and medical equipment.

• Charitable donations: Contributions to qualified organizations, such as churches or non-profits.

• Mortgage interest: Interest paid on a mortgage for a primary or secondary reside...read more

Tax reconciliation involves comparing financial records with tax returns to ensure accuracy.

• Gather all financial records and tax returns for the period in question

• Identify any discrepancies between the two sets of records

• Adjust the financial records to match the tax returns, or vice versa

• Document any changes made during the reconciliation process

• Ensure all adjustments are properly accounted for in the final reconciliat

LTCA stands for Long-Term Capital Asset and STCA stands for Short-Term Capital Asset.

• LTCA refers to assets held for more than 36 months, while STCA refers to assets held for 36 months or less.

• Gains from LTCA are taxed at a lower rate compared to gains from STCA.

• Examples of LTCA include real estate, stocks held for more than 3 years, while examples of STCA include stocks held for less than 3 years.

Disallowed expenses in a tax return

• Personal expenses

• Gifts and donations

• Political contributions

• Illegal activities

• Fines and penalties

• Life insurance premiums

• Health club dues

• Hobby expenses

Book profit is calculated based on accounting principles, while tax profit is calculated based on tax laws and regulations.

• Book profit is calculated using Generally Accepted Accounting Principles (GAAP), which may allow for different methods of revenue recognition and expense allocation compared to tax laws.

• Tax profit is calculated based on tax laws and regulations, which may have specific rules for deductions, credits...read more

Journal ledger scrutiny involves reviewing and analyzing entries in the journal ledger to ensure accuracy and compliance with accounting standards.

• Reviewing journal entries for accuracy and completeness

• Checking for proper classification and documentation of transactions

• Verifying that entries comply with accounting standards and regulations

• Identifying and correcting errors or discrepancies

• Ensuring proper approval and au...read more

Bank reconciliation involves comparing the bank statement with the company's records to ensure they match. Tax reconciliation involves comparing tax records with financial statements.

• Ensure all transactions on the bank statement are recorded in the company's records

• Identify any discrepancies and investigate the reasons behind them

• Adjust the company's records to match the bank statement

• For tax reconciliation, compare ta...read more