Chuka University Chartered Accountant Interview Questions and Answers

Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money.

Q1. What is accounting and characteristic of accounting
Ans. 
Accounting is the process of recording, summarizing, and analyzing financial transactions of a business.
• Accounting involves recording financial transactions such as sales, purchases, and expenses.

• It includes summarizing the recorded transactions in financial statements like the balance sheet and income statement.

• Accounting also involves analyzing the financial data to provide insights and make informed business decisio...read more
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Q2. What are the benefit according to accounting
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The benefits of accounting include financial transparency, informed decision-making, and compliance with regulations.
• Provides financial transparency by accurately recording and reporting financial transactions

• Enables informed decision-making by providing timely and accurate financial information

• Helps in compliance with regulations and legal requirements

• Facilitates effective budgeting and financial planning

• Assists in me...read more
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Q3. What is last in fist out method
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LIFO method used in inventory management
• Last In First Out (LIFO) is a method used in inventory management to value and track inventory.

• Under LIFO, the most recently acquired or produced items are assumed to be sold or used first.

• This method assumes that the cost of the most recent inventory is the cost of goods sold.

• LIFO is commonly used when prices are rising, as it results in a lower taxable income due to higher cost...read more
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Q4. What is first in first out method
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First in first out (FIFO) is a method of inventory valuation based on the assumption that the first goods purchased are the first goods sold.
• FIFO assumes that the oldest inventory items are sold first

• It is commonly used in industries where the products have a limited shelf life, such as food and beverage

• FIFO results in higher cost of goods sold and lower ending inventory when prices are rising

• Example: A company buys 10...read more
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Q5. What are the features of accounting
Ans. 
Accounting features include recording, classifying, summarizing, and interpreting financial transactions.
• Recording financial transactions

• Classifying transactions into different categories

• Summarizing transactions into financial statements

• Interpreting financial statements to make business decisions
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Q6. What is mean by profit and loss account
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Profit and loss account is a financial statement that shows a company's revenues, expenses, and net income or loss for a specific period.
• It is also known as an income statement.

• It is used to determine a company's profitability.

• The revenue section includes sales, interest income, and other income.

• The expense section includes cost of goods sold, salaries, rent, and other expenses.

• The net income or loss is calculated by s...read more
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Q7. What is meat by trading and profit and and loss account
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Trading and profit and loss account is a financial statement that shows the company's revenue, expenses, and net profit or loss for a specific period.
• Trading and profit and loss account is prepared to determine the profitability of a business.

• It includes all the revenue earned and expenses incurred during a specific period.

• The account starts with the opening stock, includes purchases, sales, direct expenses, indirect e...read more
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Q8. What is meant by trial balance
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Trial balance is a statement of all ledger account balances to ensure that the total debits equal the total credits.
• Trial balance is prepared at the end of an accounting period

• It lists all the ledger accounts and their balances

• The purpose is to ensure that the total debits equal the total credits

• If the trial balance does not balance, it indicates an error in the accounting records

• It is the first step in the preparation...read more
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Q9. What is meant by balance sheet
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A balance sheet is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time.
• It is a snapshot of a company's financial position

• Assets are listed on the left side and liabilities and equity on the right side

• The balance sheet equation is Assets = Liabilities + Equity

• It helps investors and creditors to assess the financial health of a company

• Examples of assets include cash, i...read more
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Q10. What is meant by journal entries
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Journal entries are records of financial transactions in chronological order.
• Journal entries are used to record financial transactions in a company's accounting system.

• They include the date, accounts affected, and amounts debited or credited.

• Journal entries are the first step in the accounting cycle and are used to create the general ledger.

• Examples of journal entries include recording a sale, paying a bill, or adjusti...read more
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Q11. What is meant by ledger
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A ledger is a book or computer program used to record financial transactions.
• A ledger is a record-keeping system for financial transactions.

• It contains all the accounts and transactions of a business.

• Ledgers can be physical books or computer programs.

• They are used to keep track of debits and credits, and to prepare financial statements.

• Examples of ledgers include general ledger, accounts payable ledger, and accounts re...read more
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Q12. What is meant by planning concerns
Ans. 
Planning concerns refer to the issues that need to be addressed while creating a plan.
• Planning concerns involve identifying the goals and objectives of the plan.

• It also involves determining the resources required to achieve those goals.

• Risk assessment and contingency planning are also important planning concerns.

• Examples of planning concerns include financial planning, project planning, and strategic planning.
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Q13. What is meant by triple colume cash book
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A triple column cash book is a financial record that contains three columns for cash transactions.
• It is used to record cash transactions in a business.

• The three columns are for cash received, cash paid, and balance.

• It helps in maintaining accurate records of cash transactions.

• It is commonly used by small businesses and individuals.

• Example: A business may use a triple column cash book to record daily sales, expenses, an...read more
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Q14. What is meat by double colume cash book
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A double column cash book is a bookkeeping record used to track both cash and bank transactions.
• It has two columns for recording transactions - one for cash and one for bank

• It helps in maintaining a record of all cash and bank transactions in a single book

• It facilitates easy reconciliation of bank statements with cash book

• Example: A company maintains a double column cash book to record all its cash and bank transaction...read more
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Q15. What is single colume cash book
Ans. 
Single column cash book is a cash book with only one column for recording cash transactions.
• It is a simple form of cash book used by small businesses.

• It records all cash receipts and payments in a single column.

• It does not differentiate between cash and bank transactions.

• It helps in maintaining a record of cash balance.

• Example: A stationary shop maintaining a single column cash book to record daily cash transactions.
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Q16. What is mean by petty cash
Ans. 
Petty cash refers to a small amount of cash kept on hand for minor expenses.
• Petty cash is used for small expenses that are not worth writing a check for.

• It is usually managed by a designated employee who is responsible for keeping track of the cash and receipts.

• The amount of petty cash varies depending on the needs of the organization.

• Examples of petty cash expenses include office supplies, postage, and minor repairs.

• P...read more
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Q17. What is meant by withdrawl cash
Ans. 
Withdrawal cash refers to the act of taking out money from a bank account or ATM.
• Withdrawal cash is the opposite of depositing cash into an account.

• It can be done at a bank branch or through an ATM.

• The amount of cash that can be withdrawn may be limited by the bank or ATM.

• Withdrawal cash can also refer to taking money out of an investment account or retirement plan.

• It is important to keep track of all cash withdrawals ...read more
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Q18. What is mean by communication
Ans. 
Communication is the exchange of information or ideas between individuals or groups.
• Communication involves both sending and receiving messages

• It can be verbal or nonverbal

• Effective communication requires clarity, empathy, and active listening

• Examples include conversations, emails, presentations, and body language
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Q19. What are the characteristics of communication
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Communication is the process of exchanging information, ideas, and emotions between individuals or groups.
• Communication involves both verbal and non-verbal methods.

• It requires a sender, a message, a medium, and a receiver.

• Effective communication requires clarity, conciseness, and understanding.

• Active listening and feedback are important components of communication.

• Communication can be formal or informal, written or ora...read more
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Q20. What is meat by conigent liability
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Contingent liability refers to a potential liability that may arise in the future depending on the outcome of a specific event.
• It is a possible obligation that may arise from past events or current conditions

• It is not a certain liability but a potential one

• Examples include pending lawsuits, warranties, and guarantees

• Contingent liabilities are disclosed in financial statements
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Q21. What is meant by provision for doubtful debts
Ans. 
Provision for doubtful debts is an accounting practice where a company sets aside funds to cover potential losses from customers who may not pay their debts.
• Provision for doubtful debts is a financial provision made by a company to account for potential bad debts.

• It is an estimate of the amount of money that a company expects to lose from customers who are unlikely to pay their debts.

• The provision is created by recordi...read more
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Q22. What is mean by bank reconciliation statement
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A bank reconciliation statement is a document that compares the bank statement with the company's cash records.
• It helps identify any discrepancies between the bank statement and the company's records.

• It ensures that all transactions are accurately recorded and accounted for.

• It includes adjustments for items such as outstanding checks, bank fees, and deposits in transit.

• The statement reconciles the ending balance on the...read more
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Q23. What is mean by bank account
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A bank account is a financial account maintained by a bank for a customer.
• A bank account allows customers to deposit and withdraw money

• It can be a savings account, checking account, or other types of accounts

• Bank accounts may earn interest on the balance

• Examples of banks include Chase, Wells Fargo, and Bank of America
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Q24. What is meant by cash account
Ans. 
Cash account is a record of all transactions involving cash inflows and outflows.
• Cash account is a part of the general ledger that records all cash transactions.

• It includes all cash receipts and payments made by the company.

• It helps in tracking the cash balance of the company.

• Examples of cash transactions include cash sales, cash purchases, and cash payments for expenses.

• Cash account is important for preparing financia...read more
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