30+ Interview Questions and Answers

During my articleship, I faced an audit and accounting issue related to revenue recognition.

• The issue was that a client had recognized revenue from a long-term contract upfront, which was not in accordance with the accounting standards.

• I resolved the issue by thoroughly reviewing the contract terms and conditions, and comparing them with the revenue recognition criteria specified in the accounting standards.

• I also consulted with senior auditors and accounting experts to ensur...read more

I will recognize debtors aging by analyzing the accounts receivable aging report and identifying patterns of late payments. Suspected bad debts can be identified by reviewing past payment history and communication with customers.

• Reviewing accounts receivable aging report regularly

• Identifying patterns of late payments and following up with customers

• Analyzing past payment history to identify potential bad debts

• Communicating with customers to address any concerns or issues regar...read more

Financial statements provide a snapshot of a company's financial health, including assets, liabilities, and equity. Trial balances ensure accuracy of financial records.

• Financial statements serve to provide stakeholders with an overview of a company's financial performance and position.

• Components of financial statements include balance sheet, income statement, cash flow statement, and statement of changes in equity.

• Balance sheet shows assets, liabilities, and equity at a speci...read more

An associated enterprise is a company that has a significant influence over another company's operations.

• An associated enterprise is determined by the level of control or influence it has over another company.

• There are six criteria to determine if a company is an associated enterprise.

• These criteria include ownership, control, management, financial transactions, technology, and business operations.

• For example, if Company A owns more than 50% of Company B, then Company B is co...read more

Transfer pricing is the practice of determining the value of goods or services exchanged between related entities. Arm's length price is the price at which unrelated parties would transact.

• Transfer pricing is used by multinational companies to allocate profits and taxes between different countries.

• It involves setting prices for goods and services that are transferred between different subsidiaries of the same company.

• The arm's length principle is used to ensure that the price...read more

Depreciation is the allocation of the cost of a tangible asset over its useful life. Land does not depreciate.

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

• It is calculated using methods such as straight-line, double declining balance, or units of production.

• Land is not depreciated because it is considered to have an indefinite useful life.

• Journal entries for depreciation involve debiting Depreciation Expense and crediting Accumu...read more

GST can lead to cheaper goods through the elimination of cascading taxes and increased efficiency in the supply chain.

• GST eliminates the cascading effect of taxes, where taxes are levied on top of taxes, resulting in higher prices.

• Under GST, input tax credits can be claimed, allowing businesses to reduce their tax liability and pass on the benefits to consumers.

• GST simplifies the tax structure and reduces compliance costs, which can lead to cost savings for businesses and ult...read more

Cross-site scripting (XSS) is a type of security vulnerability that allows attackers to inject malicious code into web pages viewed by other users.

• XSS attacks occur when an attacker injects malicious code into a web page viewed by other users

• Attackers can use XSS to steal sensitive information, such as login credentials or personal data

• XSS can be prevented by properly validating and sanitizing user input on the server side

• There are three types of XSS attacks: stored, reflecte...read more

Caro 2020 is more advanced and feature-rich compared to Caro 2016.

• Caro 2020 has better user interface and user experience.

• Caro 2020 has more advanced features like AI-powered recommendations.

• Caro 2020 has better integration with third-party tools.

• Caro 2020 has improved security features compared to Caro 2016.

Audit is a systematic examination of financial records, statements, or operations to ensure accuracy and compliance with laws and regulations.

• Audit involves reviewing financial records, statements, or operations

• It aims to ensure accuracy, compliance with laws and regulations, and identify any discrepancies or fraud

• Auditors gather evidence, analyze data, and report findings to stakeholders

• Types of audits include financial audit, operational audit, compliance audit, and forensi...read more

Ratios are used to analyze financial performance and efficiency of a company.

• Profit Margin: Net income divided by total revenue, shows how much profit a company makes for every dollar of sales.

• Current Ratio: Current assets divided by current liabilities, measures a company's ability to pay its short-term obligations.

• Debt-to-Equity Ratio: Total debt divided by total equity, indicates the proportion of debt used to finance a company's assets.

• Return on Investment (ROI): Net prof...read more

Stat audit helps ensure accuracy, compliance, and reliability of financial statements.

• Ensures accuracy of financial statements by verifying data and calculations

• Helps identify errors, fraud, or inconsistencies in financial records

• Ensures compliance with laws, regulations, and accounting standards

• Provides assurance to stakeholders about the reliability of financial information

Operational efficiency refers to the ability of an organization to optimize its processes and resources to achieve maximum output with minimum input.

• Operational efficiency can be improved by streamlining processes, reducing waste, and increasing productivity.

• Examples of operational efficiency measures include lean manufacturing, Six Sigma, and Total Quality Management.

• Technology can also play a key role in improving operational efficiency, such as automation and data analytic...read more

The purpose of audit is to provide an independent assessment of an organization's financial statements or processes to ensure accuracy, compliance, and efficiency.

• Ensuring accuracy of financial statements

• Evaluating compliance with laws and regulations

• Identifying areas for improvement in processes and controls

• Providing assurance to stakeholders

• Detecting and preventing fraud or errors

• Enhancing transparency and accountability

• Examples: financial audit, operational audit, complian...read more

JE Testing involves verifying the accuracy of journal entries in accounting.

• Reviewing supporting documentation for journal entries

• Checking mathematical accuracy of journal entries

• Ensuring proper classification of journal entries

• Testing for compliance with accounting standards

• Performing substantive testing on high-risk journal entries

My favorite accounting and auditing standard is the Generally Accepted Accounting Principles (GAAP).

• GAAP provides a common set of rules and guidelines for financial reporting, ensuring consistency and comparability.

• It is widely used in the United States and helps investors and stakeholders make informed decisions.

• GAAP covers topics such as revenue recognition, depreciation, and financial statement presentation.

• Another popular standard is the International Financial Reporting ...read more

JE Testing procedures involve conducting tests to ensure the accuracy and reliability of financial statements.

• JE testing procedures involve verifying the accuracy of journal entries recorded in the financial statements.

• Testing procedures may include reviewing supporting documentation for journal entries.

• Analyzing the reasonableness of journal entries based on historical data and industry standards.

• Ensuring that journal entries are properly classified and recorded in the corre...read more

Yes, I am familiar with US tax laws.

• I have a strong understanding of federal tax laws and regulations.

• I am knowledgeable about tax codes and guidelines.

• I stay updated on any changes or updates to tax laws.

• I have experience in applying tax laws to various scenarios.

• I am familiar with tax deductions, credits, and exemptions.

• I can effectively communicate and explain tax laws to clients or colleagues.

A bank reconciliation statement is a document that compares the balance in a company's bank account with the balance shown on the bank statement.

• It helps identify any discrepancies between the two balances, such as outstanding checks or deposits in transit.

• The statement typically includes adjustments for items like bank fees, interest earned, and errors.

• The goal of a bank reconciliation statement is to ensure the accuracy of the company's financial records and bank transactio...read more

Tax liability for income of 1400000 needs to be calculated.

• Determine the tax bracket based on the income level

• Calculate the tax amount based on the tax rates for each bracket

• Consider any deductions or credits that may apply

The golden rule of accounting states that debit what comes in and credit what goes out.

• Debit what comes in and credit what goes out

• Assets = Liabilities + Equity

• Helps maintain the balance in financial statements

The turnover limit for GST audit is Rs. 2 crores.

• The turnover limit for GST audit is Rs. 2 crores for businesses with a turnover exceeding this limit.

• GST audit is mandatory for businesses with a turnover exceeding Rs. 2 crores in a financial year.

• Businesses with turnover below Rs. 2 crores are not required to undergo GST audit.

SOC 1 focuses on controls relevant to financial reporting, while SOC 2 focuses on controls relevant to security, availability, processing integrity, confidentiality, and privacy.

• SOC 1 is specifically for service organizations that impact their clients' financial reporting, while SOC 2 is for service organizations that store customer data.

• SOC 1 reports are focused on controls relevant to financial reporting, while SOC 2 reports cover controls related to security, availability,...read more

Yes, I am able to handle pressure. I thrive in high-pressure situations and always deliver my best work.

• I have experience working on tight deadlines and managing multiple projects simultaneously

• I remain calm and focused under pressure, allowing me to make sound decisions

• An example of handling pressure was during a project deadline where I had to work long hours to ensure its completion

An audit statement is a formal declaration of the findings and conclusions of an audit process.

• An audit statement summarizes the results of an audit, including any discrepancies or areas of concern.

• It is typically issued by the auditor or auditing firm to the client or relevant stakeholders.

• The statement may include recommendations for improvement or corrective actions.

• Examples of audit statements include financial audit reports, compliance audit findings, and internal contro...read more

Risk assessment process involves identifying, analyzing, and evaluating potential risks to determine their impact and likelihood.

• Identify potential risks by examining internal and external factors

• Analyze the identified risks to understand their causes and potential consequences

• Evaluate the risks based on their impact and likelihood to prioritize them for mitigation

• Develop risk mitigation strategies to address the identified risks

• Monitor and review the effectiveness of the ris...read more

ISO 27001 audit process involves assessing an organization's information security management system.

• The audit process begins with planning and scoping, where the scope of the audit is defined.

• Next, the audit team conducts on-site visits to gather evidence and assess the organization's compliance with ISO 27001 standards.

• The audit team then reviews the evidence collected and prepares a report detailing any non-conformities found.

• Finally, the organization must address any non-c...read more

TDS sec 194j is a section of the Income Tax Act that deals with TDS on fees for professional or technical services.

• TDS sec 194j requires deduction of tax at source at the rate of 10% on fees for professional or technical services.

• The limit for TDS under sec 194j is Rs. 30,000 for a single payment or Rs. 1,00,000 in aggregate during the financial year.

• If the payment is made to an individual or HUF, the TDS rate is 10%. If the payment is made to any other entity, the TDS rate i...read more

Accounts Payable is the amount of money a company owes to its suppliers or vendors for goods or services purchased on credit.

• Accounts Payable is a liability on the company's balance sheet.

• It represents the short-term debt that a company owes to its creditors.

• Examples of Accounts Payable include invoices from suppliers for inventory purchases or services rendered.

• Accounts Payable is typically paid within a specified period, often 30, 60, or 90 days.

Cash flow statement is a financial statement that shows the inflows and outflows of cash in a business over a specific period of time.

• It provides insights into how well a company manages its cash position.

• Consists of three main sections: operating activities, investing activities, and financing activities.

• Helps investors and analysts assess the financial health and liquidity of a company.

• Example: Cash received from customers, cash paid for investments, cash received from loan...read more

Income heads in Indian taxation refer to different sources of income that are taxed separately.

• Income from salary

• Income from house property

• Income from business or profession

• Income from capital gains

• Income from other sources

Professional scepticism is the attitude of questioning and critically assessing information and evidence in order to form an independent and objective opinion.

• Professional scepticism involves maintaining a questioning mindset and not accepting information at face value.

• It requires auditors to critically evaluate evidence, assumptions, and conclusions.

• Auditors should be alert to potential biases, conflicts of interest, and inconsistencies in the information they are reviewing....read more

GSTR-2A is auto-populated with data from suppliers, while GSTR-2B is a static statement generated by the taxpayer.

• GSTR-2A is generated by the GST system based on the data uploaded by suppliers.

• GSTR-2B is a static statement generated by the taxpayer after considering amendments, credit notes, etc.

• Taxpayers can make changes to GSTR-2B before filing, but not to GSTR-2A.

• GSTR-2A helps in reconciliation of input tax credit, while GSTR-2B provides a snapshot of the input tax credit ...read more

RFP process involves issuing a request for proposals to potential vendors, evaluating their responses, and selecting the best proposal.

• Identify project requirements and create a detailed RFP document

• Distribute the RFP to potential vendors

• Receive and review proposals from vendors

• Evaluate proposals based on criteria such as cost, quality, and timeline

• Select the best proposal and negotiate terms with the vendor

SOC Reports are reports on controls at a service organization relevant to user entities' internal control over financial reporting.

• SOC reports are reports on controls at a service organization relevant to user entities' internal control over financial reporting.

• There are three types of SOC reports: SOC 1, SOC 2, and SOC 3.

• SOC 1 reports focus on controls relevant to financial reporting.

• SOC 2 reports focus on controls related to security, availability, processing integrity, con...read more

I have a Bachelor's degree in Marketing and a Master's degree in Business Administration.

• Bachelor's degree in Marketing provided me with a strong foundation in marketing principles and strategies.

• Master's degree in Business Administration equipped me with advanced knowledge in business management and leadership.

• I also completed various marketing courses and certifications to stay updated with the latest trends and techniques in the field.