Pierian Services Interview Questions, Process, and Tips

The golden rule of accounting is to debit the receiver and credit the giver.

• Debit the receiver, credit the giver

• Assets = Liabilities + Equity

• Revenue increases equity, expenses decrease equity

• Helps maintain the balance in financial statements

The journal entry for a credit purchase involves crediting accounts payable and debiting the corresponding expense account.

• Credit the accounts payable account to reflect the increase in liability

• Debit the corresponding expense account to show the decrease in assets

• Example: Journal entry for a credit purchase of $500 of office supplies - Debit Office Supplies Expense $500, Credit Accounts Payable $500

Prepaid expenses are expenses paid in advance but not yet incurred. They are recorded as assets on the balance sheet until they are used up.

• Prepaid expenses are initially recorded as assets on the balance sheet

• As the expenses are incurred, they are gradually expensed on the income statement

• Adjust prepaid expenses account at the end of each accounting period to reflect the portion that has been used up

• Examples of prepai...read more

Cashflow statement shows the inflow and outflow of cash in a business over a specific period of time.

• Cashflow statement is divided into three main activities: operating, investing, and financing.

• Operating activities include cash received from sales, payments to suppliers, and salaries paid to employees.

• Investing activities include cash spent on purchasing assets like equipment or investments like stocks.

• Financing activ...read more

The entry for the sale of a fixed asset involves recording the proceeds received and removing the asset from the balance sheet.

• Debit the Cash or Bank account for the amount received from the sale

• Credit the Fixed Asset account for the original cost of the asset

• Credit the Accumulated Depreciation account for the total depreciation accumulated on the asset

• Any difference between the sale proceeds and the net book value of ...read more

Sales provision entry is a journal entry made to account for potential future losses on sales.

• Sales provision is a liability account on the balance sheet.

• It is created when there is a likelihood of returns, discounts, or warranty claims on sales already made.

• The entry involves debiting the provision for sales account and crediting the relevant expense account (e.g. provision for sales returns).