Aditya Birla Fashion and Retail Interview Questions and Answers

Bad debts are recorded as an expense in the income statement and as a reduction in accounts receivable in the balance sheet.

• Bad debts are debts that are unlikely to be collected from customers.

• The accounting procedure for bad debts involves estimating the amount of bad debts and recording them as an expense in the income statement.

• The allowance method is commonly used to estimate bad debts.

• Under the allowance method, a percentage of accounts receivable is estimated to be unco...read more

The three golden rules of accounting are the rules of debit and credit, which are: 1. Debit the receiver, credit the giver 2. Debit what comes in, credit what goes out 3. Debit expenses and losses, credit income and gains

• Debit the receiver, credit the giver - for example, when a company receives cash from a customer, the cash account is debited and the accounts receivable account is credited

• Debit what comes in, credit what goes out - for example, when a company purchases inve...read more

Deferred revenue is income received by a company in advance of earning it, resulting in a liability on the balance sheet.

• Deferred revenue represents a liability for the company until the goods or services are delivered to the customer.

• It is common in subscription-based businesses where customers pay upfront for services that will be provided over time.

• Once the revenue is earned, it is recognized on the income statement.

• Examples include magazine subscriptions, software license...read more

Accrual concept is a principle of recognizing revenue and expenses when they are incurred, regardless of when cash is exchanged.

• Revenue and expenses are recorded when they are earned or incurred, not when cash is received or paid.

• This concept ensures that financial statements accurately reflect the financial position of a company.

• For example, if a company provides services in December but doesn't receive payment until January, the revenue is still recognized in December under...read more

The quick ratio is a financial metric used to measure a company's ability to meet its short-term obligations with its most liquid assets.

• Quick ratio is calculated by dividing quick assets (cash, marketable securities, accounts receivable) by current liabilities.

• A quick ratio of 1 or higher indicates that a company has enough liquid assets to cover its short-term liabilities.

• A quick ratio below 1 may suggest that a company may struggle to meet its short-term obligations.

• Quick ...read more

Depreciation is the allocation of the cost of an asset over its useful life for tax and accounting purposes.

• Depreciation is used to spread out the cost of an asset over its useful life

• Different methods of depreciation include straight-line, double declining balance, and units of production

• Depreciation expense is recorded on the income statement and accumulated depreciation is shown on the balance sheet

• Depreciation is a non-cash expense that reduces the value of an asset over ...read more

The golden rules of accounting are basic principles that guide the process of recording financial transactions.

• The golden rule of accounting is that for every debit entry, there must be an equal credit entry.

• There are three types of accounts: real, personal, and nominal. The golden rules differ for each type of account.

• For real accounts, the golden rule is: Debit what comes in, credit what goes out.

• For personal accounts, the golden rule is: Debit the receiver, credit the give...read more