The Solvent Extractors’ Association of India Interview Questions and Answers

Increase in product price by $10 affects income statement by increasing revenue and cost of goods sold.

• Revenue will increase by the amount of the price increase

• Cost of goods sold will also increase by the amount of the price increase

• Gross profit will remain the same

• Net income may increase or decrease depending on other factors such as operating expenses and taxes

Interest on bonds is reported as cash flow from operating activities in the cash flow statement.

• Interest paid on bonds is considered an operating expense and is included in the operating activities section of the cash flow statement.

• Interest received on bonds is considered an operating cash inflow and is also included in the operating activities section.

• The interest amount is reported net of any tax paid or received.

• The interest paid and received on bonds can be found in the ...read more

Sunk cost refers to the cost that has already been incurred and cannot be recovered.

• Sunk cost is a past cost that has no relevance to future decision-making.

• It is important to ignore sunk costs when making rational decisions.

• Examples of sunk costs include money spent on non-refundable tickets or investments that have already lost value.

Absorption costing includes all manufacturing costs, while variable costing only includes variable manufacturing costs.

• Absorption costing allocates fixed manufacturing costs to products, while variable costing treats fixed costs as period expenses.

• Absorption costing is required for external financial reporting, while variable costing is used for internal decision-making.

• Absorption costing may result in higher inventory values and net income compared to variable costing.

• Variab...read more

Product cost and period cost are two types of costs incurred by a business.

• Product cost is the cost of producing or purchasing a product, including direct materials, direct labor, and overhead costs.

• Period cost is the cost of operating a business that is not directly related to the production of a product, such as marketing, rent, and salaries of administrative staff.

• Product cost is included in the cost of goods sold, while period cost is expensed in the period it is incurred...read more

Contribution refers to the act of giving or providing something, usually in terms of effort, resources, or ideas, to a cause or project.

• Contribution involves actively participating and making a positive impact.

• It can be in the form of sharing knowledge, skills, or expertise.

• Contributions can be financial, material, or time-based.

• Examples of contribution include volunteering for a charity, donating money to a cause, or offering assistance to someone in need.

• Contributions can a...read more