Audit Analyst Interview Questions and Answers for Freshers

Profit and loss account, financial statement, and cash flow statement are all important financial documents used to track a company's financial performance.

• Profit and loss account shows a company's revenues, expenses, and net income or loss over a specific period of time.

• Financial statements provide a comprehensive overview of a company's financial health, including its assets, liabilities, and equity.

• Cash flow statement shows the inflow and outflow of cash in a company over ...read more

The cash flow statement has three main elements: operating activities, investing activities, and financing activities.

• Operating activities: cash inflows and outflows from the company's core business operations, such as sales and expenses.

• Investing activities: cash inflows and outflows from investments, such as buying or selling property, plant, and equipment.

• Financing activities: cash inflows and outflows from financing, such as issuing or repaying debt, or paying dividends t...read more

Bank Reconciliation Statement is a document that compares the bank statement with the company's records.

• It helps to identify any discrepancies between the two records.

• It ensures that all transactions are recorded accurately.

• It helps to detect any fraudulent activities.

• It is prepared at regular intervals, usually monthly.

• Example: If a company issues a check but it has not yet cleared the bank, it will be reflected in the company's records but not in the bank statement.

• Example:...read more

Current assets/liabilities are expected to be used/settled within a year, while non-current assets/liabilities have a longer life span.

• Current assets include cash, accounts receivable, inventory, and prepaid expenses.

• Current liabilities include accounts payable, short-term loans, and accrued expenses.

• Non-current assets include property, plant, and equipment, long-term investments, and intangible assets.

• Non-current liabilities include long-term loans, deferred tax liabilities,...read more

Working capital is calculated by subtracting current liabilities from current assets.

• Current assets include cash, accounts receivable, inventory, and short-term investments.

• Current liabilities include accounts payable, short-term loans, and accrued expenses.

• The formula for working capital is: Current Assets - Current Liabilities.

• A positive working capital indicates that a company has enough short-term assets to cover its short-term liabilities.

• A negative working capital indic...read more

Accounting is the process of recording, classifying, and summarizing financial transactions to provide information that is useful in making business decisions.

• Accounting involves keeping track of financial transactions such as sales, purchases, and payments

• It includes classifying these transactions into categories such as assets, liabilities, and equity

• The information is then summarized in financial statements such as balance sheets and income statements

• Examples of accounting...read more

Provision is an estimated liability while reserve is a part of profit set aside for future use.

• Provision is an estimated liability that a company sets aside to cover a known or potential future obligation.

• Reserve is a part of profit that a company sets aside for future use, such as for expansion or to cover unexpected expenses.

• Provisions are usually based on estimates and can be adjusted as more information becomes available.

• Reserves are not based on estimates and are set asi...read more