40+ Finance Executive Interview Questions and Answers for Freshers

The journal entry for consultancy services instead of purchases

• Debit the Consultancy Expense account

• Credit the Accounts Payable or Cash account

• If the consultancy service is prepaid, debit the Prepaid Consultancy Expense account

• If the consultancy service is received but not yet paid, credit the Accrued Consultancy Expense account

Pvt. ltd, public, LLP, NPA, GST are different types of companies and taxes in India.

• Pvt. ltd company is a privately held company with limited liability.

• Public company is a company whose shares are traded publicly on stock exchanges.

• LLP stands for Limited Liability Partnership, which is a partnership in which partners have limited liability.

• NPA stands for Non-Performing Assets, which are loans that are not being repaid by borrowers.

• GST stands for Goods and Services Tax, which ...read more

Vendor code opening requires specific documents to ensure compliance and proper record-keeping.

• Vendor Registration Form: A completed form with vendor details.

• Tax Identification Number (TIN): Essential for tax purposes.

• Bank Account Details: To facilitate payments, including account number and bank name.

• Business License: Proof of legal operation, such as a business license or registration.

• W-9 Form (for U.S. vendors): Required for tax reporting purposes.

PO-based invoice processing uses purchase orders for payments, while non-PO invoicing does not require them.

• PO-based invoicing requires a purchase order (PO) to be created before goods/services are received.

• Example: A company orders office supplies and receives an invoice that matches the PO.

• Non-PO invoicing occurs when no PO is issued, often for services or one-time purchases.

• Example: A consultant submits an invoice for services rendered without a prior PO.

• PO-based processin...read more

The rate of depreciation to be deducted depends on the asset's useful life and the chosen depreciation method.

• The rate of depreciation is determined by dividing the cost of the asset by its useful life.

• Different depreciation methods, such as straight-line, declining balance, or units of production, may result in different rates of depreciation.

• For example, if a company purchases a machine for $10,000 with a useful life of 5 years, the annual depreciation rate would be $2,000 ...read more

As a Finance Executive, I manage financial planning, analysis, and reporting to support strategic decision-making.

• Conduct financial analysis to identify trends and variances, such as analyzing quarterly revenue growth.

• Prepare and present financial reports to senior management, ensuring clarity and actionable insights.

• Develop and manage budgets, ensuring alignment with organizational goals, like reducing operational costs by 10%.

• Collaborate with cross-functional teams to suppo...read more

The Accounts Receivables process involves managing and collecting payments owed to a business by its customers.

• 1. Invoice Generation: Businesses issue invoices to customers for goods/services provided. Example: A software company sends an invoice after delivering a product.

• 2. Payment Terms: Clear terms are set, such as net 30 days, indicating when payment is due. Example: A retailer specifies payment is due within 30 days of invoice date.

• 3. Payment Collection: Follow-up on ou...read more

Motherson is a global automotive supplier with a focus on electrical distribution systems, automotive rearview mirrors, and polymer processing.

• Founded in 1975 in India

• Operates in 41 countries

• Employs over 135,000 people

• Supplies to major automotive companies such as BMW, Ford, and Volkswagen

• Acquired PKC Group, a Finnish wiring harness manufacturer, in 2017

The journal entry for purchases involves debiting the Purchases account and crediting the Accounts Payable or Cash account.

• Debit the Purchases account to record the cost of goods purchased

• Credit the Accounts Payable account if the purchase is made on credit

• Credit the Cash account if the purchase is made in cash

• If applicable, include additional accounts such as Sales Tax Payable or Discounts

• Example: Debit Purchases $10,000, Credit Accounts Payable $10,000

Analyzing financial statements involves evaluating a company's financial health through various metrics and ratios.

• 1. Gather financial statements: Collect the balance sheet, income statement, and cash flow statement.

• 2. Perform ratio analysis: Calculate key ratios like liquidity (current ratio), profitability (net profit margin), and solvency (debt-to-equity).

• 3. Trend analysis: Compare financial data over multiple periods to identify trends, such as revenue growth or expense m...read more

A Fixed Asset Register (FAR) is a comprehensive record of a company's fixed assets, detailing their acquisition, valuation, and depreciation.

• Tracks all fixed assets like machinery, buildings, and vehicles.

• Includes details such as purchase date, cost, and location.

• Helps in calculating depreciation for financial reporting.

• Facilitates asset management and compliance with regulations.

• Example: A company may have a FAR listing its office buildings and their respective values.

The Order to Cash Cycle is the process from receiving an order to collecting payment, crucial for cash flow management.

• 1. Order Placement: Customer places an order, e.g., a retailer orders products from a supplier.

• 2. Order Processing: The order is confirmed and processed in the system, ensuring inventory availability.

• 3. Order Fulfillment: Products are picked, packed, and shipped to the customer.

• 4. Invoicing: An invoice is generated and sent to the customer for payment.

• 5. Paym...read more

Depreciation refers to the decrease in the value of an asset over time due to wear and tear, obsolescence, or other factors.

• Depreciation is a non-cash expense that is recorded on the income statement.

• It is used to allocate the cost of an asset over its useful life.

• There are various methods of calculating depreciation, such as straight-line, declining balance, and sum-of-the-years'-digits.

• Depreciation is important for financial reporting and tax purposes.

• For example, a company...read more

Our company has experienced steady growth over the past few years.

• We have consistently increased our revenue year over year.

• We have expanded our customer base and entered new markets.

• We have successfully launched new products and services.

• We have made strategic acquisitions to enhance our capabilities.

• We have improved operational efficiency and cost management.

• We have attracted top talent and built a strong team.

• We have gained recognition and industry awards for our performan...read more

I expect a competitive salary that reflects my skills, experience, and the industry standards for this role.

• Research industry standards: For example, similar roles in the finance sector typically offer salaries ranging from $80,000 to $120,000.

• Consider my experience: With over 5 years in finance, I believe a salary towards the higher end of the range is justified.

• Factor in location: Salaries can vary significantly based on the cost of living in different cities, such as New Y...read more

Vendor master management involves maintaining accurate and up-to-date records of all vendors for efficient procurement and payment processes.

• Centralizes vendor information for easy access and management.

• Ensures compliance with regulatory requirements, such as tax identification.

• Facilitates efficient procurement processes by streamlining vendor selection.

• Example: Regularly updating vendor contact details to avoid payment delays.

• Helps in assessing vendor performance through his...read more

T-codes for P2P (Procure-to-Pay) and O2C (Order-to-Cash) processes streamline financial transactions in SAP.

• P2P T-codes include ME21N (Create Purchase Order) and MIRO (Invoice Verification).

• O2C T-codes include VA01 (Create Sales Order) and VF01 (Create Billing Document).

• ME51N is used for creating Purchase Requisitions in the P2P process.

• For O2C, VA02 allows for the modification of existing Sales Orders.

GST stands for Goods and Services Tax. It is a comprehensive indirect tax levied on the supply of goods and services.

• GST is a single tax that replaced multiple indirect taxes in India.

• It was implemented on July 1, 2017, with the aim of simplifying the tax structure and eliminating cascading effects.

• GST is levied at every stage of the supply chain, from the manufacturer to the consumer.

• It has different tax rates for different goods and services, such as 0%, 5%, 12%, 18%, and 2...read more

The limit for 194C is Rs. 30,000 for a single payment and Rs. 1,00,000 in aggregate during a financial year.

• The limit for 194C is applicable for payments made to contractors and sub-contractors for carrying out any work.

• If the payment to a single contractor or sub-contractor exceeds Rs. 30,000 in a single transaction, TDS (Tax Deducted at Source) needs to be deducted at the rate of 1%.

• If the total payments made to a contractor or sub-contractor exceed Rs. 1,00,000 in a financ...read more

The rate for 194C is 1% for payments made to contractors or sub-contractors for carrying out any work.

• The rate for 194C is applicable for payments made to contractors or sub-contractors for carrying out any work.

• The rate is 1% of the total payment amount.

• This provision is under the Indian Income Tax Act.

A sales order is a document confirming a customer's request to purchase goods or services from a seller.

• It includes details like product type, quantity, price, and delivery date.

• Sales orders are generated after a customer places an order but before the goods are shipped.

• They help in tracking inventory and managing customer relationships.

• For example, a sales order might be created when a retailer orders 100 units of a product from a manufacturer.

Financial statements are formal records of the financial activities and position of a business, person, or entity.

• Types of financial statements include the balance sheet, income statement, and cash flow statement.

• The balance sheet shows assets, liabilities, and equity at a specific point in time.

• The income statement summarizes revenues and expenses over a period, indicating profit or loss.

• The cash flow statement tracks the flow of cash in and out of the business, highlighting...read more

Temporary accounts track financial activity for a specific period and reset at the end of the accounting cycle.

• Temporary accounts include revenue, expense, and dividend accounts.

• They are closed at the end of each accounting period to prepare for the next.

• For example, a company's sales revenue account resets to zero at year-end.

• Expenses like rent or utilities are also temporary and reset after closing entries.

The entry with GST refers to the recording of transactions involving the Goods and Services Tax.

• GST is a value-added tax levied on the supply of goods and services in many countries.

• When recording an entry with GST, the tax amount is typically added to the cost of the goods or services.

• The entry should include the GST amount, the tax code, and the relevant accounts for recording the transaction.

• For example, if a company purchases goods for $100 with a GST rate of 10%, the ent...read more

The golden rules in finance are principles that guide financial decision-making and management.

• Spend less than you earn

• Diversify your investments

• Save for emergencies

• Avoid unnecessary debt

• Plan for retirement

• Monitor and manage your credit score

I left my first finance job to pursue better growth opportunities and align my career with my passion for financial analysis.

• I felt limited in my role and wanted to explore more challenging projects.

• The company culture didn't align with my values; I seek a collaborative environment.

• I wanted to specialize in financial analysis, which wasn't a focus in my previous job.

• I received an offer that provided better career advancement and learning opportunities.

VLOOKUP is a function in Excel used to search for a specific value in a table and return a corresponding value.

• VLOOKUP stands for Vertical Lookup

• It is used to search for a specific value in the first column of a table and return a corresponding value in the same row from a specified column

• It requires four arguments: lookup value, table array, column index number, and range lookup (exact match or approximate match)

• It is commonly used for tasks such as matching data from differ...read more