100+ Financial Associate Interview Questions and Answers

Journal entry for cash sales involves debiting the cash account and crediting the sales revenue account.

• Debit the cash account to reflect the increase in cash due to the sales

• Credit the sales revenue account to record the revenue generated from the sales

• The journal entry would typically be: Cash (debit) and Sales Revenue (credit)

The journal entry for provision of bad debts is a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts.

• Bad Debt Expense is an expense account that represents the amount of uncollectible accounts receivable.

• Allowance for Doubtful Accounts is a contra-asset account that reduces the balance of accounts receivable to its net realizable value.

• The provision for bad debts is an estimate of the amount of accounts receivable that are expected to be uncollectible.

• E...read more

Journal entry for bad debts

• Debit the bad debt expense account

• Credit the accounts receivable account for the amount of the bad debt

• If the bad debt has already been written off, credit the allowance for doubtful accounts account instead of accounts receivable

• Example: Debit Bad Debt Expense for $500, Credit Accounts Receivable for $500

Prudence concept is the principle of exercising caution and good judgment in decision-making.

• It involves taking a conservative approach to financial management

• It requires considering potential risks and uncertainties before making decisions

• It is important for ensuring the long-term financial stability of an organization

• For example, a company may choose to hold onto excess cash reserves rather than investing them in risky ventures

The first thing to consider while starting statutory audit is understanding the client's business and industry.

• Understand the client's business and industry

• Identify the key risks and controls

• Assess the materiality of the financial statements

• Plan the audit approach and procedures

• Consider any regulatory requirements or changes

• Review prior year's audit work

• Communicate with the client and their management team

The Russia war has negatively impacted the IT business due to economic sanctions and decreased foreign investment.

• Economic sanctions have limited access to technology and equipment needed for IT businesses

• Decreased foreign investment has led to a lack of funding for IT startups and projects

• The war has also disrupted supply chains and caused instability in the market

• Cybersecurity concerns have increased due to potential hacking and data breaches during the conflict

I rate myself highly on data analysis and business intelligence skills.

• I have a strong background in data analysis and have successfully completed several projects that required in-depth analysis.

• I am proficient in using various data analysis tools and software, such as Excel, SQL, and Tableau.

• I have a solid understanding of statistical analysis and can effectively interpret and present data-driven insights.

• I have experience in developing and implementing business intelligenc...read more

Journal entries for intercompany transactions are used to record financial transactions between two entities within the same company.

• Intercompany transactions involve the transfer of goods or services between two entities within the same company.

• The journal entry for intercompany transactions involves recording the transaction in the books of both entities.

• The debit and credit accounts used in the journal entry will depend on the nature of the transaction.

• For example, if Enti...read more

Strategy is a plan of action designed to achieve a long-term or overall aim.

• Strategy helps in setting clear goals and objectives for the company.

• It helps in identifying the strengths and weaknesses of the company and its competitors.

• It helps in making informed decisions and allocating resources effectively.

• It helps in adapting to changes in the market and staying ahead of the competition.

• Examples of successful strategies include Apple's focus on innovation and customer experi...read more

Charging depreciation in P&L helps in spreading the cost of an asset over its useful life, matching expenses with revenues.

• Depreciation helps in accurately reflecting the wear and tear of assets over time.

• It allows for the allocation of the cost of an asset over its useful life, rather than expensing it all at once.

• By charging depreciation, the profit and loss statement reflects the true cost of using the asset to generate revenue.

• It helps in providing a more accurate picture...read more

Financial budgeting, planning and analysis face challenges due to changing market conditions, data accuracy, and lack of communication.

• Market volatility can affect budgeting and planning

• Data accuracy is crucial for effective analysis

• Lack of communication between departments can lead to discrepancies

• Forecasting future trends can be difficult

• Unexpected expenses can disrupt budgeting plans

• Inflation and currency fluctuations can impact financial planning

• Difficulty in balancing sh...read more

Trial balance is a list of all the accounts in the general ledger with their debit or credit balances. Cash flow statement shows the inflow and outflow of cash. EBITDA is a measure of a company's operating performance.

• Trial balance is used to ensure that the total of all debits equals the total of all credits.

• Cash flow statement shows the sources and uses of cash during a specific period of time.

• EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization...read more

Working capital is the difference between current assets and current liabilities on a balance sheet. Depreciation is the allocation of the cost of an asset over its useful life.

• Working capital is calculated as current assets minus current liabilities.

• Balance sheet is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time.

• Depreciation is the reduction in value of an asset over time, typically recorded as an expense on the incom...read more

P2P cycle refers to the procure-to-pay process in which goods or services are ordered, received, and paid for. A P.O. (purchase order) is a document issued by a buyer to a seller outlining the details of a purchase transaction.

• P2P cycle involves requisitioning, purchasing, receiving, and paying for goods or services

• Purchase Order (P.O.) is a document issued by a buyer to a seller specifying the details of the purchase, such as quantity, price, and terms

• P.O. helps in tracking ...read more

Basic of accounting is to record financial transactions and prepare financial statements.

• Accounting is the process of recording, classifying, and summarizing financial transactions.

• The basic accounting equation is Assets = Liabilities + Equity.

• Journal entries of GST and TDS are recorded to account for taxes paid and collected.

• For example, a journal entry for GST paid would be Debit GST Paid and Credit Bank Account.

• Similarly, a journal entry for TDS collected would be Debit TD...read more

Revenue recognition for cars sold with insurance and maintenance services.

• Revenue should be recognized separately for the car sale, insurance, and maintenance services.

• If the insurance and maintenance services are bundled with the car sale, revenue should be allocated based on their relative standalone selling prices.

• If the insurance and maintenance services are sold separately, revenue should be recognized when the services are provided.

• The revenue recognition method should ...read more

Journal entries are records of financial transactions that are recorded in a company's general ledger.

• Debit and credit accounts are identified and recorded

• Each entry must have a corresponding debit and credit entry

• Entries must be recorded in chronological order

• Examples include recording sales revenue, expenses, and depreciation

• Journal entries are used to create financial statements

Investment decisions depend on metrics like ROI, risk assessment, market trends, and financial ratios.

• Return on Investment (ROI)

• Risk assessment

• Market trends

• Financial ratios

Financial activities involve managing money and investments, while commercial activities involve buying and selling goods and services.

• Financial activities include budgeting, investing, accounting, and financial reporting

• Commercial activities include marketing, sales, procurement, and supply chain management

• Examples of financial activities include managing a company's cash flow, investing in stocks or bonds, and creating financial statements

• Examples of commercial activities i...read more

GL coding is a system of assigning codes to financial transactions. P2P cycle refers to the process of procuring goods and services. Journal entries are records of financial transactions.

• GL coding involves assigning codes to transactions for easy tracking and analysis

• P2P cycle includes steps like requisition, purchase order, receipt of goods, and payment

• Journal entries are used to record financial transactions in the general ledger

• GL coding and journal entries are important f...read more

Accounting ensures accurate financial reporting and compliance, aiding decision-making and resource management.

• Tracks financial transactions to provide a clear picture of a company's financial health.

• Facilitates budgeting and forecasting by analyzing past financial data.

• Ensures compliance with laws and regulations through accurate record-keeping.

• Examples of journal entries include: 1) Debit Cash, Credit Sales Revenue for cash sales. 2) Debit Rent Expense, Credit Cash for rent...read more

I rate myself 8 on analytical skills, 7 on communication, 9 on attention to detail, and 6 on teamwork.

• Analytical skills - 8: I am proficient in analyzing financial data and making strategic recommendations.

• Communication - 7: I can effectively communicate complex financial information to clients and team members.

• Attention to detail - 9: I am meticulous in reviewing financial documents and ensuring accuracy.

• Teamwork - 6: While I work well in a team, I prefer independent tasks t...read more

Transportation of goods can face problems such as delays, damages, theft, and regulatory issues.

• Delays due to traffic, weather, or mechanical issues

• Damages caused by improper handling or packaging

• Theft by employees or external parties

• Regulatory issues such as customs clearance or documentation

• Capacity constraints or lack of available transportation options

A derivative is a financial contract whose value is based on the performance of an underlying asset.

• Derivatives are used for hedging or speculation.

• Types of derivatives include futures, options, swaps, and forwards.

• Futures contracts involve buying or selling an asset at a predetermined price and date.

• Options contracts give the holder the right, but not the obligation, to buy or sell an asset at a predetermined price and date.

• Swaps involve exchanging cash flows based on differ...read more

A share represents ownership in a company and is bought and sold on the stock market.

• A share is a unit of ownership in a company, representing a claim on part of the company's assets and earnings.

• Shares are bought and sold on the stock market, where investors can trade them with each other.

• Share prices fluctuate based on the company's performance, market conditions, and investor sentiment.

• Investors buy shares in the hope that the company will grow and increase in value, allow...read more

The accounting entry for fixed deposits involves recording the initial deposit and any subsequent interest earned.

• Fixed deposits are recorded as an asset on the balance sheet.

• The initial deposit is debited to the fixed deposit account.

• Any interest earned is credited to the fixed deposit account.

• At maturity, the fixed deposit is either renewed or the funds are transferred back to the bank account.

• If the fixed deposit is renewed, the interest earned is added to the principal am...read more

Market volatility can be understood by analyzing historical data, economic indicators, and market sentiment.

• Monitor historical price movements and trading volumes

• Track economic indicators such as GDP growth, inflation rates, and interest rates

• Pay attention to market sentiment and news events that can impact investor confidence

• Use technical analysis tools like Bollinger Bands or Moving Averages to identify potential volatility

• Consider external factors like geopolitical events ...read more