60+ Fund Accountant Interview Questions and Answers

Journal entry for prepaid rent paid at beginning and end of month affecting net worth.

• Debit prepaid rent account for the full amount paid at the beginning of the month

• Credit cash account for the same amount

• At the end of the month, debit rent expense account for the portion of rent used during the month

• Credit prepaid rent account for the same amount

• The entry at the end of the month affects the net worth as it reduces the prepaid rent asset and increases the rent expense

• Example...read more

The entry for share purchased today credited into demat on T+2 is a debit to the cash account and a credit to the demat account.

• Debit cash account

• Credit demat account

• Occurs on T+2

• Reflects purchase of shares

The share price has an impact on the issue of dividends as it affects the dividend yield and the amount of cash paid out to shareholders.

• Share price affects the dividend yield, which is calculated by dividing the annual dividend per share by the share price.

• A higher share price reduces the dividend yield, making the stock less attractive to income-seeking investors.

• Share price also affects the amount of cash paid out as dividends. A higher share price may result in a lower di...read more

The technical term for bond interest is coupon rate.

• Coupon rate is the fixed annual interest rate paid on a bond.

• It is expressed as a percentage of the bond's face value.

• For example, a bond with a face value of $1000 and a coupon rate of 5% will pay $50 in interest annually.

• Coupon payments are usually made semi-annually or quarterly.

Options give the right but not the obligation to buy or sell an asset at a predetermined price, while futures require the buyer or seller to fulfill the contract at a specific date and price.

• Options provide flexibility to the buyer as they can choose whether or not to exercise the option, while futures require the buyer or seller to fulfill the contract.

• Options have a premium that the buyer pays to the seller for the right to buy or sell the asset, while futures do not have a...read more

State Street Corporation is a leading financial services company known for its global presence and expertise in asset management and custody services.

• State Street Corporation is one of the largest custodian banks in the world, providing services to institutional investors and asset managers.

• The company has a strong global presence with offices in over 100 locations worldwide.

• State Street is known for its expertise in asset management, offering a wide range of investment solut...read more

Assets are resources owned by a company, while liabilities are obligations or debts. They have subcategories and formulas to determine their values.

• Assets are economic resources that provide future benefits to a company, such as cash, inventory, or property.

• Liabilities are obligations or debts that a company owes to external parties, such as loans or accounts payable.

• Subcategories of assets include current assets (e.g., cash, accounts receivable) and non-current assets (e.g.,...read more

Management fees and performance fees are charges levied by investment managers for managing funds and achieving certain performance benchmarks.

• Management fees are ongoing charges that cover the cost of managing the fund, including administrative expenses, research, and investment management.

• Performance fees are additional charges based on the fund's performance relative to a benchmark or a predetermined hurdle rate.

• Management fees are typically calculated as a percentage of t...read more

Retained earnings are the portion of a company's profits that are kept by the company instead of being distributed as dividends.

• Retained earnings are a measure of a company's financial health and its ability to reinvest in itself.

• They are calculated by subtracting dividends paid to shareholders from the company's net income.

• Retained earnings can be used for various purposes such as research and development, debt reduction, or expansion.

• If a company has negative retained earni...read more

Capstock refers to the total value of a company's outstanding shares of stock.

• Capstock is the market value of a company's equity capital.

• It represents the total value of all the company's shares of stock.

• Capstock can be calculated by multiplying the current market price per share by the total number of outstanding shares.

• It is an important metric for investors and analysts to assess the overall value of a company.

• Subscription refers to the process of purchasing new shares of ...read more

Accounting rules are guidelines and principles that govern the recording and reporting of financial transactions.

• Accounting rules ensure consistency and accuracy in financial reporting.

• They provide a framework for recording and classifying transactions.

• Modern accounting rules are often based on international standards, such as the International Financial Reporting Standards (IFRS) or the Generally Accepted Accounting Principles (GAAP) in the United States.

• Traditional accounti...read more

Mutual funds are open to all investors, while hedge funds are only open to accredited investors.

• Mutual funds are regulated by the SEC, while hedge funds are not.

• Mutual funds are more diversified, while hedge funds are more focused on specific strategies.

• Mutual funds have lower fees, while hedge funds have higher fees and require larger minimum investments.

• Mutual funds are required to disclose their holdings regularly, while hedge funds are not.

• Examples of mutual funds include...read more

Corporate action refers to any event initiated by a publicly traded company that impacts its shareholders.

• Corporate actions can include stock splits, dividends, mergers and acquisitions, rights issues, and spin-offs.

• Stock split: When a company divides its existing shares into multiple shares, e.g., 2-for-1 split.

• Dividends: Distribution of a portion of a company's earnings to its shareholders.

• Mergers and acquisitions: When two companies combine or one company acquires another....read more

GAV stands for Gross Asset Value, which represents the total value of all assets in a fund. NAV stands for Net Asset Value, which is the value of a fund's assets after deducting liabilities.

• GAV is the total value of all assets in a fund, including both realized and unrealized gains or losses.

• NAV is the value of a fund's assets after deducting liabilities, such as management fees, operating expenses, and accrued expenses.

• GAV is calculated by adding up the market value of all i...read more

Capstock can affect the NAV by impacting the valuation of the fund's investments.

• Capstock refers to the capitalization of a stock, which is the total value of a company's outstanding shares.

• If a fund holds capstocks that experience a significant increase or decrease in value, it can impact the Net Asset Value (NAV) of the fund.

• An increase in the value of capstocks held by a fund can lead to an increase in the NAV, as the overall value of the fund's investments rises.

• Conversel...read more

Yes, I have extensive knowledge of MS-Excel.

• I am proficient in using Excel for financial analysis and reporting.

• I have experience in creating complex financial models using Excel.

• I am skilled in using Excel functions such as VLOOKUP, SUMIF, and Pivot Tables.

• I have used Excel to prepare financial statements and reconcile accounts.

• I am comfortable working with large data sets in Excel and have experience in data analysis.

Yes, hedge funds operate in India.

• Hedge funds have been operating in India since the early 2000s.

• The Securities and Exchange Board of India (SEBI) regulates hedge funds in India.

• Some examples of hedge funds operating in India are AQR Capital Management, Bridgewater Associates, and DE Shaw.

• Hedge funds in India primarily invest in equities, fixed income, and derivatives.

Swaps, equities, bonds, MBS, RMBS, CMBS, ETFs, and valuations are all financial instruments used in investment management.

• Swaps are agreements between two parties to exchange cash flows based on a notional amount.

• Equities are ownership shares in a company.

• Bonds are debt securities issued by companies or governments.

• MBS, RMBS, and CMBS are types of mortgage-backed securities.

• ETFs are exchange-traded funds that track an index or a basket of assets.

• Valuations are the process of ...read more

Dividend is a portion of a company's profits paid to shareholders. Bonus is an additional payment to shareholders. Split is dividing existing shares into multiple shares. NAV is the value of a fund's assets minus liabilities.

• Dividend is a distribution of a portion of a company's profits to its shareholders

• Bonus is an additional payment made to shareholders, often as a reward for holding shares for a certain period of time

• Split is when a company divides its existing shares int...read more

DR and CR are abbreviations for debit and credit, which are used in accounting to record financial transactions. Ledger is a book that contains all the accounts, while subledger is a subsidiary ledger that provides more detailed information for specific accounts.

• DR stands for debit, which represents an increase in assets or a decrease in liabilities or equity.

• CR stands for credit, which represents a decrease in assets or an increase in liabilities or equity.

• Ledger is a book t...read more

Equity represents ownership in a company and can be affected by stock splits, dividends, right issues, and bonus issues.

• Equity represents ownership in a company, giving shareholders a claim on assets and earnings.

• Stock splits increase the number of shares outstanding while decreasing the share price proportionally.

• Dividends are payments made by a company to its shareholders from its profits.

• Right issues allow existing shareholders to purchase additional shares at a discounted...read more

Fund accounting is a specialized form of accounting used by organizations that manage funds or investments.

• It focuses on tracking and reporting the financial activities of specific funds or investment portfolios.

• It involves recording and reconciling transactions, calculating net asset values, and preparing financial statements.

• Fund accountants ensure compliance with regulatory requirements and provide accurate and timely financial information to stakeholders.

• Examples of organ...read more

Derivatives are financial instruments whose value is derived from an underlying asset or group of assets.

• Derivatives can be used for hedging, speculation, or arbitrage.

• Common types of derivatives include options, futures, forwards, and swaps.

• Options give the holder the right, but not the obligation, to buy or sell an asset at a specified price before a certain date.

• Futures are contracts to buy or sell an asset at a future date for a price agreed upon today.

• Forwards are simila...read more

Management fees are fees paid by investors to the fund manager for managing the fund's investments. Performance fees are fees paid based on the fund's performance.

• Management fees are typically calculated as a percentage of the fund's assets under management.

• Performance fees are usually calculated as a percentage of the fund's profits above a certain benchmark.

• Management fees are paid regardless of the fund's performance, while performance fees are contingent on the fund outpe...read more

Equity is ownership in a company, while a bond is a debt instrument issued by a company or government.

• Equity represents ownership in a company and gives shareholders the right to vote and receive dividends.

• Bonds are debt instruments where the issuer borrows money from investors and promises to repay the principal with interest.

• Equity holders have a higher risk and potential for higher returns compared to bondholders.

• Examples of equity include common stock, while examples of b...read more

ABS/MBS securities are financial instruments that represent a pool of underlying assets such as mortgages or loans.

• ABS stands for Asset-Backed Securities and MBS stands for Mortgage-Backed Securities.

• These securities are created by pooling together similar types of assets and then selling them to investors.

• Investors receive payments based on the cash flows generated by the underlying assets.

• ABS/MBS securities played a significant role in the 2008 financial crisis.

• Examples of ...read more

A fund accountant is responsible for managing financial records and reporting for investment funds.

• Maintains accurate financial records for investment funds

• Prepares financial statements and reports for investors

• Calculates and distributes profits and losses to investors

• Monitors compliance with regulatory requirements

• May work for hedge funds, private equity firms, or mutual fund companies

NAV stands for Net Asset Value, which is the value of a fund's assets minus its liabilities.

• NAV is calculated by dividing the total value of a fund's assets by the number of outstanding shares.

• It is used to determine the price at which investors can buy or sell shares in the fund.

• NAV is calculated daily and is a key metric for evaluating the performance of a fund.

• For example, if a fund has $100 million in assets and 10 million outstanding shares, the NAV would be $10 per shar...read more

Fund accounting is a specialized accounting system used by investment companies to track and manage their portfolio of investments.

• It involves tracking the performance of individual investments and calculating the net asset value (NAV) of the fund.

• It also involves ensuring compliance with regulatory requirements and preparing financial statements for investors.

• Examples of investment companies that use fund accounting include mutual funds, hedge funds, and private equity firms...read more

Mutual funds are regulated investment vehicles that pool money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. Hedge funds are private investment partnerships that are not subject to the same regulations as mutual funds and are typically only available to accredited investors.

• Mutual funds are regulated investment vehicles that are open to all investors and are subject to strict regulations.

• Hedge funds are private investment partn...read more

Fund accounting is a specialized accounting system used by non-profit organizations and government agencies to track and manage funds.

• It involves tracking and reporting on the use of funds for specific purposes

• It is used by organizations such as charities, universities, and government agencies

• It requires strict adherence to accounting standards and regulations

• Examples include tracking donations for a specific project or program, or managing government grants for a specific pu...read more

Yes, dividends impact NAV (Net Asset Value).

• Dividends are a distribution of a portion of a company's earnings to its shareholders.

• When a company pays out dividends, it reduces its retained earnings and cash balance.

• As a result, the NAV of a fund that holds shares of the company will decrease.

• The impact of dividends on NAV depends on the size of the dividend and the fund's holdings.

• For example, if a fund holds a significant amount of shares in a company that pays a large divid...read more

Mutual funds are open-end investment vehicles that pool money from multiple investors to invest in a diversified portfolio of securities. Hedge funds are private investment partnerships that use various strategies to generate high returns for a select group of investors.

• Mutual funds are regulated by the Securities and Exchange Commission (SEC) and are available to the general public.

• Hedge funds are typically only available to accredited investors and have fewer regulatory res...read more

Golden rules of accounting are basic principles that guide the accounting process.

• The first golden rule is the rule of debit and credit.

• The second golden rule is the rule of assets and liabilities.

• The third golden rule is the rule of income and expenses.

• These rules help ensure accuracy and consistency in financial reporting.

• For example, the rule of debit and credit states that for every debit entry, there must be a corresponding credit entry.

• Similarly, the rule of assets and ...read more

Financial products are instruments or contracts that represent a financial interest, while financial markets are platforms where these products are traded.

• Financial products are instruments or contracts that allow individuals or organizations to invest, save, or manage risk.

• Examples of financial products include stocks, bonds, mutual funds, derivatives, insurance policies, and loans.

• Financial markets are platforms where buyers and sellers come together to trade financial prod...read more

Expense accounting entries involve debiting the expense account and crediting the corresponding liability or cash account.

• Debit the expense account to increase expenses

• Credit the corresponding liability account if the expense is not paid immediately

• Credit the cash account if the expense is paid immediately

• Example: Debit Rent Expense, Credit Accounts Payable for rent not yet paid

• Example: Debit Office Supplies Expense, Credit Cash for office supplies purchased

Fund accounting is a specialized form of accounting used by investment companies to track and report on the financial activities of investment funds.

• Fund accounting is used by investment companies to manage the financial activities of investment funds.

• It involves tracking and reporting on the income, expenses, and investments of the fund.

• Fund accountants ensure compliance with regulatory requirements and provide accurate financial statements to investors.

• They calculate the ne...read more

Corporate actions refer to events initiated by a publicly traded company that can impact its shareholders and the value of its securities.

• Corporate actions include events such as stock splits, dividends, mergers, acquisitions, rights issues, and spin-offs.

• These actions can affect the ownership structure, share price, and overall value of a company.

• For example, a stock split may increase the number of shares outstanding while reducing the price per share, making it more afford...read more

Management fee is calculated as a percentage of assets under management.

• Management fee is typically calculated as a percentage of the total assets under management.

• The percentage can vary depending on the agreement between the fund manager and the client.

• For example, if the management fee is 2% and the total assets under management are $1 million, the fee would be $20,000.

ABS stands for Asset-Backed Securities and MBS stands for Mortgage-Backed Securities.

• ABS are securities backed by a pool of assets such as auto loans, credit card debt, or student loans.

• MBS are securities backed by a pool of mortgages, where the interest and principal payments from the mortgages are passed through to the investors.

• Both ABS and MBS are types of structured finance products that allow investors to invest in a diversified pool of assets.

Master-feeder structure is a common investment structure where multiple feeder funds pool their assets into a single master fund.

• Master fund is the main fund that receives investments from feeder funds.

• Feeder funds are separate funds that pool capital from investors and then invest in the master fund.

• Allows for economies of scale and efficient management of investments.

• Commonly used in hedge funds and private equity funds.

• Example: A hedge fund may have multiple feeder funds f...read more

A hedge fund is a type of investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets.

• Hedge funds are typically only available to high net worth individuals and institutional investors.

• They use a variety of investment strategies, including leveraging and short selling, to generate high returns.

• Hedge funds are less regulated than traditional investment funds and are not required to disclose their holdings to the ...read more

An option is a financial derivative that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a specific time period.

• Options can be used for hedging, speculation, or generating income.

• There are two types of options: call options (the right to buy) and put options (the right to sell).

• The price at which the underlying asset can be bought or sold is called the strike price.

• The expiration date is the last day on which ...read more

NAV stands for Net Asset Value and it is calculated by subtracting the total liabilities from the total assets of a fund.

• NAV is a measure of the value of a fund's assets minus its liabilities

• It is calculated by taking the total value of the fund's assets and subtracting the total value of its liabilities

• NAV per share is calculated by dividing the NAV by the total number of shares outstanding

• NAV is used to determine the price at which investors can buy or sell shares of a fund...read more

Subscription/redemptions refer to the process of investors adding or withdrawing funds from a fund.

• Subscription is when an investor adds funds to a fund

• Redemption is when an investor withdraws funds from a fund

• These transactions affect the net asset value (NAV) of the fund

• Subscription/redemptions are important for fund accounting and reporting

NAV stands for Net Asset Value, which is the value of a fund's assets minus its liabilities.

• NAV is calculated by subtracting the total value of a fund's liabilities from the total value of its assets.

• The formula for NAV is (Total Assets - Total Liabilities) / Total Number of Outstanding Shares.

• NAV is used to determine the price at which investors can buy or sell shares of a mutual fund or ETF.

Financial market is a platform where buyers and sellers trade financial securities, commodities, and other fungible items.

• Financial markets facilitate the exchange of assets such as stocks, bonds, currencies, and derivatives.

• They provide a platform for companies to raise capital through issuing stocks or bonds.

• Financial markets can be categorized into primary markets (new securities are issued) and secondary markets (existing securities are traded).

• Examples of financial marke...read more