new Associate Interview Questions and Answers

The insurance premium paid for the entire year will be apportioned for the period of 1st January to 31st March.

• The portion of premium for the period of 1st January to 31st March will be treated as prepaid expense and will be shown in the balance sheet as an asset.

• The remaining portion of premium will be treated as an expense and will be shown in the income statement.

• The prepaid expense will be gradually expensed out over the period of January to December.

• The accounting entry ...read more

The three golden rules of accounting are the basis of all accounting practices.

• The first rule is the accounting equation: Assets = Liabilities + Equity

• The second rule is the double-entry principle: Every transaction has two equal and opposite effects on the accounting equation

• The third rule is the revenue recognition principle: Revenue should be recognized when it is earned, not when it is received

Basic concepts of accounting include assets, liabilities, equity, revenue, and expenses.

• Assets are resources owned by a company, such as cash, inventory, and property.

• Liabilities are debts owed by a company, such as loans and accounts payable.

• Equity represents the residual interest in the assets of a company after liabilities are deducted.

• Revenue is the income earned by a company from its operations, such as sales.

• Expenses are the costs incurred by a company in order to gener...read more

Accrual concept of accounting recognizes revenues and expenses when they are earned or incurred, regardless of when cash is received or paid.

• Accrual concept is based on the matching principle, which ensures that revenues and expenses are recorded in the same accounting period.

• Under accrual accounting, revenues are recognized when they are earned, even if the cash is not received yet.

• Expenses are recognized when they are incurred, even if the cash is not paid yet.

• Accrual accou...read more