Essential Accounts Interview Questions Part – 5

Wat Is Bep In Cost Accounting?

The level of activity at which total revenues equal total costs.

A point at which there is no profit and no loss.

What Are The Variable Costs?

Variable costs are those that are directly proportionate with the quantity of production and or directly associated with the service.

Variable costs are the costs that change depending on how many products you sell or how many services you provide.

What Is The Cost Sheet?

Cost sheet is a statement of cost for a product for given period of time.

What Is Difference Between Cost Accounting And Financial Accounting?

The difference between “cost accounting” and “financial accounting are terms refer to the accounting techniques used internally by a company’s management to determine the costs of running the business and help in decision making.

For example, reports that compare budgeted to actual expenses are commonly used to monitor the successful management of a specific department or store within a larger enterprise.

What Is Cost Accounting?

This can be described as the process of accumulating, measuring, analyzing, interpreting and reporting cost information that is both useful and relevant to the internal and external stakeholders of a business entity.

External stakeholders are those who have a vested financial interest in a business or company. For example banks (loans), financial houses (mortgages), investors (investments), etc. Internal stakeholders are the business or company directors, managers, division heads, etc.

One of the many benefits of cost accounting is that it turns data into information, knowledge and wisdom about a business entity’s operations that is useful for:

► measuring performance
► reducing or managing costs
► determining the fees or prices for goods and services
► deciding to authorize, modify or discontinue a program or activity.

What Are The Basic Principles Of An Internal Audit Controlsystem?

The basic principles of financial internal control are explained below:Financial and accounting operations must be separated that is the handling of cash and the recording of the movement thereof should be done by different persons. Responsibility for the performance of the job must be clearly stated so that there may be no room for doubt or confusion subsequently.

Too much confidence should not be pinned in one individual. Nearly all frauds have been committed by trusted officials or employees. It is interesting to note that frauds have occurred owing to their being trusted.

Relation principle relating to transfer of an employee from one job to another should be the inflexible guiding rule. This is an effective safeguard against collusion and is recognized as an important canon of sound organization.

Mechanization of the work wherever feasible and practicable should be resorted to, mechanical devices such as cash register, recording time clocks, calculation machines should be introduced. A system of control accounts should elegantly be fitted in the book keeping system.

The work should be so arranged that work done by one employee should be properly checked by independent employee. Such continuous and constant checking goods moral control and the errors and the frauds cannot go undetected.

Whats Are The Importance Of Evaluating An Internal Audit Department?

Significance of Internal Auditing:

Internal auditing refers to an assessment activity managed within a corporation as a check to the entity. Its main function is to monitor control within the corporation.

The task of internal auditing is determined by organization itself, and its goals differ from those of the external auditor who is appointed to report independently.

The depth and goals of internal auditing vary widely and depend on the volume and structure of the body and the requirements of its administration. Ordinarily, the importance of internal auditing can be seen by one or more of the following:

► Implementing and monitoring of sufficient internal control. That is the duty of management that demands proper attention on a permanent basis. Internal auditors are ordinarily assigned definite task by management for reviewing controls, monitoring their function and suggesting improvements for them.
► Inspection of monetary and operational information. This may include review of the means used to recognize, determine, categorize and report such information and definite inquiry into individual items as well as in depth testing of balances, transactions and procedures.
► Review of the economy, effectiveness and efficiency of operations including non-financial controls of the corporation.
► Review of fulfillment of laws, regulations and other external requirements and compliance with administration policies and commands.

What Are The Importance Of Internal Audit To The Organization?

An audit helps keep track of where the money is going and makes sure the money is going where it is supposed to and not in someone’s pocket. An audit can also help a company know if it is losing or making more money.

How Does The Internal Audit Differ From An External Audit?

Internal audit nothing but the checking the product that you produced.

External audit is checking your product by your customer.

Here it means you may not find mistakes in your processes but a third man who comes and check the system he may see some deviations in the system and give suggestions for the improvements of the system.

Explain The Difference Between Internal Audit And Statutory Audit?

An internal audit is one which is conducted by the internal auditors of the company. It is not mandatory for the company and the company just conducts it to keep a check on the operations of the company.

On the other hand statutory audit is very important because it is by the external auditors and it is mandatory for all kinds of companies. Statutory audit is usually conducted for various purposes like tax regulatory requires it for taxation purposes.

Tell Me That How I Can Evaluate The Internal Control Audit?

Compliance procedures are tests designed to obtain reasonable assurance that these internal controls on which audit reliance is to be placed are in effect.

The auditor can test the functioning of the controls and not the transactions. He can check the exceptions and departure from suggested internal control. When there is strict supervisory control the staff can not digress from prescribed control procedures. Compliance procedures can be applied with the help of audit sampling.

The samples can be selected from various categories of transaction in order to test the control aspect. He can examine evidence through inspection of signature. He can apply re performance and observation techniques. He can check custodial control over assets.

He can examine the segregation of duties. He can go through supervisory controls. The auditor can test all the items included in the sample. The compliance procedures can ensure the auditor that internal control exists. The control is operating effectively. The control has so operated throughout the period of intended reliance.

Explain How To Do An Internal Audit Effectively?

With internal audit we always need to be careful of any manipulations within the company itself.Errors and frauds within the company cannot be denied /overlooked at any cost.

What Does An Internal Audit Charter Contain?

This charter describes the mission, independence and objectivity, scope and responsibilities, authority, accountability and standards of the Internal Audit function.

A charter is basically a delegation or grant of authority from a person or organization of authority to another person or organization. The purpose of an internal audit charter is to compel the departments that need to be audited to provide the information required by the auditor.

Without this charter or similar authority most managers wouldn’t see any benefit to being audited and would likely refuse to provide anything the auditor needed.

What Is An Internal Audit And What Is The Role Of Internal Audit?

The internal audit is a continuous review of operations and records undertakes within the business and is normally done by specially assigned staff. It should operate independently of all the internal check and in no case should divest any one of the responsibilities placed upon him.

Internal auditing is an independent appraisal activity within an organization for the review of operations as a service to management. It is managerial control which functions by measuring and evaluating the effectiveness of other controls.

To achieve its objectives the auditor has to review the following areas:

► Reliability and integrity of the information.
► Compliance with the policies, plans, procedures, laws and regulations.
► Safeguarding of assets.
► Economical and efficient use of resources.
► Accomplishment of established objectives and goals for operations or programs.

Explain Different Functions Of Internal Audit?

The function of internal audit is concerned with analysis of internal check. The internal audit can look into the duties of each employee. All employees are provided jobs on the basis of their abilities. The auditor can test the effectiveness of internal check. The function of internal audit is examining the application of legal requirements.

The accounts are prepared under certain legal frame work. Verification of accuracy is a function of internal audit. The accuracy of accounting books and records can be verified with the help auditing techniques. The audit techniques include inspection, observation, inquiry, confirmation, computation and review. An auditor can check the accuracy through these techniques.

Confirmation of liability is a function of internal auditor can determine the work done by every person. The carelessness or negligence on the part of worker is noted. The concerned person is given a chance to explain his position. If the reason is not justified, the liability is confirmed.

The function of internal audit is to examine the assets protection. The proper record is to be maintained. The possession must be in the hands of senior officer. The assets are used for business only. There are proper purchase and disposal of these assets. The internal auditor can check that assets are protected.

What Are The Essential Of Internal Audit?

Planning is an essential feature of internal audit. The auditor can plan to check the accounting system. The plan may relate to accounting functions like purchase, sales, income, expenses and shares. The planning includes degrees of risk and extent of audit. It also states the nature of audit work.

Controlling is an essential feature of internal audit. Auditor can examine the operations of accounting system. He can control audit work through audit program. The whole audit work is distributed among audit staff.

Recording is an essential feature of internal audit. The audit can record the facts and figures in order to express his views in the business activities.

The audit note book and audit working papers are used to record the information. Independence is essential element of internal audit. The work of internal audit is done by an employee of the company. He must not be influenced by management. He must be free in developing audit program, audit investigation and audit reporting.

What Are Objectives Of Internal Audit?

The purpose of internal audit is to keep proper control over business activities. When there is proper control there is maximum efficiency. The internal auditor determines the degrees of control over work. The purpose of internal audit is to evaluate the accounting system.

It is concerned with checking proper authority for transactions like purchase, retirement and disposal of fixed assets. The vouchers can be compared with entries in order to determine that figures are facts.

The purpose of internal audit is to help the management. Internal auditor can point out the weakness. The internal audit can be used as a tool to correct the situation. The management functions can be performed properly. The purpose of internal audit is to review the working of business.

The working of current tear can be reviewed in detail just to note the successful area of working. There is a need to locate the weak points. The corrective measures can be taken for proper working.

Explain The Difference Between Internal Audit And External Audit?

The internal audit is conducted to help the management. The weakness of the management is disclosed. The external audit is conducted to help the shareholder. The rights of owners are protected. The appointment of internal audit is made by the management. The appointment in external audit is made by the shareholders. Internal audit is the part of internal control.

External audit is the not the part of internal control.The internal audit can suggest improvement in internal check system. The external audit can not suggest improvement in internal check system. The internal audit can perform his duties under the terms of appointment.

The management can limit the scope of work at any time. The external auditor can perform his work to terms of appointment and other prescribed law. The scope is very wide. Internal audit is an employee of the company. He is not an independent person. External auditor is not an employee of the company.

How To Involve People In Audit?

Use audits as opportunities to train others. Ask for a volunteer (who is not an auditor) to walk through the audit process with you as an assistant. This will provide others with a better understanding of what audits are and why they are necessary.

Invite all the auditees to the closing meeting. Having been an auditee, I know it helps to hear audit findings firsthand, the positive as well as the negative.

Involving people creates a feeling that everyone is a vital contributor to the goal of the company – compliance.

What To Do After The Audit?

► Hold an auditors meeting to discuss the closing meeting content.
► Hold a closing meeting with all auditees involved with the audit. First, point out what was done well. Second, address the nonconformances and ensure the auditees understand the nonconformances and what part of the standard is not met.
► Issue the audit report in a timely manner.
► Encourage auditees to decide on the corrective actions. Allowing auditees to have input will give them ownership in implementing changes.
► Assist those responsible for completing the corrective actions with setting reasonable deadlines. The corrective action deadlines may vary depending on the severity of the non compliance.
► Be available and willing to help the auditees.
► Ask for feedback on how you and your audit team were perceived – adjust your approach if necessary.

What Techniques Used During An Audit?

► Be professional at all times. Avoid being judgmental.
► Follow safety procedures, clean room procedures, and all other required procedures.
► Explain the purpose of the audit to the auditees.
► Answer questions or discuss compliance problems brought to your attention by auditees.
► Be flexible – if you find a potential problem not within the scope of the audit – evaluate the potential risks of the problem if left unaddressed.
► Encourage honesty with the auditees.

Explain The Before An Audit Processes?

► Make sure the authority of the audit team is established – this will increase the cooperation from auditees.
► Decide what areas of the company will be audited and the frequency of the audits. Prepare a yearly audit schedule and distribute.
► Develop an audit plan. Decide what other audit resources are needed – checklists, other auditors.
► Determine the purpose of the audit – is it to comply with government regulations, quality standards, internal procedures and systems?Define the scope of the audit – is it an overview of the area being audited or is it to concentrate on a specific system within the area.
► Hold a meeting with the auditors to discuss the plan, purpose, and scope of the audit.
► Read the documents you will be auditing against. Know what they say. Develop questions to ask the auditees.
► Conduct an opening meeting with the auditees.

What Is Statutory Audit?

It is a compulsory audit done by a CA. Finance Audit conduct by the CA to compliance the legal requirements of monitory issues.

What Is An Audit Process?

The word ‘Audit’ is a derivative of the word ‘Audition’ which means ‘to hear’. In earlier times, the Kings used to hear their accountants narrate the accounts verbally.

However, as the complexity of the accounting function grew, need was felt to thoroughly check the accounts for mistakes misclassification and document the findings in a written form so that it can be used by the Management, stakeholders, investors, Government and various other bodies. This process is known as Auditing or Audit.

What Is The Difference Between Billable And Non-billable Expenses?

Billable expenses are the expenses incurred by you on behalf of your customer in performing duties / service and supply. These expenses are recoverable from your customer by way of billing.

Non-billable expenses are the expenses incurred by you for carry out your own business / duties and responsibilities.

What Steps Would You Take Before Approving An Invoice For Payment?

Following steps should be taken.

► Validate the invoice once it is matched for checking any holds.
► If workflow is implemented , initiate approval for the invoice. Once the invoice is approved/Approval not required(status in case WF is not implemented) you can go for payments.
► Create accounting after approval of invoice.
Finally for payments u need to format, build.

What Is The Meaning Of Invoice?

Invoice is a statement which contains the under mentioned details compulsorily.

1. Invoice Number
2. Invoice date
3. Name and address of the person
4.Name and address of the person to whom invoice is made. ( Buyer of goods and service)
5. Description of goods / services involved
6. Applicable rates and taxes with percentages
7. Rate of the goods / services
8.Quantity of the goods and services
9. Quality or any other specifications
10. Price / Value of the goods and services
11. Invoice must be signed by the person making it
12. Terms and conditions of making the payment.

What Procedure For Excess Payment To Supplier I Would Like Know Without Adjusting Invoice That Means How Supplier Will Send Back Excess Amount How Do In Oracle Apps?

Excess payment to supplier is treated as Advance paid to supplier. This will show as debit balance in supplier account.

Supplier can send the payment by way of cheque / demand draft without adjusting in his subsequent bills.

What Is The Difference Between Consignor And Consignee?

Consignor is the person who is the owner of the goods and who deliver the goods to the consignee.

Consignee is the person who receives the goods and he just possesses the goods and not the owner.

What Is The Difference Between Sap Memory And Abap Memory?

SAP Memory:

Global, user-related memory that extends beyond transaction limits. Access to the SAP memory is via SPA/GPA parameters.

ABAP Memory:

Memory area within each main session, which can be accessed by programs using the EXPORT and IMPORT statements and which remains available using a series of program calls (call sequence).

How Is A Po (purchase Order Created)?

A document or form used by a customer to issue an order for goods or services.

1.Procure to pay cycle with accounting entries
2.order to cash
3.record to report
4.Sox

How Does The Payment Mechanism Work?

The open items of an account can only be cleared once you post an identical offsetting amount to the account. In other words, the balance of the items assigned to each other must equal zero.

During clearing, the system enters a clearing document number and the clearing date in these items. In this way, invoices in a vendor account are indicated as paid, and items in a bank clearing account are indicated as cleared.

You generally use the payment program to clear invoices. Manual clearing of open items is therefore not usually necessary. However, you will sometimes have to clear items manually if, for example, you receive a refund from your vendor or you have set up a direct debit procedure.

What Do You Understand By Open Item Managed Account?

Open item management ensures that all items that have not yet been cleared are available in the system. Only after every open item in a document is cleared can a document be archived.

What Do You Mean By Wcc?

Winter compensation from contributions.

What Is An Ifa?

Institute of finance & accounts

What Do You Understand By Intercompany Settlement?

A key functional area of SAP for Utilities that supports cross-company exchange of settlement data based on international standards such as EDI, XML, and Microsoft Excel.

Intercompany data exchange manages data transfer between retailers, distributors, and independent service operators with special regard to the requirements in deregulated markets.

What Is Fbt (fringe Benefit Tax)?

The tax payable on a non-salary benefit provided to an employee or an associate of the employee. The employer is liable to pay any FBT and may choose to recover the FBT amount from the employee.

What Is Debit And Credit From The Banks Point Of View?

Credit what comes in

Debit what goes out.

What Is Meant By Liabilities?

Liabilities are what all u owe from the bank on notes payable or in other words it is:

Liability=Asset-Owners equity
What company owes that is liability. Liability = Asset-capital.

What Steps Would You Take Before Making A Payment?

1. We should verify that any advances have been made.
2. See that all the services/goods delivered according to bill.
3. Any query is there to attend on that ultimately can be made payment.

What Are Steps To Define Supplier?

Supplier should follow the check list.

1 He should create confidence in the client mind
2 Services to be done (fulfilled in time)
3 Services to be done according the specification of the client
4 He should be placed the another order by doing the above three steps.