Question 1

Why does a company/business require an Accounts payables process?

Accepted Answer

Accounts payable process is required in a company because this will help and guide the accountant to manage their payables with in the normal course of the business This includes verifying and checking the invoice details including the credit terms, due date, mode of payment, payee and the items received Only the items received will be paid Incase theres a discrepancy against the actual receipts, a credit note will be raised by the supplier against the short-shipped invoice At the end of the month, AP reconcilition is required confirming both parties balances thru the statement of accounts (SOA) This you can identify which invoices or payment hasnt been booked yet by both parties and you will end up with the same balances, (equal balance from your company and with their company)

Question 2

What is the difference between EFT & Wire?

Accepted Answer

EFT-Electronic Funds Transfer is basically batch of payments are transferring from one bank to another bank with specified time lines EFT payments are also called as BACS if it is UK, ACH in US for domestic payments Foreign payments are called as SWIFT payments WIRE: Wire can be used to release payments for local or international, Different countries will be named in different ways viz, CHAPS for Local Payments made in UK, WIRE for all international payments made from UK and Local & foreign payments made in all other countries

Question 3

What is the main function of international monetary fund ?

Accepted Answer

Help to solve Balance of Payment problems of member countries

Question 4

Accounts that normally have debit balances are

Accepted Answer

Assets,Dividends,and Expenses

Question 5

What is Evaluated Receipt Settlement?

Accepted Answer

ERS is a business process between trading partners that conduct commerce without invoices In an ERS transaction the supplier ships goods based upon an Advance Shipping Notice (ASN) and the purchaser upon receipt confirms the existence of a corresponding purchase order or contract verifies the identity and quantity of the goods and then pays the supplier

Question 6

Explain How is a journal entry recorded?

Accepted Answer

Journal Entries are recorded on a double entry system ie debit and credit concept In order to record a journal entry the following steps need to be followed - Enter the Journal entry number - Enter the Date of transaction - Enter the Debit item (as per the golden principles of accountancy) - Enter the corresponding GL folio number - Enter the Debit amount - Enter the credit item(as per the golden principles of accountancy) - Enter the amount in the credit column - Provide a brief description of the transaction - leave a single line before next transaction

Question 7

Is it possible for a company to show positive cash flows but be in grave trouble ?

Accepted Answer

Absolutely Two examples involve unsustainable improvements in working capital (a company is selling off inventory and delaying payables), and another example involves lack of revenues going forward in the pipeline

Question 8

What are the Golden Rules Of Accounting ?

Accepted Answer

Golden rules of accounting convert complex book-keeping rules into a set of well defined principles which can be easily studied and applied Real accounts involve machinery, land and building etc Similarly when you credit what goes out, you are reducing the account balance when a tangible asset goes out of the organization Debit All Expenses And Losses, Credit All Incomes And Gains This rule is applied when the account in question is a nominal account Personal-Account ---Debit the receiver ---Credit the Giver Real-Account ---Debit what comes in ---Credit what goes out Nominal-Account ---Debit all expenses and losses ---Credit all income and gains

Question 9

The journal entry to record a credit sale is

Accepted Answer

The journal entry to record a credit sale is Accounts Receivable. Credit sale is nothing butthe customers pay at the time of buying.

Question 10

What is the difference between cheque and Demand Draft?

Accepted Answer

A cheque is basically issued by an individual but a draft is issued by a bank In a demand draft you have to pay before issuing while a check is withdrawn from the account

Question 11

What have you learned from your studies that can be applied to a career in investment banking?

Accepted Answer

You might initially think that if you haven’t done a degree in finance or economics you haven’t got very much to offer an investment bank, but you’d be wrong Any numerate discipline will have given you a mathematical toolkit that will come in useful in technical banking work, and any good degree proves that you’re intelligent, hardworking, and effective under pressure Extra-curricular activities may have given you a wealth of other skills that are valuable at an investment bank, such as being able to juggle a number of commitments and work with others

Question 12

What is CRR rate?

Accepted Answer

CRR or Cash Reverse Ratio is the amount of money that a commercial bank has to keep with the Reserve Bank of India If the bank increase CRR then the amount with RBI comes down and vice-versa

Question 13

What is ‘Bill Discount’ ?

Accepted Answer

‘Bill Discount’ is a settlement of the bill, where your electricity bill or gas bill is sold to a bank for early payment at less than the face value and the bank will recover the full amount of the bill from you before bill due date For example, electricity bill for XYZ is $1000; the electricity bill company will sell the bill to the bank for 10% to 20% discount to the face value Here, the bank will buy the electricity bill for $900 whose face value is $1000, now the bank will recover, full amount of bill from the customer ie $1000 If the customer fails to pay the bill, the bank will put interest on the outstanding bill and ask the customer for the payment

Question 14

Most modern Banking Systems are based on

Accepted Answer

Most modern banking systems are based on Fractional reserves. Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank. 1. In a fractional reserve banking system banks can create money through the lending process. 2. A fractional reserve banking system is susceptible to bank panics. 3. Bank panics are a risk of fractional reserve banking, but are unlikely when banks are highly regulated and lend prudently.

Question 15

Define Budgetary Control ?

Accepted Answer

Budgetary Control is establishment of budgets and the continuous comparison of actual results with the planned results It computes the variances and after that management takes necessary actions to maintain favorable variations, through revision of the budgets

Question 16

In which year, the first bank of India "Bank of Hindustan" was established ?

Accepted Answer

Among the first banks were the Bank of Hindustan, which was established in 1770 and liquidated in 1829-32.

Question 17

As per the provisions of Section 12 of the Banking Regulation Act, 1949, the minimum ratio between authorized, subscribed and paid-up capital of a banking company should be

Accepted Answer

As per the provisions of Section 12 of the Banking Regulation Act, 1949, the minimum ratio should be 4:2:1.

Question 18

When referring to student loans what is a grace period?

Accepted Answer

6 months after graduating or quitting school when you have to start paying back the loans. A grace period is one term that’s provided for student loans that allow you to delay payments up to a certain length of time, without penalty. During a grace period no late charges would apply, and the loan would not risk falling into default for missed payments. The grace period allows you time to find financial stability prior to having to make payments on your student loans. Many students use student loans to help pay for their college expenses, including tuition, books, room and board, and other living expenses. Students are expected to repay these loans when they graduate.

Question 19

Tally package is developed by

Accepted Answer

Tally package is developed by Tally Solutions. Tally Solutions, then known as Peutronics, was co-founded in 1986 by Shyam Sunder Goenka and his son Bharat Goenka.

Question 20

Interest is usually associated with

Accepted Answer

Interest is usually associated with notes receivable.

Accounting and Finance Questions