Depreciation Interview Questions and Answers: Topics
Depreciation Interview Questions and Answers: Topics
Depreciation Interview Questions and Answers: Topics
Topics
General Accounting
Accounting Type
Journal
Expenditure
Ledger
Depreciation
Bank Reconciliation
Balance Sheet
Profit and Loss
Financial Accounting
Rectification of Errors
Cost Accountancy
Cost Element
Labour Cost
Material Cost
Overhead Cost
Marginal Costing
Standard Costing
Uniform Costing
Budgetary Control
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3 :: Explain Cost Accounting. What are the objectives of doing it?
Cost Accounting is the process of classifying and recording of expenditure incurred during
the operations of the organization in a systematic way, in order to ascertain the cost of a
cost center with the intention to control the cost.
1) Cost accounting views the whole organization from the individual component of the
organization like a job, a process etc.
2) Cost accounting aims at ascertaining the profitability of individual components of the
organization.
3) It is meant for those people who are part of the decision making process of the
organization. Thus, it is only for internal use.
4) It is not a legal requirement. It is not compulsory to maintain cost accounting records.
5) In Cost Accounting, data is immediately available which facilitates in decision making
process.
6) Cost Accounting considers each and every transaction, whether related to past or future
which will have an impact on the business.
2) Assess Risk: The aim of management accounting is to assess risk in order to maximize
risk.
2) Management Accounting is useful only to those people who are in the decision making
process.
3) Tools and techniques used in management accounting only provide information and not
ready made decision. Thus, it is only a supplementary service.
5) Personal prejudices and bias affect the decisions as the interpretation of financial
information is based on personal judgment of the interpreter.
7 :: What are the various techniques used to discharge the function of management
accounting?
Following are the technique used to discharge the function of management accounting:
1) Marginal Costing
2) Budgetary Control
3) Standard Costing
4) Uniform Costing
1) Financial Accounting
2) Cost Accounting
3) Revaluation accounting
4) Control Accounting
5) Marginal Costing
6) Budgetary Control
7) Financial Planning and
8) Break Even Analysis
9) Decision accounting:
10) Reporting
11) Taxation
12) Audit
3) Financial Accounting is concerned about the calculation of profits and state of affairs of
the organization as whole whereas Cost accounting deals in cost ascertainment and
calculation of profitability of the individual products, departments etc.
5) Financial Accounting reports are prepared in the standard formats in accordance with
GAAP whereas Cost accounting information is reported in whatever form management
wants
2) In Financial Accounting, only historical financial transactions are considered and do not
consider non financial transactions whereas in Managerial Accounting emphasis is on
decisions affecting the future, thus it may consider future data as well s non financial
factors.
5) In Financial Accounting, only summarized data is prepared for the entire organization
whereas in Management Accounting detailed reports are prepared about products,
departments, employees and customer.
3) Cost accounting provides only cost information for managerial use whereas management
accounting provides all types of accounting information i.e., cost accounting as well as
financial accounting information.
4) In Cost accounting, the main emphasis is on cost ascertainment and cost control
whereas in management accounting the main emphasis is on decision-making.
5) The various techniques used by cost accounting are standard costing, budgetary control,
marginal costing and cost-volume-profit analysis, uniform costing and inter-firm comparison,
etc. whereas management accounting also uses these techniques but also uses techniques
like ratio analysis, funds flow statement, statistical analysis etc.
26 :: How is it possible for a company to show positive net income but go bankrupt?
Two examples include deterioration of working capital (i.e. increasing accounts receivable,
lowering accounts payable), and financial shenanigans.
27 :: Why are increases in accounts receivable a cash reduction on the cash flow statement?
Since our cash flow statement starts with net income, an increase in accounts receivable is
an adjustment to net income to reflect the fact that the company never actually received
those funds.
29 :: What is a deferred tax liability and why might one be created?
Deferred tax liability is a tax expense amount reported on a company's income statement
that is not actually paid to the IRS in that time period, but is expected to be paid in the
future. It arises because when a company actually pays less in taxes to the IRS than they
show as an expense on their income statement in a reporting period.
Differences in depreciation expense between book reporting (GAAP) and IRS reporting can
lead to differences in income between the two, which ultimately leads to differences in tax
expense reported in the financial statements and taxes payable to the IRS.
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30 :: What is a deferred tax asset and why might one be created?
Deferred tax asset arises when a company actually pays more in taxes to the IRS than they
show as an expense on their income statement in a reporting period.