Accounting Questions & Answers Page 1 4/7/2023

PART II

What is the difference betwn "Inventory" and "Stock".  The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners. Possessing a high amount of inventory for long periods of time is not usually good for a business because of inventory storage, obsolescence and spoilage costs. However, possessing too little inventory isn't good either, because the business runs the risk of losing out on potential sales and potential market share as well.

Inventory management forecasts and strategies, such as a just-in-time inventory system, can help minimize inventory costs because goods are created or received as inventory only when needed.

Stock: type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.

There are two main types of stock: common and preferred. Common stock usually entitles the owner to vote at shareholders' meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares.

how do you charge Depreciation in P&L,(what basis and value?)

 

Depreciation is the reducing value of asset in a financial year so firstly calculated the amount of depreciation in fixed or diminishing balance method from the w.d.v of asset and the amount of depreciation amount is to be taken in the debit side of p/l account and the same amount is to be deducted from the opening w.d.v and that the calcuted amount is the closing w.d.v of asset and finally the closing w.d.v taken in to balance sheet asset side as the current value of asset for the purpose of finalizing of account and the depreciation

of next year is to be calculated from the closing w.d.v of asset.what is bonds  bond is a security in which the authorized issuer owes a debt and obliged to repay the interest and principle amountat a later date.

what is diff between p&l & trading a/c CAtrading is relate to all direct exp.but p&l a/c represent all indirect exp.p&l = net profit, trading=gross profit

Explain the difference between inactive account and dormant account?

 

Inactive account means an account had not been in use for a long time and not going to be used in the future. Dormant accounts are those which are presently not in use but it is likely that it may be used in the near future.

Difference Between Tax Invoice and retail Invoice  tax invoice is issued by a registered dealer to a register dealer. it shows the amount of tax separately. in tax invoice buyer can claim tax input credit. retail invoice is used where amount of sales is very small in number. tax is included in the amount charged. in retail invoice buyer can not avail the tax input credit.

Where does TDS payable & receivable appear in the books of accounts

 

tds payable is our liabilities and receivable tds is our current assets.

it comes in journal entry tds payable:vendor a/c dr xxxto tds payable a/c xxx

tds receivabletds a/c dr xxxto customer a/c xxx

after receiving and paying amount out of bill amount it will be deducted.

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For example, owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes bankrupt and is liquidated.

Also known as "shares" or "equity". A holder of stock (a shareholder) has a claim to a part of the corporation's assets and earnings. In other words, a shareholder is an owner of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have claim to 10% of the company's assets.

Stocks are the foundation of nearly every portfolio. Historically, they have outperformed most other investments over the long run. 

what happens if LIFO Price Increases?  LIFO means last in first out whenever any quantity comes tobefore we sale first quantity and after other quantity then adjust this amount.///

IF LIFO PRICE INCREASE, MEANS, EITHER COST OF PURCHASE PRICE IS DECLINING IN COMPARISON OF THE PREVIOUS RATES OR THERE IS HIGHER PRICE STOCK WHICH IS NOT MOVING IN COMPERISON OF LOWER PRICE STOCK

What is the Accountancy ? Give the Answer in one sentence.

 

Accounting is an art of recording, classifying and summarizing business transactions in a systematic manner.

what is indirect tax? Capital-IQthere are two type of taxes one is direct tax & another is indirect tax. direct tax is a tax on

individual person whereas indirect tax is a tax on goods &

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services.

diff b/w debenture and bond?Bank-Of-America

bonds and debentures are acknowledgments of debts. Generallygovernments issue bonds for raising funds. CentralGovernment, State Governments, and even municipalcorporation today issue bonds for raising funds form thepublic. where as debentures are used by companies forraising long term debt from the public

Mention the difference between consigner and consignee?  person who sells the goods is consignor and the person who

receives is consigneeUnder what rate will be the Head office related accounts, like Head Office Current A/c, Goods from Head Office A/c, will be converted in case of Foreign Branch...??

 

There is no need of conversion for such accounts as the exact conversion amount is available from the Head Office books... i.e. transactions of such accounts are recorded in both Head office books as well as branch books.

why share capital shown in liability side of a balance sheet  Because, the share capital shows credit balance.

Accounts showing credit balances must come under the liabilities side of the balance sheet.

what do u mean by NPA???? SBINPA means Non-Performing Asst.an asset which is not generating the income that asset is non performing the asset. These can be applicable to the banking sectors. the bank performance will be based on the NPA.

what are limitations of accounts ?  Accounting is based on historical cost / values.The real values such as Brands (Self-developed), human assets, Reputation, hold on the market , credit of Organizations etc can not be accounted.Financials only shows the cost at which assets are bought/

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constructed/ acquired net off depreciation even thought there are possibilities of appreciation of assets due to inflationary effects.

These are the few limitations.

what is contingent liability and state some examples also.  Accounting is based on historical cost / values.The real values such as Brands (Self-developed), human assets, Reputation, hold on the market , credit of Organizations etc can not be accounted.Financials only shows the cost at which assets are bought/ constructed/ acquired net off depreciation even thought there are possibilities of appreciation of assets due to inflationary effects.

Theses are the few limitations.

GOLDEN RULES OF ACCOUNTING HPREAL ACCOUNTS DEBIT WHAT COMES IN CREDIT WHAT GOES OUT NOMINAL ACCOUNTS DEBIT ALL EXPENSES AND LOSSES CREDIT ALL INCOMES AND REVENUES

PERSONAL ACCOUNTS DEBIT THE GIVER CREDIT THE RECEIVER

what is business transaction  the transfer of money or money's worth from one party to another party is known as business transaction. but here the main motive is to earn profit.

Should I deduct TDS for Dyeing Charges in Garments Industry? If yes what is the percentage under which group it will come?

 

if your payment for dyeing charges to a same party(outsideparty other than your employee) exceeds Rs.20000 or yourtotal annual payment to a same party exceeds Rs.50000 youneed to deduct TDS at the rate of 2% plus surcharge 10%(if

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your total annual payment to that party exceeds one crore)plus excess 3%. This comes under TDS on Contract.

What is the difference between CASH FLOW & FUND FLOW Management?

 

Cash flow management is the process of knowing the cash transactions how much cash inflows and outflows by meeting the transactions in order to have sufficient Cash operations

Secondly Fund flow management is the process of knowing the fund transactions how much funds are utilizing and maintaining in order to work out the working capital as well as to know the Funds operations..

What is meant by Salaries Outstanding Accounts? HPSalaries Outstanding Account refers salaries which are already due but not paid.

What is peer group Comparison? Office-Tigerpeer group comparison means comparing the performance of one company with its competitor .i.e company of similar nature and into same business.

what is net turnover and how to calculate?  The Turnover is calculated on basing of company nature of business, for trading companies were calculate on basing of sales, for construction companies were calculate on basing of work done.

Gross Sales-Excise duty= Net Turnoverwhat is account payables and account receivables?Accounts payables are amounts that are being owed to outsiders or third parties to the business for supplies of goods and services yet to be paid for by the business. They are also called, Creditors. Accounts receivables are amounts that are outstanding against others for the supply of goods and services by the company, of which

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they owe to the company. They are also called, Debtors.

what do mean by drawing?An amount withdrawn from the business by the Proprietors or Directors of the business.

What do you mean by Preliminary ExpensesThese are expenses incurred by a business in the inception and in the process of commencement of the new business.

What do you mean by Accrued Expenses Accrued expenses are those expenses actually incurred but, yet to be paid for by the business. They are also provided for and adjusted in the financial statement.

what is bank reconciliation statementBank Reconciliation is a statement by which we can come to know the reason of amount difference between to Accounts(may be bank & Pass book or debtors/Creditors & Our account)as on a specific date for a specific period

give the general entry for Depreciation of machineryThe general entry for Dep of Machinery

Depreciation A/c-----Dr To Machinery A/c.

what is IFRS.International Financial Reporting Standards (IFRS)accounting and reporting standards in the European Union countries.

Give the balance sheet schedules ,what is differed tax, GIVE THE RATES OF DIFFERED TAX FOR THE YEAR 2008-09

what is service tax, how to calculate service tax?Service Tax means, The person who render the service he is liable to collect the Service tax from the client and payable to Government of India. the threshold limit for

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Service tax for the FY 2008-09 10 lacs. The service tax amount is Service Tax -12% & Cess-3%, Below is the exampleif you are rendering software services

Dr XXX ( Client Name ) 11236cr Consulting Charges REcd 10000Cr Service Tax payable 1200cr Edu.Cess Payable 36

what is the difference between cost accounting & financial accounting, with example?Financial accounting is the reporting of financial information to people outside of the business whereas Cost accounting is done primarily for management inside the business. It consists of determining the cost of producing a product or a service.

how accountant calculate depreciationDepreciation amount may vary for fixed assets.for Computer 60% is depreciation amount ( For ex. if the opening balance as on 01.04.08 Rs.10000/-.and in the financial year nothing was added so the closing balance will be Rs.10,000/-. below is the calculation)

Dr Depreciation 6000/-.cr Computer 6000/-.

Narration: Being the 60% Depreciation Calculated for the FY 2008-09

what is the journal entries of a debit/credit notes in the books of seller and purchaser's A/C.IN THE BOOKS OF SELLER :-debit note :- by party a/c debit ----xxx to sales a/c--------------xxx to vat a/c---------------xxx

credit note:- BY SALES A/C debit -----XXX BY VAT A/C DEBIT -----XXX TO PARTY A/C CR--------------XXXin the books of purchaser the journal entry opposite

what is differed tax liability? explain in detail with some example

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what is a JOURNAL ENTRIES FOR ISSUING A debit NOTEDebit note is issued by seller to purchaser for sales returns

sale returns a/c. dr

to name of the party

what is financefinance is an obligation to meet all the requirementswhich deals with financial mattersIf I purchased a machinery of Rs. 50,000 and Received a free printer of Rs. 3000 . What its Accounting entry?Machinery A/c _____________Dr 50000

To Cash A/c 50000

what is the meaning of fbt? tell me different type of fbt rate? & when it will consider in accounting?FBT means Fringe Benefit Tax,

FBT payable on Business promotion, advertisement, vehicle repairs, depreciation as per IT act on vehicles, fuel expenses to vehicles, conveyance & Traveling (For Construction Business - 5%), Telephone charges. FBT is payable 20 % of the above.

Fringe benefit tax shown in current liabilities.

what is actual meaning of Tax Deduction at sourceTDS is applicable if the payment is exceeds (one time payment) Rs. 20,000/- or Rs. 50,000/- p.a during the year. tds to be deducted as prescribed rates.

what is the deadline of filing tds return of salary & other than salary ? how to prepare quarterly return file of tds ? please explain in details.TDS for Salary other than Salary the due date of Remittance TDS is on or before 7th of every month. TDS to be filled Electronically by Quarterly for e.g. April to June we have to

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file the E-TDS on or before 15th July. For Salary TDS We have file in 24q & other than Salary is 26Q in form 27A. Truly Return Software you can download from Income Tax Site.what is the procedure to charge depreciation under provision method? please pass the journal entries showing provision method of depreciation.when depreciation is taking on provision in opening of the year the entry is deprecation a/c dr. To provision for depreciation a/c (Being provision for depreciation is taken)when depreciation is transferred to p&l a/c profit and loss a/c dr. to depreciation a/c (Being depreciation transferred to p&l a/c)

Why the closing stock will not appear in the Trial Balance?

Why the closing stock will not appear in the Trial Balance?it directly take to balance sheet and not deducted in trading account.

If you get excess of cash Rs. 2000/- than what actually Cash/c shows. As an account what do U do?it the additional capitalwhat is difference between preliminary Exp and Misc. exppreliminary expenses are those expenses which incurred before the commencement of business whereas miscellaneous expenses incurred during the course of business which are not adjustable under any other head.

Data for two divisions of Alpha Biotech Ltd. Are given below. Analyze both divisions. Parameters Division X Division Y Rs. Rs. Capital Employed 50,00,000 50,00,000 Sales 30,00,000 28,00,000 Cost of Goods Sold 21,00,000 18,00,000 Profit Before Tax 9,00,000 10,00,000 Tax 2,70,000 3,00,000 Profit After Tax 6,30,000 7,00,000 Data for two divisions of Alpha Biotech Ltd. Are given below. Analyze both divisions. Parameters Division X Division Y Rs. Rs. Capital Employed 50,00,000 50,00,000 Sales 30,00,000 28,00,000 Cost of Goods Sold 21,00,000 18,00,000 Profit Before Tax

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9,00,000 10,00,000 Tax 2,70,000 3,00,000 Profit After Tax 6,30,000 7,00,000 Data for two divisions of Alpha Biotech Ltd. Are given below. Analyze both divisions. Parameters Division X Division Y Rs. Rs. Capital Employed 50,00,000 50,00,000 Sales 30,00,000 28,00,000 Cost of Goods Sold 21,00,000 18,00,000 Profit Before Tax 9,00,000 10,00,000 Tax 2,70,000 3,00,000 Profit After Tax 6,30,000 7,00,000 Data for two divisions of Alpha Biotech Ltd. Are given below. Analyze both divisions. Parameters Division X Division Y Rs. Rs. Capital Employed 50,00,000 50,00,000 Sales 30,00,000 28,00,000 Cost of Goods Sold 21,00,000 18,00,000 Profit Before Tax 9,00,000 10,00,000 Tax 2,70,000 3,00,000 Profit After Tax 6,30,000 7,00,000How will be prepare BRS in tally, please tell me step by step.Start from Gateway of Tally>Display>Cash/Bank Books>Choose the bank & then the month for BRS. Then press F5. Post all bank clearing dates, ur BRS will be ready.

what is the treatment of rent paid more than 10000rs.If we are paying Rent more than 10,000 /-. PM we are liable to deduct the TDS u/s 194 I

1)Paying to individual - TDs-15% & SC -10% & Cess -3% (if income crosses more than 10,00,000 we have to deduct Surcharge unless no need of deduct Surcharge for individual)

2)Paying to Company - TDS -20% & SC-10%,& Cess-3%

We have remit the TDS on or before 7th every month. and E-TDS to be filled quarterly on or before 15Th

what does profit and loss appropriation a/c on dr side of financial trial balance mean? pls answer my question

After getting the net profit or net loss that will be transferred to Profit and Loss Appropriation a/c, and that profit or loss will be distributed to partners capitals a/c after deducting the interest and remunerations and other

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drawings.

what will be a journal entry when we received a telephone bill from air tel and payment of bill.

Telephone charges under come in telegraph and postages so the entry will be. like

Telephone expenses a/c dr to cash or bank.

what is the difference between reserve & provisionProvisions are those where the liability existence is certain, but the amount of liability cannot be determined with substantial accuracy.

In case of reserves, the liability is not known. but some amount of profits are kept aside for meeting the contingencies that might become actual liabilities.

Question What is accounts payable & how it reflect in books of accounts?

Answer Account payable is refers to current liability of a business/an organization it is unsettled payment of a business/an organizations to refers account payable.

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