BASIC ACCOUNTING & FINANCE INTERVIEW SHORT QUESTIONS (131-140)

131. Cost: The amount of expenditure incurred on to a given thing.

132. Cost accounting:  It is thus concerned with recording, classifying, and summarizing costs for determination of costs of products or services planning, controlling and reducing such costs and furnishing of information management for decision making.

133. Elements of cost:  (A) Material (B) Labour (C) Expenses (D) Overheads

134. Components of total costs:  (A) Prime cost (B) Factory cost (C)Total cost of production (D) Total c0st

135. Prime cost:  It consists of direct material direct labour and direct expenses.  It is also known as basic or first or flat cost.

136. Factory cost:  It comprises prime cost, in addition factory overheads which include cost of indirect material indirect labour and indirect expenses incurred in factory. This cost is also known as works cost or production cost or manufacturing cost.

137. Cost of production:  In office and administration overheads are added to factory cost, office cost is arrived at.

138. Total cost:  Selling and distribution overheads are added to total cost of production to get the total cost or cost of sales.

139. Cost unit:  A unit of quantity of a product, service or time in relation to which costs may be ascertained or expressed.

140. Methods of costing:  (A)Job costing (B)Contract costing (C)Process costing (D)Operation costing (E)Operating costing (F)Unit costing (G)Batch costing.

BASIC ACCOUNTING & FINANCE INTERVIEW SHORT QUESTIONS (121-130)

121. Cash budget:  It is a summary statement of firm’s expected cash inflow and outflow over a specified time period.

122. Master budget:  A summary of budget schedules in capsule form made for the purpose of presenting in one report the highlights of the budget forecast.

123. Fixed budget:  It is a budget which is designed to remain unchanged irrespective of the level of activity actually attained.

124. Zero- base- budgeting:  It is a management tool which provides a systematic method for evaluating all operations and programmes, current of new allows for budget reductions and expansions in a rational manner and allows reallocation of source from low to high priority programs.

125. Goodwill:  The present value of firm’s anticipated excess earnings.

126. BRS:  It is a statement reconciling the balance as shown by the bank pass book and balance shown by the cash book.

127. Objective of BRS:  The objective of preparing such a statement is to know the causes of difference between the two balances and pass necessary correcting or  adjusting entries in the books of the firm.

128. Responsibilities of accounting:  It is a system of control by delegating and locating the responsibilities for costs.

129. Profit centre:  A centre whose performance is measured in terms of both the expense incurs and revenue it earns.

130. Cost centre:  A location, person or item of equipment for which cost may be ascertained and used for the purpose of cost control.

BASIC ACCOUNTING & FINANCE INTERVIEW SHORT QUESTIONS (111-120)

111.Commercial banks:  Commercial banks extend foreign currency loans for international operations, just like rupee loans.  The banks also provided overdraft.

112. Development banks:  It offers long-term and medium term loans including foreign          currency loans

113.International agencies:  International agencies like the IFC,IBRD,ADB,IMF etc. provide indirect assistance for obtaining foreign currency.

 114. Seed capital assistance:  The seed capital assistance scheme is desired by the IDBI for professionally or technically qualified entrepreneurs and persons possessing relevant experience and skills and entrepreneur traits.

115. Unsecured l0ans:  It constitutes a significant part of long-term finance available to an enterprise.

116. Cash flow statement: It is a statement depicting change in cash position from one period to another.

117.Sources of cash: Internal sources-(a)Depreciation (b)Amortization (c)Loss on sale of fixed assets (d)Gains from sale of fixed assets (e) Creation of reserves External sources-(a)Issue of new shares (b)Raising long term loans (c)Short-term borrowings (d)Sale of fixed assets, investments

118. Application of cash: (a) Purchase of fixed assets (b) Payment of long-term loans (c) Decrease in deferred payment liabilities (d) Payment of tax, dividend (e) Decrease in unsecured loans and deposits

119. Budget:  It is a detailed plan of operations for some specific future period.  It is an estimate prepared in advance of the period to which it applies.

 120. Budgetary control:  It is the system of management control and accounting in which all operations are forecasted and so for as possible planned ahead, and the actual results compared with the forecasted and planned ones.

BASIC ACCOUNTING & FINANCE INTERVIEW SHORT QUESTIONS (101-110)

101. Share capital: The sum total of the nominal value of the shares of a company is called share capital.

102. Funds flow statement:  It is the statement deals with the financial resources for running business activities.  It explains how the funds obtained and how they used. 

103. Sources of funds:  There are two sources of funds Internal sources and external sources.

Internal source: Funds from operations is the only internal sources of funds and some important points add to it they do not result in the outflow of funds

(a)Depreciation on fixed assets (b) Preliminary expenses or goodwill written off, Loss on sale of fixed assets

Deduct the following items as they do not increase the funds:

Profit on sale of fixed assets, profit on revaluation of fixed assets

External sources: (a) Funds from long term loans (b) Sale of fixed assets (c) Funds from increase in share capital

104. Application of funds: (a) Purchase of fixed assets (b) Payment of dividend (c)Payment of tax liability (d) Payment of fixed liability

105. ICD (Inter corporate deposits):  Companies can borrow funds for a short period. For example 6 months or less from another company which have surplus liquidity.  Such deposits made by one company in another company are called ICD.

106. Certificate of deposits:  The   CD is a document of title similar to a fixed deposit receipt issued by banks there is no prescribed interest rate on such CDs it is based on the prevailing market conditions.

107. Public deposits:  It is very important source of short term and medium term finance.  The company can accept PD from members of the public and shareholders.   It has the maturity period of 6 months to 3 years.

108.Euro issues:  The euro issues means that the issues is listed on a European stock Exchange.  The subscription can come from any part of the world except India.

109.GDR (Global depository receipts):  A depository receipt is basically a negotiable certificate , dominated in us dollars that represents a non-US company publicly traded in local currency equity shares.

110. ADR (American depository receipts):  Depository receipt issued by a company in the USA are known as ADRs.  Such receipts are to be issued in accordance with the provisions stipulated by the securities Exchange commission (SEC) of USA like SEBI in India.

BASIC ACCOUNTING & FINANCE INTERVIEW SHORT QUESTIONS (91-100)

91.  Maximum permissible bank finance (MPBF): it is the maximum amount that banks can lend a borrower towards his working capital requirements.

92. Commercial paper: a cp is a short term promissory note issued by a company, negotiable by endorsement and delivery, issued at a discount on face value as may be determined by the issuing company.

93. Bridge finance:  It refers to the loans taken by the company normally from commercial banks for a short period pending disbursement of loans sanctioned by the financial institutions.

94.  Venture capital:  It refers to the financing of high risk ventures promoted by new qualified entrepreneurs who require funds to give shape to their ideas.

95.  Debt securitization:  It is a mode of financing, where in securities are issued on the basis of a package of assets (called asset pool).

96. Lease financing:  Leasing is a contract where one party (owner) purchases assets and permits its views by another party (lessee) over a specified period

97. Trade Credit:  It represents credit granted by suppliers of goods, in the normal course of business.

98. Over draft:  Under this facility a fixed limit is granted within which the borrower allowed to overdraw from his account.

99. Cash credit:  It is an arrangement under which a customer is allowed an advance up to certain limit against credit granted by bank.

100. Clean overdraft:  It refers to an advance by way of overdraft facility, but not back by any tangible security.

BASIC ACCOUNTING & FINANCE INTERVIEW SHORT QUESTIONS (81-90)

81. Capital budgeting: capital budgeting involves the process of decision making with regard to investment in fixed assets. Or decision making with regard to investment of money in long term projects.

82. Pay back period:  payback period represents the time period required for complete recovery of the initial investment in the project.

83. ARR: accounting or average rate of return means the average annual yield on the project.

84. NPV: the net present value of an investment proposal is defined as the sum of the present values of all future cash in flows less the sum of the present values of all cash out flows associated with the proposal.

85. Profitability index: where different investment proposal each involving different initial investments and cash inflows are to be compared.

86. IRR: internal rate of return is the rate at which the sum total of discounted cash inflows equals the discounted cash out flow.

87. Treasury management:  it means it is defined as the efficient management of liquidity and financial risk in business.

88. Concentration banking: it means identify locations or places where customers are placed and open a local bank a/c in each of these locations and open local collection centre.

89. Marketable securities: surplus cash can be invested in short term instruments in order to earn interest.

90. Ageing schedule: in a ageing schedule the receivables are classified according to their age.

BASIC ACCOUNTING & FINANCE INTERVIEW SHORT QUESTIONS (71-80)

71. Reserve fund: the term reserve fund means such reserve against which clearly investment etc.,

72. Undisclosed reserves: Sometimes a reserve is created but its identity is merged with some other a/c or group of accounts so that the existence of the reserve is not known such reserve is called an undisclosed reserve.

73. finance management: financial management deals with procurement of funds and their effective utilization in business.

74. Objectives of financial management: financial management having two objectives that Is:

 1. Profit maximization: the finance manager has to make his decisions in a manner so that the profits of the concern are maximized.

 2. Wealth maximization: wealth maximization means the objective of a firm should be to maximize its value or wealth, or value of a firm is represented by the market price of its common stock.

75. Functions of financial manager:

    Investment decision

    Dividend decision

    Finance decision

    Cash management decisions

    Performance evaluation 

    Market impact analysis

76. Time value of money: the time value of money means that worth of a rupee received today is different from the worth of a rupee to be received in future.

77. Capital structure:  it refers to the mix of sources from where the long-term funds required in a business may be raised; in other words, it refers to the proportion of debt, preference capital and equity capital.

78. Optimum capital structure: capital structure is optimum when the firm has a combination of equity and debt so that the wealth of the firm is maximum.

79. Wacc: it denotes weighted average cost of capital. It is defined as the overall cost of capital computed by reference to the proportion of each component of capital as weights.

80. Financial break even point: it denotes the level at which a firm’s EBIT is just sufficient to cover interest and preference dividend.

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