INTERVIEW QUESTIONS AND ANSWARS
1. Depreciation & methods
Depreciation is reduction in the value of fixed assets due to its usage and technology changes. Generally depreciation is charged at some percentage on value of an asset. If we don’t use fixed asset also, we should provide depreciation. Depreciation is provides on the tangible asset except land
Accumulated Depreciation: The total to date of the periodic depreciation charges on depreciable assets.
Methods:
Fixed Instalment method or Stright line method
Dep. = Cost price – Scrap value/Estimated life of asset.
Diminishing Balance method: Under this metod, depreciation is calculated at a certain percentage each year on the balance of the asset, which is bought forward from the previous year.
Annuity method: Under this method amount spent on the purchase of an asset is regarded as an investment which is assumed to earn interest at a certain rate. Every year the asset a/c is debited with the amount of interest and credited with the amount of depreciation.
2. provision vs Reserve
Provisions means any amount written off by way of reduction, alterations of any assets and any liability.
Provisions is charged on p&l account
Provisions creations are mandatory.
Provisions are reducing netprofit.
Reserves are charged on profit and loss appropriation amount
These reserves are created for future loss.
Reserves creation is possible when there is net profit is available
3. Amortization
It is process of written off an intangible assets. Amortization provides on intangible assets. Intangible assets means which is not physically touched and seen like good will, patent rights, copy rights.
4. Dilapidation: means damage done to a building or other property during tenancy.
5. Operating expenses vs non Operating expenses
These expenses incurred during running the business within a year.
Like admin, sales & distribution
Non operating expenses incurred out of the business. Like interest paid, commission paid etc.
6. Operating
Depreciation is reduction in the value of fixed assets due to its usage and technology changes. Generally depreciation is charged at some percentage on value of an asset. If we don’t use fixed asset also, we should provide depreciation. Depreciation is provides on the tangible asset except land
Accumulated Depreciation: The total to date of the periodic depreciation charges on depreciable assets.
Methods:
Fixed Instalment method or Stright line method
Dep. = Cost price – Scrap value/Estimated life of asset.
Diminishing Balance method: Under this metod, depreciation is calculated at a certain percentage each year on the balance of the asset, which is bought forward from the previous year.
Annuity method: Under this method amount spent on the purchase of an asset is regarded as an investment which is assumed to earn interest at a certain rate. Every year the asset a/c is debited with the amount of interest and credited with the amount of depreciation.
2. provision vs Reserve
Provisions means any amount written off by way of reduction, alterations of any assets and any liability.
Provisions is charged on p&l account
Provisions creations are mandatory.
Provisions are reducing netprofit.
Reserves are charged on profit and loss appropriation amount
These reserves are created for future loss.
Reserves creation is possible when there is net profit is available
3. Amortization
It is process of written off an intangible assets. Amortization provides on intangible assets. Intangible assets means which is not physically touched and seen like good will, patent rights, copy rights.
4. Dilapidation: means damage done to a building or other property during tenancy.
5. Operating expenses vs non Operating expenses
These expenses incurred during running the business within a year.
Like admin, sales & distribution
Non operating expenses incurred out of the business. Like interest paid, commission paid etc.
6. Operating