Accounting Manager

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73 Accounting Manager Questions And Answers

3⟩ What are things will not be included in bank reconciliation statement?

In a bank reconciliation statement, following thing can be excluded.

☛ Direct payments made by bank not entered in Cash book

☛ Cheques deposited but not cleared

☛ Cheques dishonoured not recorded in cash book

☛ Wrong debits given by bank

☛ Bank Charges or Interst debited by bank

☛ Banks direct payment not entered in Cash book

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5⟩ Tell us what are the rules for debit and credit for different accounts to increase the amount in your business accounts?

The rules for debit and credit for different accounts,

☛ for a capital account, you credit to increase it and debit to decrease it

☛ for an asset account, you debit to increase it and credit to decrease it

☛ for a liability account, you credit to increase it and debit to decrease it

☛ for an expense account, you debit to increase it, and credit to decrease it

☛ for an income account, you credit to increase it and debit to decrease it

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8⟩ Tell me what are the accounting events that are frequently involved in compound entries?

The accounting events that are frequently involved in compound entries are;

☛ Record multiple line items in a supplier invoice that address to different expenses

☛ Record all bank deductions associated to a bank reconciliation

☛ Record all deduction and payments related to a payroll

☛ Record the account receivable and sales taxes related to a customer invoice

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10⟩ Explain me what is the general classification of accounts that usually ledger account involve?

The general classification of accounts that usually ledger account involves are

☛ Assets- Cash, Accounts Receivable

☛ Liabilities- Accounts Payable, Loans Payable

☛ Stockholders’ equity- Common Stock

☛ Operating revenues- Revenues through Sales

☛ Operating expenses- Rent Expense, Salaries Expense

☛ Non-operating revenues and gains- Investment Income, gain on Disposal of Equipment

☛ Non-operating revenues and losses- Interest Expense, Loss on Disposal of Equipment

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12⟩ What is the difference between accumulated depreciation and depreciation expense?

The difference between accumulated depreciation and depreciation expense is that

☛ Accumulated depreciation: It is the total amount of depreciation that has been taken on a company’s assets up to the date of the balance sheet

☛ Depreciation expense: It is the amount of depreciation that is reported on the income statement. Basically, it is the amount that corresponds only to the period of time indicated in the heading of the income statement.

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14⟩ What is liabilities and what all does include in current liabilities?

Liability can be defined as an obligation towards another company or party. It may consist of delivering goods, rendering services or paying money. They are the opposite of assets, and it may include

☛ Account payable

☛ Interest and dividend payable

☛ Bonds payable

☛ Consumer deposits

☛ Reserves for federal taxes

☛ Short term loans

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15⟩ What are the three factors that can affect your cash flow and business profitability?

The three factors that can affect your cash flow and business profit includes

☛ Cash flows from investing activities: It includes shares, bonds, physical property, machineries, etc.

☛ Cash flows from operating activities: It does not include cash received from other sources like investments

☛ Cash flow from financing activities: It includes any activities that involves dividend payments that the company made to its shareholders, any money that includes stock to the public, any money borrowed from the lender etc. in other words, it is a report that tells the firm about the money borrowed and paid out in order to finance its activities.

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16⟩ What is the difference between depreciation and amortization?

Capital expenses are either depreciated or amortized based upon the type of asset.

Depreciation

☛ Depreciate means to lose value of an asset due to their usage, wear and tear, outdated, etc.

☛ Depreciation cost is calculated in terms of tangible assets like furniture, plant & machinery, building, etc.

☛ The purpose of calculating depreciation costs recovery

☛ The easiest way to calculate depreciation is to know the loss of value of an asset over its life.

☛ For example, a car worth $30,000 has estimated the lifetime of 10 years after that it will have no value in the market. The cost or loss in value throughout this 10 years is known as depreciation

☛ Various method for depreciation includes straight line depreciation, declining balance method, group depreciation method, unit of time/production depreciation method, etc.

Amortization

☛ Amortize means to write off or pay the debt over a period of time. Amortization can be for loans, or it can be for Intangible assets

☛ Amortization cost is calculated in terms of intangible assets like goodwill, trademark, loans, patents, etc.

☛ The purpose of calculating amortization is also for cost recovery

☛ Amortization calculates the amount spent after the intangible assets throughout the life for that asset

☛ For example, Pharmaceutical Company spent $20 million dollars on a drug patent with a useful life of 20 years. The amortization value for that company will be $1 million each year

☛ Various method for amortization is negative amortization, zoning amortization, business amortization, etc.

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17⟩ List out some of the examples for liability accounts?

Some of the examples for liability accounts

☛ Accounts Payable

☛ Accrued Expenses

☛ Short-term Loans Payable

☛ Unearned or Deferred Revenues

☛ Installment Loans Payable

☛ Current Portion of Long-term Debt

☛ Mortgage Loans Payable

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18⟩ Tell me what is dual aspect term in accounting?

As the name implies, the dual aspect concept states that every transaction has two sides. For example, when you buy something, you give the cash and get the thing. Similarly, when you sale something, you lose the thing and gets the money. So this getting and losing is basically two aspects of every transaction.

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19⟩ What are the activities that includes in Cash Flow Statement?

The cash flow statement showcase the cash generated and used during the year or months. Various activities that are involved for the Cash Flow are

☛ Operating activities – business activities accounting to cash

☛ Investing activities – sale and purchase of equipment or property

☛ Financial activities- purchase of stock and own bonds

☛ Supplemental information- exchange of significant items that don’t involve cash

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