Basic Accounts GD PI/Interview Answers

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As many of them has asked for the answers for the post "Basic Commerce / Accounting Question in Interview.", i posted few answers for the basic Accounting Interview questions posed by an candidate, and will post the rest asap. 


What is the Personal Income Tax rate?

Income tax slabs for individual taxpayers to be as follows

Income upto     Rs 1.8 lakh Nil

Income above Rs 1.8 lakh and upto Rs. 5 lakh 10 per cent

Income above Rs.5 lakh and upto Rs. 8 lakh 20 per cent

Income above Rs. 8 lakh 30 per cent

Income tax slabs 2011-2012 for Women

Income upto     Rs 1.9 lakh Nil

Income above Rs 1.9 lakh and upto Rs. 5 lakh 10 per cent

Income above Rs.5 lakh and upto Rs. 8 lakh 20 per cent

Income above Rs. 8 lakh 30 per cent

Income tax slabs 2011-2012 for Senior citizen (Aged 60 years but less than 80 years)

Income upto     Rs 2.5 lakh Nil

Income above Rs 2.5 lakh and upto Rs. 5 lakh 10 per cent

Income above Rs.5 lakh and upto Rs. 8 lakh 20 per cent

Income above Rs. 8 lakh 30 per cent

Income tax slabs 2011-2012 for Very Senior citizen (Above 80 years)

Income upto     Rs 5 lakh Nil

Income above Rs.5 lakh and upto Rs. 8 lakh 20 per cent

Income above Rs. 8 lakh 30 per cent

What are Direct and Indirect Taxes? Give examples.

Direct Taxes: Personal Income Tax.
Indirect Taxes: Excise Duty, Value Added Tax(VAT).

Why does a Balance Sheet balance?

Balance sheet is a Financial Statement of an Firm. The Two sides of Balance sheet consist of Assets and Liabilities; the amount which is invested in the way of Capital is used for procurement of Assets.

Assets = Liabilities + Shareholders Equity

The company has to pay for buying assets by either borrowing (liabilities) or getting it from shareholders (shareholders' equity). So that make sense that both sides get equals.

Is loss an asset or a liability?

A loss to the firm is considered as an Asset not as a Liability, because there is no need to pay or return the money to anyone. It is assumed as amount to be recovered back(or Expenses) in the concern soon, so it is considered to be an Asset.

What are LIFO & FIFO? What are they used for?

LIFO stands for Last in, First Out, and FIFO as First in, First Out.

These concepts are used in accounting concern dealing with Inventories or Stocks mainly. Usually this process is used in the warehouse department, where the stock which comes First and those stocks are used to produce or to sell it that is called as FIFO method and when the product or good, which arrives last and sent out the process is called LIFO. LIFO and FIFO is based on the Time when it arrives and sent out.

What are Quick Assets?

Quick Assets are those assets which are in Cash, or which can be easily convertible to cash.  Stocks are an example for Quick Assets, as it can be convertible easily.

In accounting terms, Quick Assets = Current Assets - Inventories.

What is Quick Assets Ratio?

To Payoff the Current Liabilities (Debts), the firm make an ratio to know the current liquidity ratio, that is called as Quick Assets Ratio or Acid Test Ratio or Liquidity Ratio.

This is an commonly used tests for knowing short term financial stability.

Quick Assets Ratio = Cash + Securities + Accounts Receivable / Current Liabilities

Or

Quick Assets Ratio = Current Assets – Stock / Current Liabilities.

What is Amortization?

Amortization is an charge made on the assets, which works same as Depreciation. Basically Amortization is charged on the Intangible assets or writing off of loans. For Example, if the company purchases Equipment by taking the Loan, the Equipment is depreciated while the Loan amount is amortized.

What is Depreciation? What are the different methods of Depreciation? Which method is better and why?
Click Here: What is Depreciation? Reasons for Calculating Depreciation?
Click Here: What is the Need of Providing Depreciation?

Diminishing Balance Method is better than the Straight line Method, because it reduces the value of the assets more than the SLM and helps to make a provision from the profits before distributing it, instead of calling the money back again after distributing the profits to shareholders.

Do you know what N.P.V. discounting is?

N.P.V stands for Net Present Value, which deals with the cash inflow and outflow.

The difference between the present value of cash inflows and the present value of cash outflows. 

This is used for capital budgeting for profit analyzing for the future project which is to be undertaken now.

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