Accounting and Taxation is defined as a branch of “finance” that applies to all individual and business. There are normally two set of principles that are mainly seen in the perspectives of accounting. The first comes the “tax accounting” and the next that is seen is “financial accounting”. These “accounting procedures” are all followed under “GAAP”. The “Generally Accepted Accounting Principles” says that the companies must follow a common set of “accounting principles” and “standards” which are used in the “compilation” of the “financial statements” including the “transactions”. On the other hand for an “individual tax payer” the main focus is to determine income that would help the individual in “qualifying deductions” and at the same time would help to get an “annual tax return”.
This question may seem easy but answering this in an effective way is the most important thing. The candidate should make the “first impression as the last impression”. Delivering the introduction in right wat would help to “secure and acquire” the desired job. While giving an introduction the candidate should “initiate” proper conversation showing deep interest in “accounting and taxation”. You should be able to make the interviewer interested about how “accounting and taxation” have become your sole passion. It is important that you impress the “employer” with the correct approach.
The different types of accounting are:
“Financial Accounting” records information related to the “financial status” of the company. This is identified to be a “branch of accounting” that involves measuring, recording, “analyzing” and “classifying” the business transactions.
This type of accounting focuses on the “administrative aspects” of the company. “Administrative Accounting” is considered to be very useful in making accurate “plans and actions” which are used to fulfill the objectives of the company including the “improvement of strategy” of a company.
This type of “accounting” is focused on certain companies that have an “industrial nature”. This accounting takes care of the “unit cost of production”. It helps in analyzing the “sales and production process” that a company mainly carries out.
This “accounting” focuses on the “registration and preparation” of reports that concern with “tax return and tax payments”. “Tax Accounting” is mainly used by the individuals, business and corporations”.
“Management Accounting” is an expanded version of “cost accounting”. This records all the “financial and economic information”. The perspectives of “management accounting” measures all “long-term and short-term finance” related decisions.
“Tax Specialist” is defined as the “charge” that is mainly “levied” by the government. This word is mainly derived from the Latin word “tax” that is mainly carried out to realize the “public expenditures” which cater to “social welfare aspects”.
The payment of “tax” is mandatory and it also serves to be the main determinant of “mandatory contributions” which is to be made by the “individual or any organization”.
Taxes are “imposed and collected” for the following reasons:
This “Accounting and Taxation” question is the most important one. “Taxation” is the process to impose or “levy” taxes that are framed by the government. It is mainly “imposed” on the “individual and business entities”. “Taxation” ranges from “income tax to goods and services tax” which applies at all levels.
Recently the government has brought about different “progressive policy reforms” that has informed changes into the existing process of taxation.
To make the process of “taxation” innovative and efficient several changes have been adopted within the system which has “eased the system of sales” and the supply of goods.
This “Accounting and Taxation” question deals with the aspects of “direct and indirect tax”.
“Direct Tax”, is mainly “levied” by a person or a property over their profits. The company which has a certain responsibility to “pay tax” would “pay” directly to the government. Some of the examples of “direct tax” are:
“Indirect Tax” is generally collected from the third person. It mainly relates to the consumers who have to pay for the “goods and services” and the “manufacturers”.
The recent “tax reforms” have “overhauled” the taxation system of India. This has brought the concepts of “ONE NATION ONE TAX” regime that is also called as the “Goods and Services Tax”, which came into effect on July 1, 2017.
“Accounting and Taxation” accuracy cannot be maintained. In fact they are held to be “reasonable” depending upon facts. There are “accruals”, “prepaid”, “deferrals” which are involved in the process of “accounting”. The use of “accounting” does not guarantee the accuracy of the data maintained. The main fact that lies are the existence of the “accounting standards” which are considered while calculating the estimates.
This “accounting and taxation” interview question deals with the concept of “Working Capital”. It is defined as the difference between “current liabilities” and “current assets”. If the process of determination of “working capital’ is simple then it mainly focuses upon the “capital resources” of the company which the company “counts” on a “short term basis” to look after the operations that it holds.
These resources mainly include the “cash”, “portfolio of the finance related products” and the other investments that the company holds.
This “accounting and taxation” question deals with the suggestions of how the existing “Working Capital Flow” of a company can be improved. The best way to improve the “working capital flow” of the company is to consider the existing “stock in hand” of the organization. The “stock” that a company mainly holds is the main component of the “working capital” which can be controlled.
For this the “debtors” are pressurized to “pay back the debts” quickly. This process does not guarantee any control over the “payments” as these are identified to be “separate legal entities”.
The business at this stage can stop the payment to be made to the “suppliers”, but doing this it can ruin the “business relationships” and at the same time can ruin the “reputation” of the company. This is the reason which determines not to “hold back” the money that is “due” on the “supplier’s side”.
The business needs to understand that “funds” present in the company always “come at a cost” and thus it is the duty of the organization not to only stick to the “stocks”. The business must keep this in mind that “overvaluation of stock” should be avoided and on this contrary the “stock turnover rate” should be high so that the “working capital” can be in a better position.
This “accounting and taxation” interview question deals with the concepts of “Income Tax”. This is mainly a “direct tax” that is imposed on every “taxable individual”. The “imposition” deal with different rates that are ensured within their own “jurisdictions”. The person “liable to pay tax” has to “file the returns” on an annual basis that would be able to meet the respective “tax obligations”. The income concerning every person should be calculated under different heads such as:
The “income tax” also covers the “estimated tax slabs” which are calculated in their respective percentages. These are:
“Accounting and Taxation” have an important feature which is known as the “accounts payable”. It is the amount of money that a company holds. It mainly includes the “purchases of the goods and services” from the “suppliers”.
“Accounts Receivable” is again an important aspect of “Accounting and Taxation”. It mainly deals with the money which the company has the right to collect in account of the “goods sold” to the final customers on “credit”.
This is an important “accounting and taxation” interview question. The common mistakes in “accounting” are:
This “accounting and taxation” interview question deals with the “constitutional body” named as “GST Council”. The “Goods and Services Tax Council, GSTC”, is mainly identified as a “legal structure” which looks after the “implementation of GST act” throughout the country. This is mainly dealt under “Article 279A of the constitution”.
This “accounting and taxation” interview question deals with the implication of “tax invoice”. This “tax invoice” is mainly referred under “section 31 of the CGST Act, 2016”. This is determined as an “important legal entity” which makes it a “mandate” to the “registered person” to issue “tax invoice” which is mainly meant for the “supply of goods and services”. If in this case the “supply” is done by an “unregistered person” then the “recipient” has to issue the “Bill of Supply” instead of a “tax invoice”.
It is important to also impose the “input tax credit” which has been made to the supplier. It also serves to be an “important evidence” which includes the “charging of GST” at the time of the imposition of “tax invoice” that forms to be an “indicator” of “supply made”.
This contains the name of the “supplier” and also the “recipient” including the “details of the goods”, “quantity” and the value of the other details.
This is a very common question that is asked in the “accounting and taxation” interviews. It is important to have the knowledge of the “International Accounting Standards”. It is normally a vast topic through which the candidate needs to be well versed with the “latest changes”.
Currently there are 41 “accounting standards” in India.
This “accounting and taxation” interview question deals with the main difference between “Trial Balance and Balance Sheet”.
A “Trial Balance” shows the list of all the accounts which is mainly used to check the “arithmetic accuracy” while recording and “posting” transactions.
On the contrary a “balance sheet” is a statement that mainly displays the “assets and liabilities” including the “equities” of an organization. A “balance sheet” is mainly used to determine the “financial position” of a business.
This aspect of “accounting and taxation” deals with the documentation. The “accounting” is mainly like a “watchdog” of an organization and this is the reason which makes this system to be very systematic.
The “accounting heads” have the responsibility to determine a “true and fair view” of the “financial statements” of the company which are to be presented to the “stakeholders”.
Documentation serves to be the most important aspect of accounting. For this there is the need to “verify the adequate documents” for which necessary “audit trail” needs to be maintained.
This aspect of “accounting and taxation” deals with the determination of the “composition scheme”. This is mainly availed by the “small traders: who have a “turnover” less than “1.5 crore” and want to make themselves free from the “detailed formalities” of paying “GST” at a “fixed turnover”. The “turnover” of the business that is registered under the same “PAN number” is mainly to be taken into consideration.
“Exemptions of the Composition Scheme”
Rates of “Composition Scheme Dealers”
This “accounting and taxation” interview question deals with the concept of “e-way bill”. It is mainly referred as an “electron way bill” that is generated on the “e-waybillgst.gov.in” bill “portal”. This is an important document which is to be carried out by the “transporter” who supplies the “goods”. This is mainly to be generated for “transporting goods” whose value becomes more than Rs 50,000. It can be generated by the “supplier” or by the “recipient” who is basically in the form of an “unregistered person”.
This has simplified the process of “transportation” of the goods especially when it is “interstate supply”. It contains the details of the “consignee and consigner” which also contains the address of the “delivery place”, “value of the goods” and location of the “delivery place and date”.
“Accounting and Taxation” have their own set of “golden rules” which are based on “debit and credit”.
The “Golden Rule” states that:
In “accounting and taxation” terms, a “deterred tax” is mainly referred to an “asset” whose “tax amount” is paid or “carried forward”. This value which is “carried forward” cannot be identified in the “income statement”.
The value of such is mainly created by taking into consideration the difference that exists between the “taxable income” and the “booked income”.
This “accounting and taxation” question is a bit “derogatory”. “Positive Cash Flows” does not guarantee the “success factor” of the company. If a company shows any kind of “unsustainable improvement” in its existing “working capital” it only means that the company is suffering from the “inefficient revenue”.
So “positive cash flows” does not mean that the company is out of trouble.
This “accounting and taxation” interview question mainly deals with the concept of “GST Returns”. It is a document that is “filed” by the “taxable person” in the “current financial year” that is to be presented before the “tax authorities”. These documents mainly include:
The concept of “GST” is normally “destination based”. With the invent of this “tax regime” the “indirect tax structure” got simplified, that has made the framework more efficient by digitalizing the entire “tax structure”. As a result of this “tax”, it has increased the level of competitiveness. The introduction of “GST” has broadened the “tax base” by bringing higher level of uniformity in the taxation system.
This “tax” is mainly collected to bring welfare in the “public finance expenditures”. The imposition of “GST” has brought “assurance” and has also developed a “progressive tax system”. This is also called as the “One Nation, One Tax System” which has brought “cooperation” as well as “coordination” in the “tax system”.
This “accounting and taxation” interview question deals with the concept of “Bank Reconciliation Statement”. It is defined as the process of identifying the “transactions” on an individual basis. It also states matching the “transactions” with the “bank statements”. Doing this the “balance of the bank” matches with the “bank statement”. In this process the “transaction” that does not matches suitable “adjustments” need to be initiated for matching with the “financial statements”.
“CMM” is known as the “Capability Maturity Model”. It is mainly a document that provides a structure to the basic “six elements” concerning “infrastructure”. This is used to measure the “effectiveness and capability” of the existing “finance structure” of the organization.
“Bad Debts” can be determined by following the three ways:
“Capital Transactions” mainly deal with “large purchases of fixed assets” which are mainly used for generation of “revenue” over a “longer period of time”. These are also referred as “revenue transactions” which depend on the “acquisition” of “operating expenses”. These “expenses” are also termed as the “short term expenses” which are incurred in the “daily business operations”.
On the other hand, the “revenue transactions” mainly deal with the “incur” of the “short term expenses concerning the “current period” or within one year. These are needed to meet the “ongoing operational cost” of the business and thus are referred as the “operating expenses”.
This “accounting and taxation” interview question deals with “Fictitious Assets”. These are normally “intangible” and the benefits derived are determined for a “longer period of time”. These are normally “fake assets” which have o “physical presence”. These “assets” normally exist because they are considered to be a “major expense” for the business. These assets are normally “amortized” over the time which expands more than a “financial year”.
The examples of such “assets” are, “goodwill”, “deferred revenue”, “rights”, “preliminary expenses” and “accumulated losses”.
“Double-entry bookkeeping” is an accounting system which states that for every “entry” made into one account an “equal entry” should be made into another “account”. The main purpose of “double entry bookkeeping” is to create a certain set of “financial statements” which is based on the preparation of “Trial Balance”. The “profit and loss” statement prepared shows the demarcation of the “revenue”, “costs” and the “profit and loss” incurred over a certain period.
The “double entry bookkeeping” is based on the following formulae:
“Assets = “Liabilities + Equity”
The rules of “double entry bookkeeping” are mainly divided into three main accounts. These accounts are:
The “dual aspect” concept in “accounting” indicates that each and every “transaction” which is made by a business makes an effect in the business from two different aspects that are “equal and opposite” in nature. This concept forms the basis of the “double entry accounting system” which is used by all the “accounting frameworks” for the purpose of generating “accurate and reliable financial statements”.
An example of “dual aspect” of accounting can be seen from below:
A started business with a “capital” of Rs 5, 00,000, which is a “primary investment”. Now this “investment” would have the following effect on the business.
The “obstructions” that can hamper the “financial statements” are:
On a whole the candidate should know the topic well which would include an “extensive research”. This also includes knowing individual “job description” which would also specify the “job requirements” for the position in which the candidate is mainly applying for. It is also important to be clear about the role in which the application is mainly processed for. The “interviewee” should maintain a positive attitude which would not at all disclose about the personal problems that the candidate is facing in real life as this attitude can ruin the relationship and can disrupt the relationship. When the candidate would talk with the interviewer it is important to “speak with a clear voice”. The candidate should also be patient and wait for the turn and lastly the candidate should maintain a formal attire.
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