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InterviewSolution
This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 451. |
What is meant by 'Fund based Accounting? |
| Answer» SOLUTION :The concept of 'FUND BASED Accounting' refers to the accounting whereby receipts and INCOME relating to a particular fund are credited to that fund any payments and expenses are debited to it. Credit balance of te Fund Account is show on the liabilities side of the Balance SHEET. | |
| 452. |
What is meant by forfeiture of shares ? |
| Answer» Solution :If any SHAREHOLDER FAILS to pay the amount DUE on allotment or on any call within the specified period, the Directors may cancel his shares. This is CALLED Forfeiture of Shares. | |
| 453. |
What is meant by Forfeiture of Shares? |
| Answer» Solution :If a shareholder fails to payany made on him, which is DUE on SHARES, the company MAY CANCEL his shares. This cancellation of shares for non-payment of AMOUNT due on shares is known as Forfeiture of shares. | |
| 454. |
What is meant by 'Fluctuating Capital' of a partner? |
| Answer» Solution :It is a method of MAINTAINING CAPITAL Accounts of partners under which all transactions relacted to a partner (such as his SHARE of profit/loss, drawings, INTEREST on capital or drawings, salary, etc.,) are recorded in his Capital Account. | |
| 455. |
What is meant by Financing Activities? |
| Answer» SOLUTION :Financing Activities are activities that result in changes in size and composition of owners' capital (INCLUDING Preference share capital in the case of a COMPANY) and BORROWINGS of the ENTERPRISE. | |
| 456. |
What is meant by Financing Activities ? |
| Answer» Solution :Financing ACTIVITIES are activities that RESULT in changes in the size and composition of the OWNER's capital and borrowing of the ENTERPRISE? | |
| 457. |
What is meant by Financial Statements? State the importance of Financial Statements to: (I) Shareholders: (li) Creditors, (Iii) Government, and (Iv) Investors. |
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| 458. |
What is meant by 'Employees Stock Option Plan'? |
| Answer» Solution :Employees Stock OPTION PLAN means a scheme under which the company grants options (a RIGHT but not an obligation) to its employees who fulfil the prescribed terms and conditins to SUBSCRIBE for shares of the company at a PREDETERMINED price (which is lower than the market price). | |
| 459. |
What is meant by ' Employee Stock Option Plan' ? |
| Answer» SOLUTION :EmployeesStock Option PLAN MEANS option granted by the company to its employees and employee directors to subscribe the SHARES of the company at a price that is lower than THEMARKET price but it is not an obligation on the employee to subscribe for it. | |
| 460. |
What is meant by Employee Option Plan ? |
| Answer» SOLUTION :Employee Stock Option PLAN MEANS option granted by the company to its EMPLOYEES and employee directors to subscribe the shares of the company at a price that is lower than the market price but it is not an OBLIGATION on the employee to subscribe for it. | |
| 461. |
What is meant by Dissolution ? |
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| 462. |
What is meant by dissolution of a firm? |
| Answer» Solution :DISSOLUTION of a firm MEANS the dissolution of partnership among all the partners of the firm and the firm's business is CLOSED. | |
| 463. |
What is meant by deblt (Dr) balance in an account? |
| Answer» SOLUTION : EXCESS of debit side TOTAL over CREDIT side total of an account is debit balance | |
| 464. |
What is meant by current assets? |
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| 465. |
What is meant by 'current liabilities '? |
| Answer» Solution :CURRENT LIABILITIES REFER to those liablilities which are expected to mature a YEAR. | |
| 466. |
What is meant by credit (Cr.) balance in an account? |
| Answer» Solution :Excess of CREDIT side TOTAL over DEBIT side total of an account is credit balance | |
| 467. |
What is meant by Convertible Debentures? |
| Answer» SOLUTION :Convertible Debentures are those debentures which are convertible into Equity Shares or other SECURITIES either at the OPTION of debentureholders or at the option of the COMPANY, as the CASE may be, after a specified period. | |
| 468. |
What is meant by change in profit-sharing ratio? |
| Answer» Solution :A CHANGE in profit sharing ratio implies purchase of share of profit by one or more PARTNERS from other PARTNER or partners. | |
| 469. |
What is meant by conditional formatting? Give its two uses and three benefits. |
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Answer» Solution :A format CHANGE, such as background cell shading or font colour that is applied to a cell when a specified CONDITION for the data in the cell is true. Conditional formattingis often applied to worksheets to FIND: a. Data that is above or below a certain value. Duplicate data values. b. Cells containing specific text. Data that is above or below AVERAGE. c. Data that falls in the top ten or bottom ten values. Benefits of using conditionalformatting: i) Helps in answering questions which are important for taking decisions. ii) Guides with help of using visuals. iii) Helps in understanding DISTRIBUTION and variation of critical data. |
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| 470. |
What is meant by Comparative Financial Statement? |
| Answer» Solution :Comparative Financial Statement is a tool of financial ANALYSIS that SHOWS change in each item of the Financial Statement in both absolute amount and percentage terms, taking the item in preceding accounting period as BASE. | |
| 471. |
What is meant by Cash Equivalents ? |
| Answer» SOLUTION :Cash Equivents are short-term, highly liquid INVESTMENT that are readily convertible into know amount of cash and which are subject to an INSIGNIFICANT risk of change in value. | |
| 472. |
What is meant by 'Cash from Operating Activities'? |
| Answer» Solution :CASH from Operating Activities means FLOW of Cash and Cash Equivalents from the principal revenue PRODUCING activities of the enterprise and other activities that are not investing or financing activities. | |
| 473. |
What is meant by Cash Flow from Financing Activities? |
| Answer» Solution :Financing ACTIVITIES are activities that result in changes in the size and composition of the owner's CAPITAL (INCLUDING Preference Share Capital in the case of a company) and BORROWINGS of the enterprise. | |
| 474. |
What is meant by Cash Flow? |
| Answer» SOLUTION :Cash FLOWS are inflows (i.e., RECEIPTS) and outflows (i.e., payments) of Cash and Cash EQUIVALENTS. | |
| 475. |
What is meant by Cash Flow Statement? |
| Answer» Solution : CASH Flow STATEMENT is a statement PREPARED to show inflow (receipts) and outfiow (PAYMENTS) of Cash and Cash Equivalents | |
| 476. |
What is meant byCapital Reserve? |
| Answer» Solution :CAPITAL Reserve is a reserve created out of THEPROFITS of capital NATURE which are not availablefor distribution as DIVIDEND. | |
| 477. |
What is meant by 'Capital Reserve' ? |
| Answer» SOLUTION :CAPITAL RESERVE is that reserve which is CREATED out ofcapital PROFITS. | |
| 478. |
What is meant by Buy-Back of Shares? |
| Answer» SOLUTION :Buy-BacK of SHARES MEANS the ACT of purchasing its own shares by a COMPANY. | |
| 479. |
What is meant by called up Capital ? |
| Answer» Solution :It is that PORTION of subscribed CAPITAL which has been called by the company from the shareholders. For example, if the directors CALL at the rate of Rs. 60 per share on 10,000 SHARES of Rs. 100 each, Rs. 6,00,000 will be the called up Capital. The remaining AMOUNT of Rs. 40 per share will be uncalled capital. | |
| 480. |
What is meant by Calls-in-Advance ? |
| Answer» Solution :Calls in advance REFERS to the AMOUNT which has not been called by company but has been PAID by some SHAREHOLDERS in advance. | |
| 481. |
What is meant by Called-up Capital? |
| Answer» Solution :Accrding to Section 2(15) of the Companies Act, ''Called-up CAPITAL MEANS such part of the capital which has been called for payment.'' | |
| 482. |
What is meant by Authorised Capital of a Company ? |
| Answer» Solution :Authorised, Registered or NOMINAL Capital refers to that amount which is STATED in the MEMORANDUM of ASSOCIATION. This is the maximum Capital for which a Company is authorised to issue shares during its lifetime. | |
| 483. |
What is meant by Analysis of Financial Statements? How is it important from the viewpoint of creditors and management? |
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Answer» Solution :Meaningof Analysis of Financial Statements: Financial statement analysis is the use of analytical or financial tools to examine and compare financial statements in order to make BUSINESS decisions. Importance of Analysis of Financial Statements are: 1. CREDITORS Viewpoint:Creditors supplying goods to a business are interested to know as to whether the business would be in a position to pay the amount on due DATE. They are more interested in CURRENT assets and current liabilities of the business. If current assets are sufficient, say, twice the current liabilities, they are satisfied that the business would be able to discharge the short-term debts on time. 2. Management Viewpoint:Analysis of Financial Statements enables the management to evaluate teh overall efficiency of the firm. The analysis and interpretation of Financial Statements provide adequate information for planning and controlling the affairs of the business. Future forecasts can easily be made by ANALYSING the past data with the help of this information. |
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| 484. |
What is meant by Analysis of Financial Statements? |
| Answer» SOLUTION :ANALYSIS of FINANCIAL STATEMENTS is a systematic process of the critical examination of the financial information contained in the Financial Statements in order to understand and make DECISIONS regarding the operations of the firm. | |
| 485. |
What is meant by Analysis of Financial Statement? What is its importance to shareholders and employees? |
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Answer» Solution :Meaning of Analysis of Financial STATEMENTS : Financial statement analysis is the use of analytical or financial tools to examine and compare financial statements in order to MAKE business decisions. Importance of Analysis of Financial Statements : 1.Shareholders: Shareholders INVEST in the enterprise. Therefore, they are interested in profitability, and safety of their investments. enterprise. They would like to know whether the business is profitable, has growth potential and its progress. Growth potential of business helps in appreciation of their investments. 2. Employees: Employees and trade unions are interested in their welfare, i.e., better emoluments, BONUS, better working conditions and security of their jobs. So, they are interested in knowing the profitability and financial STRENGTH of the concern. Analysis of Financial Statements help them in increasing their collective bargaining and in negotiating salaries and wages. |
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| 486. |
What is meant by an Operating Cycle? |
| Answer» Solution :Operating CYCLE is the time between the ACQUISITION of assets for PROCESSING and their realisation into Cash and Cash EQUIVALENTS. Where the Operating Cycle cannot be identified, it is assumed to be of 12 MONTHS. | |
| 487. |
What is meant by activity ratios? |
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| 488. |
What is meant by 'Activity Ratios'? |
| Answer» SOLUTION :ACTIVITY Ratios' mean the ratios that measure the EFFECTIVENESS with which a firm uses its AVAILABLE resources. | |
| 489. |
What is meant by a debenture? |
| Answer» Solution :DEBENTURE is an INSTRUMENT issued by a company acknowledging a debt. It has the terms of repayment of principal and interest. According to Section 2(30) of the Companies Act, 2013, 'Debenture' INCLUDES debenture stock, bond or any other instrument of a company evidencing a debt whether constituting a CHARGE on the assets of thecompany or not. | |
| 490. |
What is meant by a Fund? |
| Answer» Solution :A FUND is a RESERVE REPRESENTED by earmarked investments. | |
| 491. |
What is maximum amount of discount which may be allowed on reissue of forfeited shares ? |
| Answer» SOLUTION :The AMOUNT credited to FORFEITED SHARE Account. | |
| 492. |
What is meant by a Common-Size Statement? |
| Answer» Solution :Common-Size Financial Statement is a statement in which FIGURES are converted into PERCENTAGE to a common BASE, i.e., Revenue from Operations for Common-size Statement of Profit and Loss and Total Assets or Total of Equity and LIABILITIES for Common-size Balance SHEET. | |
| 493. |
What is meant by a Cash Flow Statement? |
| Answer» Solution :Cash Flow STATEMENT shows inflows (RECEIPTS) and outflows (payments) of Cash and Cash Equivalents of an ENTERPRISE during a SPECIFIED PERIOD of time. | |
| 494. |
What is inventory or stock trunover ratio? How is it calculated? What are the implications of high and low inventroy orstock trunover ratio? |
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| 495. |
What is Issued Capital? |
| Answer» Solution :ISSUED Capital' means such capital which the COMPANY ISSUES from TIME to time for SUBSCRIPTION. | |
| 496. |
What is intra-firm Analysis? |
| Answer» Solution :Inter-firm Analysis is a comparison of financial VARIABLES of a firm over a PERIOD of TIME. It is ALSO known as Time SERIES Analysis or Trend Analysis. | |
| 497. |
What is inter-firm Analysis? |
| Answer» Solution :Inter-firm ANALYSIS is a comparison of two or more BUSINESS firms. It ANALYSES and compares financial variables of two or more firms to determine the competitive POSITION of these firms. | |
| 498. |
What is Income and Expenditure Account? |
| Answer» Solution : It is an account DRAWN to show the results of an ACCOUNTING period of the activities of a Not-For-Profit Organisation.Incomes are shown on the credit SIDE while expenses are shown the debit side. The clasing balance of this account shows either SURPLUS or deficit. It is preparetion accrual basis of accounting and only revenue items of the current accounting period are takes i,e, capital items are EXCLUDED. | |
| 499. |
What is Horizontal Analysis? |
| Answer» Solution :HORIZONTAL ANALYSIS is made to REVIEW and analyse financial statement for a number of years, based on financial DATA taken for those years. It is a Time Series Analysis. | |
| 500. |
What is Gross Profit? |
| Answer» Solution :Gross PROFIT is the excess of Revenue from Operations, i.e., Net Sales over COST of Revenue from Operations (Cost of Goods SOLD). | |