Easy R2R Process Interview Questions

1.What is the R2R process?

Ans. R2R is a finance and accounting management process that needs meeting, working, and
giving good and exact financial data. R2R posts planned, economical, and working feedback
on the company works to management and other partners.

2. What is amortization?

Ans. Amortization is only tried to abstract aid. On the other hand, depreciation is used for
real assistance. Amortization is the value decline caused by the distribution and a non-real aid
cost over various accounting periods.

For example, suppose a small business, a fake Company. They Spend 500,000 on R&D. And
expect to continue it for five years. In that case, it may elect to amortize. This display
$100,000 in the yearly statements for five years.

3. What are the three different kinds of accounts?

Ans. If you don't want to sound wrong and much different from the crowd, clarify your
answer briefly and clearly (one line about each is ideal).

Following are the three types of accounts.

 Real - Real accounts include all assets in a business, whether real or non-real.
 Personal - Personal accounts are tied to a person, entity, or legal body.
 Nominal- This category includes all costs and losses or income and gains accounts.

4. What are the three most important financial statements?

Ans. The three financial statements are income, balance sheet, and cash flow. 

 Income Statement: It is under revenue, income, profit, and loss for an accounting
period.
 Balance sheet: It would display a company's current assets, duty, and capital situation.
 Cash Flow Statement: This statement checks a company's cash and cash-like flows
during an accounting period.

5. What is the journal entry for donated goods?

Ans. When a company decides to donate items to charity, it must account for those donations
in the formal financial statements. In this situation, buying is decreased by the correct cost of
things.

6. What is the free samples journal entry?

Ans. When a company wants to promote a new product or line of products. It may decide to
give away free samples to consumers. In this situation, the purchase account is added. Then,
the advertisement account is in debt.
 

7. What is Executive Accounting?

Ans. Executive Accounting is planned mainly for service-based companies. Executive

accountants are in charge of properly planning a yearly cost of a company. The executive
accountant checks each department's budget, considering the company's overall financial
objectives, before impacting the company.

8. What are the receivables?

Ans. Bills receivable are the earnings or payments a supplier or company receives from its
clients. Any time a company is a due money for goods or services that have been supplied but
have not yet been paid for, a receivable is formed. This might result from a sale to a
consumer using shop money, a monthly payment due after receiving the goods or services, or
a monthly payment plan.
 

9. What is working capital?

Ans. Working capital is the money used to cover all of the short-term costs of the company,
which are for one year.

It is different from other companies' benefits and current debt. Working capital pays the
short-term debt, purchases inventory, and daily operating expenses.
 

10. What are Retain Earnings?

Ans. Retained earnings are a company's net earnings or profits after dividend payments. The
term "retained" conveys that those earnings were not paid out to investors as dividends but
kept by the company as an important accounting term.

As a result, retained earnings fall when a company loses money or pays dividends and rise
when new profits are generated.

12. Suggest improving the company's working capital flow.

Ans. Stocks can be the key to increasing the company's working money. We have complete
control over the stock part of the working money. We can put pressure on our creditors to pay
us immediately.

 Still, we don't directly impact them because they are independent legal bodies, and they
are the ones who give us business in the last.
 
 We may be open to delaying supplier payments, but this destroys business relationships
and weakens industry goodwill. 
 
  In addition, if we delay payments, they may refuse to enhance things in the future. 
 
 Maintaining funds in bank cash may help the flow of working capital, but it comes at an
opportunity cost.
 
 With this in mind, inventory management can help increase the company's working
capital.
 
 With all of this in focus, it can be believed that goods management can seriously help
advance the company's working capital. Overstocking should be prevented, and list
turnover should be high.
 
 Electronic commerce, telecommunications, and other businesses operate with negative
working funds. So, before responding, conduct some research on working funds.
 

13. What is GAAP?

Ans. GAAP's full form is Generally Accepted Accounting Principles. For the Institute of
Chartered Accountants of India and the rules of the Companies Act, 1956.

It is a collection of accounting levels and common industry terms companies use to

 Maintain correct financial data.

 Summarize accounting data into financial statements.
 Whenever it is required necessary, reveal information.
 

14. What is a Contra Account?

Ans. It's an account employed to reduce or balance the value of a related account. In the case
of a specific kind of account, it holds the opposing sign.

A credit balance will exist in a contra account if an account has a debit balance (such as an
asset account). In contrast, a liability account is correct.
 

15. What are Contingent Liabilities?

Ans. Contingent liabilities are debts that a company may or may not suffer, depending on the
outcome of a future event. The happening of this type of duty is entirely dependent on the
events of a likely future event.

Assume Dell begins a patent violation action against Asus, and Asus not only know that it
may be required to pay for violations but also evaluate the overall amount. In this situation,
Asus will record the expected amount as a Contingent Liability in their records.
 
16. What are Accruals?

Ans. Accruals are another often sent issue in the finance and accounting interview questions
list. They are costs or earnings that were suffered or generated but were not recorded in the
books of accounts. Adjustment notes are included in the financial statements to reveal after
an accounting time period.

 Accrued expense is a cost that has been suffered but has not been recorded in the books
of accounts. As financial statements, it is required to have an adjustment entry in the
books of accounts.
 
 Accrued revenue is the income that has been earned but is not yet recorded in the books
of accounts. An adapting entry, similar to arising cost, will also be necessary for this
plan.
 

17. Define the term 'Depreciation.'

Ans: These are the most common accounting interview question. You might state that
depreciation refers to the declining value of any asset in use. Calculating a company's net
income in each accounting period is required.

Hard R2R Process Interview Questions

18. What are the different kinds of depreciation?

Ans: This is a follow-up question to the last accounting interview question. Mention the
standard depreciation methods listed below.

 Depreciation in a Straight Line

 Double Declining Balance
 Production Units
 Discounted Cash Flow
 

As variables, all of these procedures have comparable inputs.

 Practical Life - The duration during which an asset remains a cost-effective alternative for a
company. The investment is no longer helpful after this time.
 Salvage Value - The value of an asset after it has been depreciated. A company can sell it at a
lower price.
 Total Asset Cost - This is the total cost of the asset, including taxes, shipping, and other fees.
 

You can highlight how they are computed to support this accounting interview response.

 The formula for annual Straight Line Depreciation is:

Total Asset Cost - Estimated Salvage Value divided by Asset Useful Life = Depreciation Expense.
 
  The formula for computing the Double Declining Balance is as follows:
(Total Asset Cost - Estimated Salvage Value divided by Asset Useful Life) x 2 = Depreciation
Expense.
 
 The formula for production Units:
(Cost basis – salvage value) divided by Estimated units produced over useful life = Units of
production rate.
 
 The formula for DCF is:

19. What do you mean by DPO?

Ans: DPO, or Days Payable Outstanding, is the classic number of days. The company should
take to clear all its credit purchases with suitable suppliers. DPO is a monthly responsibility
for a company. The day of clearing the installment payment may vary monthly, so the
average is used to know the payment period.

The formula for knowing DPO is as follows:

Accounts payable closing divided by Purchase per day

Or

(Average accounts payable divided by COGS) * Number of days where COGS is the cost of
goods sold.

20. What are the many forms of accounting liquidity ratios?

Ans: In accounting, there are five very basic types of ratios:

 The Current Ratio

The higher the company's current ratio, the good its skill to deal with short-term financial
challenges. The current ratio is checked as Current Asset /Current Debt.
 
 The Net Working Capital Ratio
It shows if a company has enough finances to carry out short-term activities. It is shown as
follows: 
Current Asset - Current Debt = Net working capital ratio
 
 Quick ratio
The quick ratio is also known as the acid test or liquid ratio. It represents the company's skills to
satisfy short-term tasks. If the quick ratio falls below one, the company is not in a position to
manage short-term loans. 
Liquid Assets / Current Debt(Liabilities) = Quick Ratio
 
  Super-Quick Ratio
This ratio is one step ahead of the current ratio. It is added up by dividing a company's super
fast assets by its current debt. It is known as the super quick or cash ratio because of other
liquidity measures. It only favors "super quick assets."
(Cash + Marketable Securities) / Current debt = Super Quick Ratio
 
 The Cash Flow Operating Ratio
It is solved by dividing working cash flow by current debt. It has been seen that an excellent
working cash flow ratio results in the company's liquidity state.
In this case, cash flow from working will consist of All income from working + Non-cash-based
expenses - Non-cash-based revenue.
Current debt comprises balance payments, creditors, donations, supply, short-term loans, etc
 21. What is a Bank Reconciliation Statement? And why is it created?
 Ans: Almost all finance and accounting interview questions collection include at least
one question on BRS, knowing how important this topic is. 
 A Bank Reconciliation Statement is a statement that is created to coordinate the bank
balance shown on the bank statement. Also, the passbook with the bank balance is
shown in the cash book. 
 Both inner sources, such as the cash book, and outer sources. Such as the bank
statement or passbook is coordinated, and any variance is known and correctly
documented.
 Reasons for preparing a BRS:

Scope Comments

Mistakes and Errors A bank reconciliation statement can help uncover flaws. And mistakes in your c

Explains Delay Can you notice any delays in checking clearance or collection?

Fraud Detection Timely reconciliations aid in the prevention and detection of cash-related fraud.

22. What are Credit Notes and Debit Notes?

Ans: Be prepared to answer this question in accounting interviews for Accounts Payable and
Accounts Receivable positions.

Debit Note: When a customer returns items to the seller, he sends a debit note. Informing the
seller of the amount and quantity returned and requesting a refund.

Credit Note: When a seller gets products from a buyer, he prepares and sends a credit note to
the buyer, as info that the money for the returned goods is in the form of a credit note.

24. What are the Retained Earnings and Dividends?

Ans: Dividends can be paid in either cash or shares. Dividend payments in cash result in a
cash outflow, which is recorded as net decreases in the records and accounts. 

 The asset value on the balance sheet drops as the firm loses control of its liquid assets in
the form of cash dividends, impacting RE.
 
  Stock dividends do not result in a cash outflow. Instead, the stock payout transfers a
portion of the retained earnings to common stock.
 
 For example, if a company distributes one share as a dividend for each share held by
investors. The price per share falls by half since the number of shares effectively
doubles. 
 
 Since announcing a stock dividend does not create any real value for the company, the
per-share market price is changed in the amount of the stock dividend.
 
 A rise in shares does not affect the company's balance sheet because the market price is
immediately updated. It lowers the per-share value shown in capital accounting and
affects the RE.
 
 A growth-oriented company may not pay dividends or minimum sums. This occurs as
the firm would use retained earnings to fund services to achieve more growth. 
 
 The benefits include R&D, marketing, working capital needs, capital spent, and assets.
Such firms have a high level of retained earnings over time.
 
 An ageing company may not have many options. Or high-return progress to using its
cash. And may prefer to distribute dividends. Such businesses typically have poor RE.
 

25. What are Fictitious assets?

Fictitious assets are not assets, and they are deceptive or false. They are expenses and losses
that could not write down during the accounting period in which they occurred. Examples
include initial costs, business advertising expenses, the discount granted on the issuance of
shares, the loss experienced on the allocation of debentures, etc. Fictitious assets are shown
on the balance sheet's asset side.

26. What Is Bank Reconciliation?

Answer :
A bank reconciliation is the process of matching the balances in an entity's
accounting records for a cash account to the corresponding information on a bank
statement. The goal of this process is to ascertain the differences between the two,
and to book changes to the accounting records as appropriate.

27. The four steps in the bank reconciliation process is as follows:

1. Compare the deposits.
2. Adjust the bank statements.
3. Adjust the cash account.
4. Compare the balances.
 28.Bank reconciliation steps
1. Get bank records. You need a list of transactions from the bank. ...
2. Get business records. Open your ledger of income and outgoings. ...
3. Find your starting point. ...
4. Run through bank deposits. ...
5. Check the income on your books. ...
6. Run through bank withdrawals. ...
7. Check the expenses on your books. ...
8. End balance.

29. What are 4 types of bank reconciliation?

There are five primary types of account reconciliation:
 bank reconciliation
 vendor reconciliation
 business-specific reconciliation
 intercompany reconciliation
 and customer reconciliation

30. what are the month end activities in reconciliation?

There are five primary types of account reconciliation: bank reconciliation, vendor

reconciliation, business-specific reconciliation, intercompany reconciliation,
and customer reconciliation. Month-end close is a systematic process of
maintaining a record of the business's financial activities.