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INTERVIEW QUESTIONS

INTERVIEW QUESTIONS 1. What is the trial balance? Previous months closing balance which is C/F next Month. Trial balance needs to tally every time. 2. What do you mean by Mutual Funds? Types Regulated by the Investment Company Act of 1940, mutual funds are openended investment companies that pool Investors' money into a fund operated by a portfolio manager Closed-End Mutual Funds, Open-End Mutual Funds, Load Funds, and Load Funds. 3. What is ADRs? American Depository Receipts (ADRs) are certificates that represent shares of a foreign stock owned and issued by a U.S. bank. The foreign shares are usually held in custody overseas, but the certificates trade in the U.S. 4. What is service tax, how much calculated on service? Service tax is an indirect tax. All the people are paying this tax when ever they received any service from the service provider. Calculation of the service tax is based on the service. Approximately 5% on the service. 5. In intangible assets, patents, trade marks, copy rights we can feel or some thing can be done but what about goodwill? Goodwill is intangible assets and goodwill are calculated depending on the company past events. 6. What is the accounting treatment for contingent liability? There is no Accounting treatment for contingent liability According to AS3. We have to disclose it below the balance sheet. But the estimation of the contingent liability is very important as it has to known by the investors. If you clearly known the out come of the liability then you can make a provision. 7. What is exact difference between copy rights and patent rights? Copy RIGHT:-A right of ones own work. Others can not print the same. (Book) Trade mark:-Using symbol. (Wood land) PATENT: For new invention. 8. What is a contract note? A CONTRACT note is a confirmation of trade(s) done on a Particular day for and on behalf of a client 9. What are swaps?

INTERVIEW QUESTIONS
It means exchange of one set of cash flows into another Set of cash flows OR Swap is an agreement between two parties to exchange a set of cash flows over period in feature. 10. On BSE, some shares are listed as EQ and some as BE, What does it mean? That shown in NSE only i.e., Equity, it allows to Speculation (intraday trading), Trade for trade scripts shown in be group. Its not allowed to speculation. 11. What is cost of goods sold? Gross profit - sales = cost of goods sold 12. What is meant by Repot Rate and Reverse Repot Rate . Repot rate is the interest rate at which the reserve bank of India lends money to other banks. Reverse Repot rate is return banks earn on excess funds parked with the central bank against Government securities. 13. What is Deferred Tax? Deferred tax is either tax asset or tax liability. It is Temporary difference between book (accounting) values of assets and liabilities, and their tax value. 14. What do you mean by debt equity ratio? Debt equity ratio: external equity/ internal equity or TD/NW (Net wroth) a high ratio shows that claims of creditors are greater than those of owners A low ratio implies greater claims of owners than creditors 15. What is the difference between long term debt and short term debt? Long term debt is given for a long period of time generally for more than 5 years whereas short term debt is concerned with the debt less than 5 years 16. Distinguish between Piece rate and Time rate? For unit of producing pay rate is called piece rate. For per hour producing products is called time rate 17. What is diff between Profit & Loss a/c and trading a/c? Trading a/c is related to all direct expenses. But P &L a/c represents all indirect expenses. 18. What is Zero Based Budgeting? A method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a zero base and every function within an organization are analyzed for its needs and costs. Budgets are then

INTERVIEW QUESTIONS
built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one 19. How to calculate the Current Ratio, Liquid Ratio & Operating Ratio 1. Current ratio = current assets/ current liabilities (Current assets = cash, bank, stock, Bill receivables Debtors) (Current Liability = creditors, bank Over Draft balance, bills Payables) 2. Liquid ratio = Liquid Assets/ Liquid Liabilities (Liquid Assets = All current assets except "Stock") (Liquid Liabilities = All current liabilities Except "Bank OD balance") 3. Operating ratio = Operating exp + cost goods sold / Sales*100 20. What is meant by memorandum of association? A company document which sets out the basis on which a company is established, giving such details as its name, capital and the extent of the liabilities of its members. The memorandum of association covers the company's external dealings, as distinct from the articles of association, which spell out the company's internal rules. 21. Share premium? It is a premium which we earn from our Shares. It is the return from our shares. 22. What is securities market? The market where the financial assets like shares are going to be in available 23. What is operating cycle? The average time between purchasing or acquiring inventory and receiving cash proceeds from its sale. 24. Which one is best to company either debt or equity? Whether a company issues debt or equity is a function of the type of business we are considering. If it is a young or a startup company then it may not have the requisite cash flows to service the debt or may get debt at a very high rate, therefore the company would choose to raise cash through equity. Whereas a well established business with stable cash flows will be able to service its debt comfortably and would therefore raise debt. Also the asset base of a company determines how easily a company can raise debt or not. 25. Stock Turnover Ratio? The rate of stock turn over in units is calculated by taking no. of units sold during the time period divided by the average units of inventory on hand for the time. 3

INTERVIEW QUESTIONS
Stock turn over ratio=cost of goods sold/average stock 26. What are operating Costs? The day-to-day expenses incurred in running a business, such as sales and administration, as opposed to production also called operating expenses. 27. What is Capital Expenditure? Capital expenditure is the expenditure to acquisition of an asset for a long period to increase the capacity of business. 28. What is a holding company? The company which holds 51% of the stake in another company is called Holding company. The holding company can purchase up to 51% of its assets .the holding company may paid minority interest to the other investors (i.e., 49% of share holders) 29. What is insider trading? When a person gets the information about the internal decisions of the management of the company, which may include information regarding dividend declaration, or expansion project etc. even before they are being officially proclaimed through company spokesperson, and trades the shares of that company in a stock exchange, then such type of trading is called as Insider trading. It is illegal as the stock exchange is allowed to operate on market speculations and not on the basis of inside information about the company. 30. What is indirect tax? Tax has been classified in two types direct tax and Indirect tax direct tax can not be transferred to another Person where as indirect tax can be transferred to another Person. Direct tax is charged on persons and indirect tax is charged on commodities. Indirect tax collected by Manufacturer from distributor and distributor from retailer and then retailer from consumer that means indirectly Collected from consumer in chain process where as direct tax is only collected from assessed. 31. What is inflation? Todays value of money is not equal to the future value of the same amount of money. This difference is termed as 'Inflation'. (Or) Inflation is defined as a sustained increase in general Price levels over a period of time. It is measured as the percentage rate of change of a price index. 32. What is public ltd company and difference between public ltd company and public sector undertaking? A Public Sector Undertaking is a corporation in the public Sector in India, where management control of the company rests with the Government; it can be Central Government or The State Governments. Below given is a 4

INTERVIEW QUESTIONS
partial list of Public Sector Undertakings of the Government of India: ONGC Ltd. There are about 237 PSUs all over India. 32. Difference between Equity Capital and Preference capital? Equity shares does not have the preference rights, where Preference share holders carry the preference rights, Preference in respect of fixed dividend, the rate of dividend is fixed in advance.

33. What is by Bank Reconciliation Statement (BRS)? This is nothing but the closing balance of bank pass book tally with our book. The cheque payment transaction made in last day or during the month but it is cleared in next month. We should reconcile the bank statement. 34. What are GAAP? GAAP stands for generally accepted accounting Principles which includes the concepts of accounting. There are business entity concept, money measurement concept, going concern concept, debit equity concept etc. 35. What are Funds Flow Statements? It is the statement of changes in financial position, prepared to determine only the sources and uses of working capital between dates of 2 balance sheets. 36. What is Hedging? Hedging is the diversification of risk into various financial instruments i.e. futures, forwards, swaps, etc. 37. What is BSE? Tell me the details about that? BSE-Bombay Stock Exchange Where Nearly 50000 Companies Listed Following The Rules And Regulation Framed By The Sebi. It Was The Only Stock Exchange Market In India Where Investors Trade In Shares Of 30. 38. What is the difference between accounts and finance? The main difference between accounts and finance is the accounts calculate the cash flow on the basis of accrual basis i.e., the mercantile basis. Finance considers only when they are received. Accounts are the only input to finance. 39. What is depreciation? Depreciation is a non cash expense incurred by a company which arises due to wear and tear of the fixed asset as a result of constant usage. 2 methods of depreciation are: 1) Straight Line Method 2) Written Down Value Method (or) 5

INTERVIEW QUESTIONS
Decrease in the value of an asset due to wear & tear. 40. What is Capital Budgeting? Budgeting for long-term resources may be termed as Capital budgeting. Decisions for accepting certain project can also be termed as capital budgeting. There are two models in capital budgeting. 1) Traditional 2) Modern. Under the Traditional model the capital budgeting can be done on 1) Pay back period method and 2) Accounting Rate of Return method (ARR) Under Modern technique model it can be done on 1) Net Present Value method (NPV) 2) Profitability Index method 3) Internal Rate of Return method (IRR) 40. In what considerations the nifty and sensex value changes? In other words what's the reason for fluctuations in nifty and sensex??? The fluctuations in the nifty and sensex values are due to the demand and supply forces prevailing in the market. If the demand for a particular security is more than its supply prices will go up and vice-versa. If the prices of the maximum stocks in an exchange are going up because of lesser supply and more demand the index (sensex, nifty) will also go up. 41. What is minority interest? Minority interest in business is an accounting concept that refers to ownership of a company (subsidiary) that is less than 50% of outstanding shares. [1] Minority interest belongs to other investors and is reported on the consolidated Balance sheet of the owning company between liabilities and equity sections to reflect the claim on the assets belonging to other, non-controlling shareholders. Also, minority interest is reported on the consolidated income statement as a share of profit belonging to minority shareholders. Minority interest is an integral part of the enterprise value of a company. The converse concept is an associate company. 42. What Profit Earning ratio? P/E ratio is ratio that shows the relation ship of market Price and earning per share of the company 43. What is entry load? What is exit load? Entry load is the initial charges collected by Mutual Fund Company, those are not refundable. Exit load is the fee collected at the time of withdraw your Investment.

INTERVIEW QUESTIONS
44. What is Cash Flow Statements? Cash Flow Statements are prepared for company's cash inflow and cash outflow over a specific period of time. (Yearly) 45. What is the Use of Financial statements to a company? Financial statement is one of the tools who give the fact of the company or we can say as like mirror. It gives the negative and positive impact. You can make decision after analyses the current and compare with previous year balance sheet.

46. Why should I invest in Mutual fund which is not secured rather than investing in Any Nationalized bank which is giving me guaranteed interest rate of 9.5% per annum which is also more secured? The risk and returns in any financial instrument have a direct relationship i.e. higher the risk, higher is the returns. In the case of Indian economy growing at the rate of app. 9 to 10%, where the Indian corporate sectors have major contribution. Investing the money in financial sectors, will give more returns. Also it seems less risky considering the global economic scenario. Also the money management by expert will certainly minimize the risk as compared to the investment by you. The returns you get in such instruments are as good as 20-50% of your invested amount. So taking little more risk, you can at least double the returns. 48. Difference between Equity Capital and Preference capital? Equity share holders are the owners of the company. They have the right to receive dividends. Preference share holders have the preference to get fixed rate of interest of profit for their shares.

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