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Accountancy interview questions and answers

Explain each real account and nominal account with examples.

Real Account: is an account of assets and Liabilities. Types of Real account
• Furniture Account
• Land Account
• Machinery Account
• Building Account
• Goodwill Account
• Patents & Trade Marks Account.
Nominal Account: is an account of incomes or expenses. Types of Nominal account:
• Salary Account,
• Commission Paid/Received Account,
• Telephone Expenses Account,
• Wages Account,
• Printing & Stationery Account,
• Interest Paid/Received Account.

What is the difference between mercantile system and cash system of accounting?

In mercantile system, expenses are considered as expenses during the period to which they pertain. Similarly, incomes are considered to be incomes during the period to which they pertain. This system of accounting is considered to be more ideal. On the hand, in cash system, expenses are considered to be expenses only when they are paid for and the incomes are considered to be income when they are actually received. This system of accounting is mainly used by the organizations established not for earning the profits.

What are the accounting concepts?

Accounting concepts are the basic assumptions on which the process of accounting is based. Following are the accounting concepts:
• Business Entity Concept
• Dual Aspect Concept
• Going Concern Concept
• Accounting Period Concept
• Cost Concept
• Money Measurement Concept
• Matching Concept

What is owner’s equity? How will you calculate it?

Owner’s equity, also known as capital of the business is the claim of the owner of the business against the assets of the business. Owner’s equity is calculated by subtracting equity of creditors from the total equity.

What is double entry Bookkeeping? What are its rules?

Double entry bookkeeping follows the principle according to which every debit has a corresponding credit; hence total of all debits is always equal to the total of all credits. In this system, one account is debited and at the same time another account is credited by the similar amount. Following are the rules for different account:
• For Personal Accounts: Debit the receiver, Credit the giver.
• For Real Account: Debit what comes in, Credit what goes out.
• For Nominal Account: Debit all the expenses, Credit all the incomes.

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