Sunday, January 24, 2016
Most Common Job Interview Questions and Answers
Preparation is one of the keys to a successful interview. Below are some of the most common questions asked by hiring managers and prospective employers, along with appropriate answers for each question. Review these questions and developing your own answer to each question will help prepare you for various interview scenarios. Being able to answer these questions will also allow you to enter the interview with confidence.
This is probably the most commonly asked question that occurs at the beginning of an interview. Be ready with a short prepared answer but make sure it doesn't sound rehearsed. And don't start blabbering on about your personal life. Limit your answer to your career background and experience unless specifically asked about your personal life. Talk about past jobs as well as work experience that is related to the position you're interviewing for.
Regardless of why you left your last job make sure to stay positive. Always smile and focus on the positive reason such you were seeking the opportunity to expand your career opportunities, your interest in working with a new firm that provided greater opportunity, you desired to work in a new location, etc. Don't reference previous job problems or differences with management that caused you to leave. If you stay positive, your answer may help you. If you're negative, you will likely decrease your chances of getting the job for which you're interviewing.
Talk about specific work related experience for the position you're interviewing for. Make sure the experience is relevant. Don't talk about previous experience that is not related to the position in question. If you don't have specific career related experience speak about prior experience that has helped you develop the specific knowledge and skills required for the position you are applying for.
You should always answer yes to this question. Briefly explain why without going on and on. If you communicate that you're more successful than you really are you may come off as arrogant or unrealistic. A goof explanation is that you have set professional goals and that you have met some of these goals and are on track to meet more in the near future.
You don't want to say that everyone loves to work with you but you do want to have a few positive examples of co-workers who enjoyed working with you with an explanation why.
You always want to make sure that you're pretty familiar with the company that you're interviewing with. Nothing looks worse than a candidate who knows nothing about the company they say they're interested in working for. Find out everything you can about the company, its culture and its goals. You will also want to know how the company is positioned in its market as well as who its major competitors are.
You'll want to be prepare with some very specific examples of what you've done over the last year and what you're currently doing to improve your professional knowledge and skill set as well as anything else you're doing the shows self improvement.
Just answer this question honestly. Sometime an employer wants to know if there are other companies you're considering so that they can determine how serious you are about the industry, they're company and find out if you're in demand. Don't spend a lot of time on this question; just try to stay focused on the job you're interviewing for.
Again be honest. The interviewer will be able to sense very quickly if you're be disingenuous. Your answer should be base on your person reasons, career aspirations as well as research you've performed on the company. The most important thing you should do is make sure to relate your answer to your long-term career goals.
Sometimes companies have policies relating to the hiring of individuals related to current company employees. If you are related to anyone working for the company make sure you're aware of company policies before you enter the interview. If you have a friend or acquaintance working for the company make sure have good relationship with this individual before mentioning them.
This can be a very tricky question as the individual asking it is probably digging for something other than a simple answer to the question. We recommend that you don't immediately respond to the question directly. Instead, say something like, “That a difficult question. What is range for this position?” More often than not the interviewer will tell you. If the interviewer insists on direct answer you may want say that it depends on the details of the job - then give a wide salary range.
Here being specific is probably not the best approach. You may consider responding, “I hope a very long time.” Or “As long as we're both happy with my performance.”
Of course you're a team player - who isn't. But a simple yes probably isn't the response the interviewer is looking for. Be ready to provide specific example of how you've worked as part of a cohesive team to get things accomplished and how you've focus on team performance rather than individual performance. Make sure not to brag as this will make it appear as that you're more concerned about your own performance and accomplishments than those of the team.
14. Have you ever you have been in a position where you've had to fire someone? How did you feel about that experience?
Be very thoughtful about your answer. This is a very serious matter for most companies and requires a very serious answer. You need to express that you will do it when it is the right thing to do but you don't want to give the impression that you're callus to the process. Don't forget that firing is not the same as laying someone off - it typically is for the direct benefit of the company.
Just be honest. If you would retire then say so. But since you can't retire, and the interviewer already knows this, simply answer that since you can't this is type of work you prefer doing. However, if you wouldn't retire if you had the money then explain why. Work is an important element of happiness for most people and many won't retire even when they can.
This is typically a straightforward question that merits a straightforward answer. Do you have strong worth ethic? Will you do whatever it takes to make sure the job gets done? Just say so in your response. Keep it short, direct and positive.
This is a great question that provides you the opportunity to put your best foot forward, to tell the interviewer why he or she should consider hiring you for the job. Make sure you're well prepared for this question as you won't likely get a second chance to really shine.
This is another opportunity to show the interviewer what you're capable of so make sure to be prepared for this type of question. Have an example ready and make sure its an example of a suggestion you've made that was accepted and that have positive influence. If you can come up with an example that relates to the position you're applying for that would be even better.
This question is designed to find out if you get along well on team, with other and whether or not you'll be a fit with the interviewer's organization. It's a trap. Think real hard but fail to come up anything that irritated you about your co-workers. A short positive response is best.
There isn't any right answer. Just make sure to make your response positive and true. A few good examples include: Your ability to solve complex problems, Your ability to work well on a team, Your ability to shine under pressure, Your ability to focus in chaotic situations, Your ability to prioritize and organize, Your ability to cut through the fluff to identify the real issues, Your ability to influence other positively. If your strength relates to the position in question that will be more beneficial - but again be honest, don't create a strength for yourself just because you think it will sound good.
Provide several reasons including skills, experience and interest. If you can show how you've been successful in a similar career field or job position that will go along way to helping the interviewer believe you'll also be successful at this new job.
There is almost no good answer to this question, so don't be specific. If you tell the interviewer that the job you're applying for with his/her company is the perfect job you may loose credibility if you don't sound believable (which you probably won't if you're not telling the truth.) If you give the interviewer some other job the interviewer may get concerned that you'll get dissatisfied with the position if you're hired. Again, don't be specific. A good response could be, “A job where my work ethic and abilities are recognized and I can make a meaningful difference to the organization.”
Be very careful answering this question as most organization employ professionals with an array of personalities and characteristics. You don't want to give the impression that you're going to have problems working with anyone currently employed at the organization. If you through out anything trivial you're going to look like a whiner. Only disloyalty to the organization or lawbreaking should be on your list of personal characteristics of people you can't work with.
The interviewer could be asking you this question for a number of reasons. Obviously, the salary is an important factor to your interest in this job, but it should not be the overriding reason for your interest. A good answer to this question is, “The salary was very attractive, but the job itself is what was most attractive to me.”
Be prepared for this question. If you have to sit and think about it it's going to appear as if you're not sure or that you've never identified your own value in the work place - not good. You don't have to have a complex response. Keep it simple and honest. For example, several possibilities could be Leadership, Problem solving ability, Initiative, Energy, Work ethic, Innovative, etc., etc.
This question is trap. It is meant to see whether or not you'll speak poorly of an employer. No one wants to hire someone who's going to speak poorly of them down the road. Stay upbeat and positive - and most of all don't say anything negative about a previous employer.
Again, this question could get you in trouble so tread carefully. Some good answers might be that your previous job didn't provide any room for growth, that you were laid off due to a mandatory reduction in staff, that they closed their office in your state and required you to relocate, etc. Make sure not to mention anything negative about the people you worked with, the company in general or the job itself.
This is a fair question, as potential employers want to know if you're going to be able to get the job done even when things get a little bit stressful. You may say that you thrive under pressure or that you're able to get the job done even when things get a little bit stressful, just make sure to provide some real world examples of your ability to work under pressure in a prior job.
Keep your answer simple, direct and positive. Some good answers may be the ability to achieve, recognition or challenging assignments.
Be completely honest. You don't want to lie to get the job if you're not going to work the hours required.
There may be several good answers. Some include: you're able to set realistic, yet aggressive goals that push you and you're able to achieve them, you go the extra mile on all projects, client satisfaction is high, your boss is elated at your performance on all projects, etc.
Be completely honest and thoughtful with this one. You don't want to wake up one to find out that you're moving to a new city or state and it may be a major factor in your eligibility for employment. But again, if you don't want to move then the job probably isn't for you.
Try to avoid specific classifications, whatever it may be. Organizations usually prefer managers who can adapt their skills to different situations.
This question is often meant to trick candidates since acknowledgment of blind spots would indicate they were aware of them. Also, do not disclose bad habits or other personal concerns. Let the interviewer find out about your personal flaws through the course of the interview without directly stating these flaws.
Candidates without specific examples often do not seem credible. However, the example shared should be fairly inconsequential, unintentional, and a learned lesson should be gleaned from it. Moving ahead without group assistance while assigned to a group project meant to be collaborative is a good example.
Discuss qualities you possess required to successfully complete the job duties.
While discussing this, be sure to stress specific examples of what you bring to the company. Good qualities include resolve to fulfill job responsibilities, optimism, and a desire to be as efficient as possible while at work.
No matter your previous job experience or educational background, be sure to tell the interviewer you have the knowledge and skills to successfully execute the job responsibilities.
The first thing you should do is discuss experience you have the interviewer is unfamiliar with. Once that is detailed, tell the person conducting the interview that you are able to learn new tasks and information in a reasonable period of time and possess a strong work ethic. However, only state this if you can live up to these expectations.
Be sure to discuss a very specific example. Tell the interviewer what methods you used to solve the problem without focusing on the details of the problem.
Remain optimistic and do not be too specific. Good attributes include moral character, honesty, and intelligence since managers usually believe they possess these qualities.
Do not claim to be comfortable with a specific role if you in are in fact not comfortable with it. However, if you have no problem working in certain roles or situations, be sure to discuss this with the interviewer.
When answering this question, discuss situations where you completed tasks benefitting your previous employers.
When discussing a professional disappointment, make sure to discuss a scenario you could not control. Be positive about the experience and accept personal responsibility where applicable.
Be prepared to ask questions during every interview, specifically questions demonstrating your desire to benefit a potential employer. The following are examples of good questions: What departments or projects would benefit most from my skills and experience? What do you expect the learning curve to be before I'm effective and efficient?
Accounting period --The period of time over which profits are calculated. Normal accounting periods are months, quarters, and years (fiscal or calendar).
Accounts payable -- amounts owed by the company for the goods or services it has purchased from outside suppliers.
Accrual basis, system, or method -- an accounting system that records revenues and expenses at the time the transaction occurs, not at the time cash changes hands. If you buy a coat and charge it, the store records or accrues the sale when you walk out with the coat, not when you pay your bill. Cash basis accounting is used by individuals. Accrual basis accounting is used by most businesses.
Accrued expenses, accruals -- an expense which has been incurred but not yet paid for. Salaries are a good example. Employees earn or accrue salaries each hour they work. The salaries continue to accrue until payday when the accrued expense of the salaries is eliminated.
Aging -- a process where accounts receivable are sorted out by age (typically current, 30 to 60 days old, 60 to 120 days old, and so on.) Aging permits collection efforts to focus on accounts that are long overdue.
Amortize -- to charge a regular portion of an expenditure over a fixed period of time. For example if something cost $100 and is to be amortized over ten years, the financial reports will the entire $100 would show up on the financial report as an expense in the year show an expense of $10 per year for ten years. If the cost were not amortized, the expenditure was made. (Entries on Expenditure and Expense.)
Appreciation-- an increase in value. If a machine cost $1,000 last year and is now worth $1,200, it has appreciated in value by $200. (The opposite of depreciation.)
Assets-- things of value owned by a business. An asset may be a physical property such as a building, or an object such as a stock certificate, or it may be a right, such as the right to use a patented process.
Current Assets- are those assets that can be expected to turn into cash within a year or less. Current assets include cash, marketable securities, accounts receivable, and inventory.
Fixed Assets- cannot be quickly turned into cash without interfering with business operations. Fixed assets include land, buildings, machinery, equipment, furniture, and long-term investments.
Intangible Assets- are items such as patents, copyrights, trademarks, licenses, franchises, and other kinds of rights or things of value to a company, which are not physical objects. These assets may be the most important ones a company owns. Often they do not appear on financial reports.
Audit-- a careful review of financial records to verify their accuracy.
Bad debts -- amounts owed to a company that are not going to be paid. An account receivable becomes a bad debt when it is recognized that it won't be paid. Sometimes, bad debts set up to provide for possible bad debts. Creating or adding to a reserve is are written off when recognized. This is an expense. Sometimes, a reserve is also an expense.
Balance sheet -- a statement of the financial position of a company at a single specific time (often at the close of business on the last day of the month, quarter, or while liabilities and capital are listed on the right side or bottom. The total year.) The balance sheet normally lists all assets on the left side or top numbers on the right side or bottom. A balance sheet balances according to this of all numbers on the left side or top must equal or balance the total of all equation: Assets = Liabilities + Capital.
Bond --a written record of a debt payable more than a year in the future. The bond shows amount of the debt, due date, and interest rate.
Book value --total assets minus total liabilities. (See also net worth.) Book value also means the value of an asset as recorded on the company's books or financial reports. Book value is often different than true value. It may be more or less.
Breakeven point -- the amount of revenue from sales which exactly equals the amount of expense.
Breakeven point is often expressed as the number of units that must be sold to produce revenues exactly equal to expenses. Sales above the breakeven point produce a profit; below produces a loss.
Capital-- money invested in a business by its owners. (See equity.) On the bottom or right side of a balance sheet.
Capital also refers to buildings, machinery, and other fixed assets in a long-term use.
Capitalize-- to capitalize means to record an expenditure on the balance sheet as an asset, to be amortized over the future. The opposite is to expense. For example, research expenditures can be capitalized or expended. If expended, they are charged against income over a period of time usually related to the life of the products or the expenditure occurs. If capitalized, the expenditure is charged against services created by the research.
Cash --money available to spend now. Usually in a checking account.
Cash flow -- the amount of actual cash generated by business operations, which usually differs from profits shown.
Chart of accounts -- a listing of all the accounts or categories into which business transactions will be classified and recorded. Each account usually has a number. Transactions are coded by this number for manipulation on computers.
Contingent liabilities --liabilities not recorded on a company's financial reports, but which might become due. If a company is being sued, it has a contingent liability that will become a real liability if the company loses the suit.
Retained earnings -- profits not distributed to shareholders as dividends, the accumulation of a company's profits less any dividends paid out. Retained earnings are not spendable cash.
Two, Three, and Four Way Matching x the expense or cost of all items sold during an accounting period. Each unit sold has a cost of sales or cost of the goods sold. In businesses with a great many items flowing through, the cost of sales or cost of goods sold is often During the Period - Ending Inventory.
Computed by this formula: Cost of Sales = Beginning Inventory + Purchases
Credit-- an accounting entry on the right or bottom of a balance sheet. Usually an increase in liabilities or capital, or a reduction in assets. The opposite of credit is debit. Each credit in a balance sheet has a balancing debit. Credit has other usages, as in credit your account with the refund." "You have to pay cash, your credit is no good." Or "we will
Debit-- an accounting entry on the left or top of a balance sheet. Usually an increase in assets or a reduction in liabilities. Every debit has a balancing credit.
Deferred income -- a liability that arises when a company is paid in advance for goods or services that will be provided later. For example, when a magazine subscription is paid in advance, the magazine publisher is liable to provide magazines for the life are delivered of the subscription. The amount in deferred income is reduced as the magazines
Depreciation-- an expense that is supposed to reflect the loss in value of a fixed asset. For example, if a machine will completely wear out after ten year's use, the cost of the machine is charged as an expense over the ten-year life rather than all at once, when the machine is purchased. Straight line depreciation charges the same amount to expense each year. Accelerated depreciation charges more to expense in early years, less in later years. Depreciation is an accounting expense. In real the depreciation period ends. life, the fixed asset may grow in value or it may become worthless long before,
Discounted cash flow -- a system for evaluating investment opportunities that discounts or reduces the value of future cash flow. (See present value.)
Dividend-- a portion of the after-tax profits paid out to the owners of a business as a return on their investment.
Double entry -- a system of accounting in which every transaction is recorded twice -- as a debit and as a credit.
Earnings per share -- a company's net profit after taxes for an accounting period, divided by the average number of shares of stock outstanding during the period.
80 - 20 rule -- a general rule of thumb in business that says that 20% of the items produce 80% of the action -- 20% of the product line produces 80% of the sales, 20 percent of the customers generate 80% of the complaints, and so on. In evaluating any of the transactions you are concerned with. This rule is not exactly accurate, business situation, look for the small group which produces the major portion but it reflects a general truth, nothing is evenly distributed.
Equity-- the owners' share of a business.
Expenditure-- an expenditure occurs when something is acquired for a business -- an asset is purchased, salaries are paid, and so on. An expenditure affects the balance sheet when it occurs.
However, an expenditure will not necessarily show up on the income statement or affect profits at the time the expenditure is made. All expenditures eventually most expenditures involve the exchange of cash for something, expenses need not show up as expenses, which do affect the income statement and profits. While involve cash. (See expense below.)
Expense-- an expenditure which is chargeable against revenue during an accounting period. An expense results in the reduction of an asset. All expenditures are not expenses. For example, a company buys a truck. It trades one asset - cash - to acquire another asset. An expenditure has occurred but no expense is recorded. Only as the truck is depreciated will an expense be recorded. The concept of expense as different is important in understanding how accounting works and what financial reports from an expenditure is one reason financial reports do not show numbers that represent spendable cash. The distinction between an expenditure and an expense when the expenditure occurs. The opposite is to capitalize.) Mean. (To expense is a verb. It means to charge an expenditure against income
Fiscal year -an accounting year than begins on a date other than January.
Fixed cost -- a cost that does not change as sales volume changes (in the short run.) Fixed costs normally include such items as rent, depreciation, interest, and any salaries unaffected by ups and downs in sales.
Goodwill-- in accounting, the difference between what a companies pays when it buys the assets of another company and the book value of those assets. Sometimes, real goodwill is involved- a company's good reputation, the loyalty of its customers, and so on. Sometimes, goodwill is an over payment.
Interest-- a charge made for the use of money.
Inventory-- the supply or stock of goods and products that a company has for sale. A manufacturer may have three kinds of inventory: raw materials waiting to be converted into goods, work in process, and finished goods ready for sale.
Inventory obsolescence -- inventory no longer salable. Perhaps there is too much on hand, perhaps it is out of fashion. The true value of the inventory is seldom exactly what is shown on the balance sheet. Often, there is unrecognized obsolescence.
Inventory shrinkage --a reduction in the amount of inventory that is not easily explainable. The most common cause of shrinkage is probably theft.
Inventory turnover -- a ratio that indicates the amount of inventory a company uses to support a given level of sales. The formula is: Inventory Turnover = Cost of Sales Average ratio is significant in comparison with the ratio for previous periods or the Inventory. Different businesses have different general turnover levels. The ratio for similar businesses.
Invested capital -- the total of a company's long-term debt and equity.
Journal-- a chronological record of business transactions.
Ledger-- a record of business transactions kept by type or account. Journal entries are usually transferred to ledgers.
Liabilities-- amounts owed by a company to others. Current liabilities are those amounts due within one year or less and usually include accounts payable, accruals, loans due to be paid within a year, taxes due within a year, and so on. Long-term liabilities normally include the amounts of mortgages, bonds, and long-term loans that are due more than a year in the future.
Liquid-- having lots of cash or assets easily converted to cash.
Marginal cost, marginal revenue -- marginal cost is the additional cost incurred by adding one more item. Marginal revenue is the revenue from selling one more item. Economic theory says that maximum profit comes at a point where marginal revenue exactly equals marginal cost.
Net worth -- total assets minus total liabilities. Net worth is seldom the true value of a company.
Opportunity cost --a useful concept in evaluating alternate opportunities. If you choose alternative
A, you cannot choose B, C, or D. What is the cost or loss of profit of not alternative A.? In personal life you may buy a car instead of taking a European choosing B, C, or D? This cost or loss of profit is the opportunity cost of the vacation. The opportunity cost of buying the car is the loss of the enjoyment
Overhead-- a cost that does not vary with the level of production or sales, and usually a cost not directly involved with production or sales. The chief executive's salary and rent are typically overhead.
Post --to enter a business transaction into a journal or ledger or other financial record.
Prepaid expenses, deferred charges -- assets already paid for, that are being used up or will expire. Insurance paid for in advance is a common example. The insurance protection is an asset. It is paid for in advance, it lasts for a period of time, and expires on a fixed date.
Present value -- a concept that compares the value of money available in the future with the value of money in hand today. For example, $78.35 invested today in a 5% savings account will grow to $100 in five years. Thus the present value of analyze investment opportunities that have a future payoff. $100 received in five years is $78.35. The concept of present value is used to
Price-earnings (p/e) ratio -- the market price of a share of stock divided by the earnings (profit) per share. P/E ratios can vary from sky high to dismally low, but often do not reflect the true value of a company.
Profit-- the amount left over when expenses are subtracted revenues.
Gross profit is the profit left when cost of sales is subtracted from sales, before any operating expenses are subtracted. Operating profit is the profit from the primary operations of a business and is sales minus cost of sales minus operating expenses. Net profit before taxes is operating profit minus non-operating expenses and plus non-operating income. Net Profit after taxes is the bottom line, after everything has been subtracted. Also called income, net income, and earnings. Not the same as cash flow and does not represent spendable dollars.
Retained earnings -- profits not distributed to shareholders as dividends, the accumulation of a company's profits less any dividends paid out. Retained earnings are not spendable cash.
Return on investment (ROI) -- a measure of the effectiveness and efficiency with which managers use the resources available to them, expressed as a percentage. Return on equity is usually net profit after taxes divided by the shareholders' equity. Return on invested capital is usually net profit after taxes plus interest paid on long-term debt divided by the equity plus the long-term debt. Return on assets used is usually the operating profit divided by the assets used to produce the profit. Typically used to evaluate divisions or subsidiaries. ROI is very useful but can only be used to compare consistent entities -- similar companies in the same industry industries have different ROIs. or the same company over a period of time. Different companies and different.
Revenue-- the amounts received by or due a company for goods or services it provides to customers. Receipts are cash revenues. Revenues can also be represented by accounts receivable.
Risk --the possibility of loss; inherent in all business activities. High risk requires high return. All business decisions must consider the amount of risk involved.
Stock-- a certificate (or electronic or other record) that indicates ownership of a portion of a corporation; a share of stock. Preferred stock promises its owner a dividend that is usually fixed in amount or percent. Preferred shareholders get paid first out of any profits. They have preference. Common stock has no preference and no fixed rate of return. Treasury stock was originally issued to shareholders but has been subsequently acquired by the corporation. Authorized by issued stock is stock which official corporate action has authorized but has not sold or issued. (Stock also means the stock of goods, the stock on hand, the inventory of a company.)
Sunk costs -- money already spent and gone, which will not be recovered no matter what course of action is taken. Bad decisions are made when managers attempt to recoup sunk costs.
Trial balance -- at the close of an accounting period, the transactions posted in the ledger are added up. A test or trial balance sheet is prepared with assets on one side and don't, the accountants must search through the transactions to find out why. Liabilities and capital on the other. The two sides should balance. If they they keep making trial balances until the balance sheet balances.
Variable cost -- a cost that changes as sales or production change. If a business is producing nothing and selling nothing, the variable cost should be zero. However, there will probably be fixed costs.
Working capital -- current assets minus current liabilities. In most businesses the major components of working capital are cash, accounts receivable, and inventory minus accounts payable. As a business grows it will have larger accounts receivable and more inventory. Thus the need for working capital will increase.
Write-down-- the partial reduction in the value of an asset, recognizing obsolescence or other losses in value.
Write-off-- the total reduction in the value of an asset, recognizing that it no longer has any value. Write-downs and write-offs are non-cash expenses that affect profits.
Prepaid expenses are those expenses which are paid in advance to the party. Which ideally comes under Assets side in balance sheet. Journal Entry: - PP exp A/c --- Dr to Cash/Bank A/c.
What is a Non-PO Invoice?
Non-PO invoices means fast line purchasing done for emergency purpose or purchase without proper procurement planning.
Non Po invoices are the invoices issued for utility bills such as rental charges, water bills, telephone charges & electricity charges. While making payment against Non Po invoices, approval from d...
What is the meaning of TDS? How it is charged?
TDS means Tax Deduct at the source. It is deducted by the customer who gets the services from vendor or supplier and is deposited to IT Department.
What is the difference between Finance & Accounts?
Finance is related to money. whereas accounts is an art of recording, summarizing, classifying the books of accounts
Finance is the art of managing money, whereas accounting is the language which we use to manage money transactions.
What is difference between account payable and bills payable?
Bills Payable: Bills drawn by the creditor and accepted by the trader in settlement of accounts.
AP: Amount owed by the company to its vendors or suppliers in respective of goods/services purchased on credit.
Vendor Account Reconciliation;
Vendor account reconciliation what is the amount of vendor in our books. Vendor account and our account much be tally that like this payment, invoice, debit note, credit note, closing or opening balance.
Vendor account reconciliation is outstanding of suppliers or sundry creditors.
In the 2 way matching process quantity and amount on the invoice are matched to the quantity and amount on the corresponding purchase order
The 3 way matching process is used when an operating location is using online receiving,
In 3 way matching an invoice is matched to the corresponding purchase order for quantity and amount and to receiving information.
The 4 way matching process is used when an operating location is using online receiving and inspection. In 4 way matching an invoice is matched to the corresponding purchase order for quantity and amount, receiving, and inspection information.
There are four types of purchase orders.
1) Standard: This PO is created for one-time purchase of material.
2) Blanket: In this PO delivery schedule are not known clearly (Net price 1 and qty should invoice value while creating PO).
3) Contract: In this PO material required are not specified.
4) Regular PO: It is a long term agreement PO. In this PO it specifies materials, estimated costs, and tentative delivery schedules.
The Typical Procure to Pay Cycle
These steps are usually involved in your typical procure to pay cycle:
Identification of Requirement
Authorization of Purchase Request
Final Approval of Purchase Request
Identification of Suppliers
Receipt of the Quotation
Selection of the Vendor
Purchase Order Acknowledgement
Advance Shipment Notice
3 Way Match
Payment to Supplier
Depreciation – What is depreciation?
Definition: Depreciation is permanent and continuing diminution in the quality, quantity or value of an asset.
Depreciation is the measure of wearing out of a fixed asset. All fixed assets are expected to be less efficient as time goes on.
Depreciation is calculated as the estimate of this measure of wearing out and is charged to the Profit & Loss account either on a monthly or annual basis. The cost of the asset less the total depreciation will give you the Net Book Value of the asset.
Types of depreciation
Common methods of depreciation are as follows: Straight Line Depreciation; same depreciation is charged over the entire useful life.
Reducing Balance Depreciation; Depreciation expense decreases at a constant rate as the life of an asset progresses.
Sum of the Year' Digits Depreciation; Depreciation charge declines by a constant amount as the life of the asset progresses.
Units of Activity Depreciation; Depreciation charge varies each period in proportion to the change in level of activity
An accrual is a journal entry that is used to recognize revenues and expenses that have been earned or consumed, respectively, and for which the related cash amounts have not yet been received or paid out. Accruals are needed to ensure that all revenues and expenses are recognized within the correct reporting period, irrespective of the timing of the related cash flows. Without accruals, the amount of revenue, expense, and profit or loss in a period will not necessarily reflect the actual level of economic activity within a business.
Examples of accruals that a business might record are:
Expense accrual for interest. A local lender issues a loan to a business, and sends the borrower an invoice each month, detailing the amount of interest owed. The borrower can record the interest expense in advance of invoice receipt by recording accrued interest.
Expense accrual for wages. An employer pays its employees once a month for the hours they have worked through the 26th day of the month. The employer can accrue all additional wages earned from the 27th through the last day of the month, to ensure that the full amount of the wage expense is recognized.
Expense accrual for supplier goods and services. A supplier delivers goods at the end of the month, but is remiss in sending the related invoice. The company accrues the estimated amount of the expense in the current month, in advance of invoice receipt.
Sales accrual. A services business has a number of employees working on a major project for the federal government, which it will bill when the project has been completed. In the meantime, the company can accrue revenue for the amount of work completed to date, even though it has not yet been billed.
What is the difference between a Credit and a Debit balance?
A debit is an entry on the left side of an account. For example, the account Cash is debited when cash is received. The account Cash will be credited when cash is paid out. (A credit is an entry on the right side of an account.)
Credit balance: balance in an account showing that more money has been received than is owed
Debit balance: balance in an account showing that more money is owed than has been received
Explain Bank Reconciliation Statement. Why is it prepared?
Bank Reconciliation Statement is a statement prepared to reconcile the balances of cash book maintained by the concern and pass book maintained by the bank at periodical intervals. At the end of every month entries in the cash book are compared with the entries in the pass book. The causes of differences in balances of both the books are scrutinized and then reconciliation statement is prepared. This statement is prepared for a special purpose and once in a month. It is prepared with a view to indicate items which cause difference between the balances as per the bank columns of the cash book and the bank pass book at a particular date.
What are the reasons which cause pass book of the bank and your bank book not tally?
* Cheque deposited into the bank but not yet collected
* Cheques issued but not yet presented for payment
* Bank charges
* Amount collected by bank on standing instructions of the concern.
* Amount paid by the bank on standing instructions of the concern.
* Interest debited by the bank
* Interest credited by the bank
* Direct payment by customers into the bank account
* Dishonor of Cheques
* Clerical errors
Process flow for Procure to pay will go through two departments
(Commercial & Finance)
Procure - Commercial Department the following steps involve to procure any item
1. Received Requisition from concern Department
2. Request for Quotation from Suppliers at least three
3. Finalize the best Quotation by keeping in mind about our companies standard
4. Check the Budget for the same
5. Negotiate with supplier for more economic pricing and finalize the payment terms
6. Process the PO and forward to the supplier to supply the goods and services
Pay Cycle - Finance Department
The following steps need to be fulfil
1. Invoice should be match with PO
2. Invoice should has all the supporting documents such as PO copy, Delivery note duly signed by receiver (our staff who authorized to received goods / store keeper)
3. If the invoice is for services then it should be forwarded to the concern department head or project manager for his confirmation of work done and his approval
4. Even if it not the services invoice, it should forwarded to the concern person's approval who request the PO for the same
5. Finance can reject the invoice if it is not budgeted and ask for the reasons.
6. After receiving all the confirmation and approvals from the concern department heads the invoice will be update in to the accounting system first in order to avoid any duplication of Invoice and PO (it shown on accounting package if the invoice is duplicate if not, ate last it tells you if the PO already used or cancel)
7. Finance approved the invoice and process the payment base on payment terms with the supplier.