Accounting Terms Students Should Know For Successful Interview

No Matter Which Career You Chose, However Remember one thing Whichever Profession you adopt then Learn all about your Profession. You Should be a Genius in you occupation. Why I Need to Write this Article?? Because of Some of My Friends Failed to get accounting Job, Even they have done Master in Commerce but Don’t Know the Some Major Accounting Terms, That’s Why I Have Decided to Write Some thing Different that is Useful For My Friends and Some other Peoples. First We Discuss the Little Introduction of Accounting

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What is an Accounting ? and Why Do We Need Accounting?

Accounting is the art of recording, Classifying and Summarising in a Significant Manner and analysis of financial transactions of a business

Why Do We Need Accounting

Asking that question of an accountant is like asking a farmer why we need rain

We Need Accounting Because it’s grow and Flourish the Business and We can measure the Errors and Frauds Easily. Now a days Mostly Companies Using Computerized Accounting Systems like Tally ERP and quick Book Software

Systems of Accounting

There are Basically two Systems of Accounting

Cash System of Accounting

It is a System in which accounting entries are made only when cash is received or Paid.

 Accrual System of Accounting

It is a System in which accounting entries are made on the basis of amount having become due for payment or receipt.

What is an Accounting Cycle

Below Picture Showing the Complete Accounting Cycle, I Hope You will understand

accounting cycle

Define Accounts

Financial records of an organization that register all financial transactions, and must be kept at its principal office or place of business.

Types and Kinds of Accounts

There are three Major types of Accounts

·         Personal Accounts

·         Real Accounts

·         Nominal Accounts

Personal Accounts :

The elements or accounts which represent persons and organisations.

  • Mrs. Vimla a/c – representing Mrs. Vimla a person.
  • M/s Bharat & Co a/c – representing M/s Bharat & Co, an organisation.
  • Capital a/c – representing the owner of the business, a person or organisation.
  • Bank a/c – representing Bank, an organisation.

Real Accounts :

The elements or accounts which represent tangible aspects.

  • Cash a/c – representing cash which is tangible.
  • Goods/Stock a/c – representing Stock which is tangible.
  • Furniture a/c – representing Furniture which is tangible.

Nominal Accounts :

The elements or accounts which represent expenses, losses, incomes, gains.

  • Salaries a/c – representing expenditure on account of salaries, an expense.
  • Interest received a/c – representing income on account of interest, an income.

Tangible Assets :

Assets which have physical existence and which can be seen, touched or felt are called tangible Assets e.g. Land, Building, Machinery etc.

Intangible Assets :

Assets Which have no Physical existence and which cannot be seen, touched or felt are called Intangible Assets e.g. Goodwill, Patent Right, Trade Mark etc.

Fictitious Assets :

Assets which have no market value are called Fictitious Assets E.g. Preliminary Expenses

Direct Expense :

Expenses connected with the purchase of goods are known as Direct Expense E.g. Freight, Wages, Carriage inward etc.

Indirect Expense :

All those expenses other than direct expense are called indirect expenses E.g. Rent, Salaries, Legal Charges.

Cash book :

A book in which all the Transactions in which Cash Involved are recorded is Known as Cash Book.

Contra Entry :

An Entry in which Cash account and Bank account are involved and it is recorded on both sides of Cash book is called Contra Entry

Bank Reconciliation Statement :

If there is any discrepancy arises between the balance of the cash book and that of Pass book, The Depositor prepares a statement to explain the causes of Problems and to reconcile the two balances.

Single Entry :

Denoting a system of bookkeeping in which each transaction is entered in one account only.

Double Entry :

Double entry accounting is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the equation Assets = Liabilities + Equity, whereby each entry is recorded so as to maintain the relationship.

Prepaid Expense :

Prepaid expenses are future expenses that have been paid in advance. E.g Insurance,

Outstanding Expense / Accrued Expense :

The Expenses which have been incurred during the Current year but have not been paid till the end of the current year are called outstanding expenses or Accrued expenses, e.g. wages payable, accrued salaries.

Accrued Revenue :

The Revenue which we have been earned in the current year but has not been received in cash within the current year it will be received in next year. E.g. Rent Received

Unearned Revenue :

Revenue which has not become due but has received in advance E.g. Unearned Commission, Rent Received in advance etc.

Depreciation :

Gradual decrease in the monetary value of an asset is called Depreciation.

Deferred Cost :

deferred cost is a cost that occurred in a transaction, but will not be expensed until a future accounting period. An example of a deferred cost is the fees necessary to register a new bond issue

Matching Principle :

Matching Principle requires that expenses incurred by an organization must be charged to the income statement in the accounting period in which the revenue, to which those expenses relate, is earned.

Goods Received Note ( GRN )

Record of goods received at the point of receipt.

Shareholder Reference Number ( SRN )

A SRN is a unique number that identifies you as an Issuer Sponsored Holder with a listed company.

I hope you will like this and Please learn these terms before interview i am Sure your interview will be Successful and you got the Job, If you have any other terms Please share with us in Comments

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Dil Bole Oberoi