CRACK
MNC
INTERVIEW
A QUICK GUIDE
PREPARED BY :
CA RUPA JAIN DAGA
SKILLSHORT EDULIFE PVT. LTD.
What is a deferred tax
asset?
A Deferred Tax Asset arises when a company has paid more
tax in the current period but will benefit from it in future
periods. This usually happens due to temporary differences
between accounting income and taxable income.
Example:
Depreciation differences where tax depreciation is lower
than accounting depreciation initially
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What is a deferred tax
liability?
A Deferred Tax Liability arises when a company has paid
less tax in the current period but will have to pay more in
future periods. This happens due to temporary differences
where accounting income is higher than taxable income.
Example:
Depreciation differences where tax depreciation is higher
than accounting depreciation initially
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What is working capital, and
how is it calculated?
Working capital measures a company's operational efficiency
and short-term financial health.
It is calculated as:
Working Capital = Current Assets - Current Liabilities
Positive working capital indicates that a company can cover its
short-term liabilities with its short-term assets.
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What are the three main
financial statements?
The three primary financial statements are:
Balance Sheet: Shows a company's assets, liabilities, and
shareholders' equity at a specific point in time.
Income Statement (Profit & Loss Statement): Details
revenues and expenses over a period, resulting in net profit or
loss.
Cash Flow Statement: Reports cash inflows and outflows over
a period, categorized into operating, investing, and financing
activities.
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What is the difference
between accounts payable
and accounts receivable?
Accounts Payable (AP): Amounts a company owes to
suppliers or vendors for goods and services received but not
yet paid for; considered a liability.
Accounts Receivable (AR): Amounts owed to a company by
customers for goods or services delivered but not yet paid for;
considered an asset.
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What is accrual accounting?
Accrual accounting is an accounting method where
revenues and expenses are recorded when they are earned or
incurred, regardless of when cash is actually received or
paid. This method provides a more accurate picture of a
company's financial position by matching revenues with
related expenses in the same period.
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What is depreciation, and
why is it important?
Depreciation is the systematic allocation of the cost of a
tangible fixed asset over its useful life. It reflects the wear
and tear, usage, or obsolescence of the asset. Depreciation is
important because it matches the cost of using an asset with
the revenue it generates, ensuring accurate profit
measurement and compliance with accounting standards.
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What is a trial balance?
A trial balance is a bookkeeping worksheet listing all ledger
accounts and their balances at a specific point in time. Its
primary purpose is to verify that total debits equal total
credits, ensuring the accuracy of the double-entry
accounting system before preparing financial statements.
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What is the purpose of a
bank reconciliation?
A bank reconciliation ensures that a company's financial
records (cash book) align with the bank statement. It identifies
discrepancies due to timing differences, errors, or
unauthorized transactions, ensuring the accuracy and
completeness of cash records.
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What is the difference
between a capital lease and
an operating lease?
Capital Lease (Finance Lease): A lease that transfers
substantially all risks and rewards of ownership to the lessee;
the asset and liability are recorded on the lessee's balance
sheet.
Operating Lease: A lease where the lessor retains substantially
all risks and rewards of ownership; lease payments are treated
as operating expenses, and neither the asset nor liability is
recorded on the lessee's balance sheet.
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