PwC Tax Associate Interview Questions and Answers

Depreciation is the accounting method of allocating the cost of a tangible asset over its useful life.

• Depreciation reflects the wear and tear on an asset over time.

• Common methods include straight-line and declining balance depreciation.

• For example, a vehicle purchased for $20,000 may depreciate by $4,000 annually over 5 years.

• Depreciation affects financial statements by reducing taxable income.

• It is important for ...read more

US tax system includes federal, state, and local taxes, with various types such as income, sales, and property taxes.

• The federal income tax is progressive, meaning rates increase with income levels. For example, 10% for low earners and up to 37% for high earners.

• State taxes vary widely; some states have no income tax (like Texas), while others have high rates (like California).

• Sales tax is imposed on the sale of g...read more

Accrual concept is a principle of recognizing revenue and expenses when they are incurred, regardless of when cash is exchanged.

• Revenue and expenses are recorded when they are earned or incurred, not when cash is received or paid.

• This concept ensures that financial statements accurately reflect the financial position of a company.

• For example, if a company provides services in December but doesn't receive payment u...read more

The quick ratio is a financial metric used to measure a company's ability to meet its short-term obligations with its most liquid assets.

• Quick ratio is calculated by dividing quick assets (cash, marketable securities, accounts receivable) by current liabilities.

• A quick ratio of 1 or higher indicates that a company has enough liquid assets to cover its short-term liabilities.

• A quick ratio below 1 may suggest that a...read more

The three golden rules of accounting are the rules of debit and credit, which are: 1. Debit the receiver, credit the giver 2. Debit what comes in, credit what goes out 3. Debit expenses and losses, credit income and gains

• Debit the receiver, credit the giver - for example, when a company receives cash from a customer, the cash account is debited and the accounts receivable account is credited

• Debit what comes in, cr...read more

Bad debts are recorded as an expense in the income statement and as a reduction in accounts receivable in the balance sheet.

• Bad debts are debts that are unlikely to be collected from customers.

• The accounting procedure for bad debts involves estimating the amount of bad debts and recording them as an expense in the income statement.

• The allowance method is commonly used to estimate bad debts.

• Under the allowance meth...read more

Golden rules of accounting are basic principles that guide the process of recording financial transactions.

• There are three golden rules of accounting: Debit what comes in, Credit what goes out, Debit the receiver, Credit the giver, Debit expenses and losses, Credit income and gains.

• For example, when a company receives cash from a customer, the cash account is debited (increased) and the accounts receivable account...read more