50+ Assurance Associate Interview Questions and Answers

Journal entries for sales return and purchase return.

• Sales return journal entry: Debit Sales Returns and Credit Accounts Receivable/Accounts Payable.

• Purchase return journal entry: Debit Accounts Payable and Credit Purchase Returns.

The interview questions cover topics related to audit, accounting, cash sales, depreciation, and bank reconciliation statement.

• Audit and accounting are closely related as audit involves examining and verifying financial records prepared by accountants.

• Cash sales are recorded in the cash book and are an important source of revenue for businesses.

• Depreciation is the systematic allocation of the cost of a fixed asset over its useful life.

• BRS is prepared to reconcile the bank bal...read more

Auditing is the process of examining financial records to ensure accuracy and compliance with laws and regulations.

• Depreciation methods include straight-line, double-declining balance, and units of production.

• Basic journal entries include debits and credits to accounts such as cash, accounts receivable, and accounts payable.

• Auditing involves testing internal controls, verifying transactions, and assessing financial statements.

• Examples of auditing procedures include reviewing ...read more

I have X years of experience. Anti-money laundering refers to the laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.

• I have X years of experience in the field of anti-money laundering.

• Anti-money laundering (AML) is a set of laws, regulations, and procedures designed to prevent the illegal generation of income.

• AML is intended to prevent criminals from disguising illegally obtained funds as legitimate in...read more

GST is Goods and Services Tax, a comprehensive indirect tax levied on the supply of goods and services in India.

• GST was implemented in India on July 1, 2017, replacing multiple indirect taxes like VAT, excise duty, and service tax.

• It is a destination-based tax system, where the tax is collected at the point of consumption.

• GST aims to simplify the tax structure, eliminate cascading effect, and create a unified market across the country.

• It has different tax slabs for different ...read more

There are two main sets of accounting rules: GAAP and IFRS.

• Generally Accepted Accounting Principles (GAAP) are used in the United States.

• International Financial Reporting Standards (IFRS) are used in many other countries.

• GAAP and IFRS have some differences in their rules and guidelines.

• There are also industry-specific accounting rules, such as those for healthcare or real estate.

• Overall, there is no set number of accounting rules as they can vary depending on the context.

GAAP stands for Generally Accepted Accounting Principles and is a set of accounting standards used in the US.

• GAAP is a set of guidelines for financial reporting that ensures consistency and transparency in financial statements.

• It includes principles for revenue recognition, expense recognition, and asset valuation.

• Examples of GAAP include the matching principle, which requires expenses to be recognized in the same period as the revenue they helped generate, and the going conc...read more

Balance Sheet shows the financial position of a company at a specific point in time, while Profit & Loss Account shows the company's financial performance over a period of time.

• Balance Sheet is a snapshot of a company's assets, liabilities, and equity at a specific date.

• Profit & Loss Account shows the company's revenues, expenses, and net income or loss over a specific period, such as a year.

• Balance Sheet helps in assessing the company's liquidity, solvency, and financial hea...read more

Oligopoly is a market structure where a few large firms dominate the market.

• The firms in an oligopoly have significant market power.

• They can influence the price and output in the market.

• The demand curve for an oligopoly is kinked due to the interdependence of firms.

• The kinked demand curve shows that firms will match price cuts but not price increases.

• Examples of oligopolies include the automobile industry and the soft drink industry.

Depreciation methods include straight-line, double-declining balance, and units of production. Cash flow statement comprises of operating, investing, and financing activities.

• Straight-line method depreciates assets evenly over their useful life

• Double-declining balance method depreciates assets more heavily in the early years of their useful life

• Units of production method depreciates assets based on their usage

• Cash flow statement shows the inflow and outflow of cash from opera...read more

Accrued income is income that has been earned but not yet received or recorded in the accounting books.

• Accrued income is recognized as a current asset on the balance sheet.

• It is recorded through an adjusting entry, which debits an accrued income account and credits the corresponding revenue account.

• Examples of accrued income include interest on investments, rent, and services rendered but not yet billed.

• Accrued income is important for accurate financial reporting and forecast...read more

Auditing is the process of examining financial records to ensure accuracy and compliance with regulations.

• Auditing involves reviewing financial statements, transactions, and records.

• The goal of auditing is to provide assurance that financial information is accurate and reliable.

• Auditors may also identify areas for improvement in financial reporting and internal controls.

• Examples of audits include financial statement audits, internal audits, and compliance audits.

Present value is calculated to determine the current worth of future cash flows.

• Present value helps in evaluating the profitability of an investment or project.

• It takes into account the time value of money, as money received in the future is worth less than money received today.

• Present value is used in various financial calculations such as net present value (NPV) and discounted cash flow (DCF) analysis.

• It allows for comparing cash flows occurring at different points in time....read more

Costing is done to determine the cost of production and to make informed decisions regarding pricing and profitability.

• Costing helps in determining the actual cost of production.

• It helps in setting the selling price of the product or service.

• Costing helps in identifying areas where cost reduction can be done.

• It helps in making informed decisions regarding profitability and future investments.

• Examples of costing methods include job costing, process costing, and activity-based ...read more

Debit and credit are two sides of an accounting transaction. Debit refers to an entry on the left side of an account, while credit refers to an entry on the right side of an account.

• Debit is used to record an increase in assets or a decrease in liabilities or equity.

• Credit is used to record a decrease in assets or an increase in liabilities or equity.

• Debit and credit must always balance in an accounting transaction.

• For example, when a company purchases inventory with cash, th...read more

Audit is a systematic and independent examination of financial statements, records, operations, and performance of an organization.

• Audit is a process of evaluating the financial statements of an organization to ensure their accuracy and reliability.

• It involves examining the records, operations, and performance of an organization to identify any discrepancies or irregularities.

• The purpose of an audit is to provide assurance to stakeholders that the financial statements are fre...read more

Detective controls identify and alert management to risks and issues after they occur, enhancing internal control effectiveness.

• Detective controls are designed to identify errors or irregularities after they have occurred.

• Examples include audits, reconciliations, and monitoring systems.

• They help organizations assess the effectiveness of preventive controls.

• Incident reports and exception reports are common forms of detective controls.

• They provide feedback for improving risk ma...read more

AML/KYC refers to Anti-Money Laundering and Know Your Customer regulations that financial institutions must comply with.

• AML/KYC regulations are designed to prevent money laundering and terrorist financing.

• Financial institutions must verify the identity of their customers and monitor their transactions for suspicious activity.

• Examples of suspicious activity include large cash deposits, frequent international transfers, and transactions with high-risk countries.

• AML/KYC complian...read more

Covid's impact on business and reporting considerations for Assurance Associate

• Consider the impact of Covid on the business's financial statements

• Assess the impact on revenue, expenses, and cash flows

• Evaluate the adequacy of disclosures related to Covid in the financial statements

• Consider the impact of Covid on internal controls and the audit process

• Assess the going concern assumption in light of Covid

• Consider the impact of government assistance programs on the financial stat...read more

A journal entry of accrued interest is recorded to recognize interest expense that has been incurred but not yet paid.

• Accrued interest is a liability account that represents the amount of interest expense that has been incurred but not yet paid.

• The journal entry for accrued interest involves debiting the interest expense account and crediting the accrued interest payable account.

• For example, if a company has incurred $1,000 of interest expense but has not yet paid it, the jou...read more

Mortgage is a loan taken to purchase a property, where the property itself serves as collateral for the loan.

• Mortgage is a type of secured loan.

• The borrower pledges the property as collateral for the loan.

• The lender holds the right to seize the property if the borrower fails to repay the loan.

• Mortgages are usually long-term loans with fixed or adjustable interest rates.

• Common types of mortgages include conventional, FHA, and VA loans.

Provision for doubtful debts is an estimated amount set aside by a company to cover potential losses from customers who may not pay their debts.

• Provision for doubtful debts is a contra asset account on the balance sheet.

• It represents the amount of accounts receivable that the company does not expect to collect.

• The provision is based on historical data, industry trends, and the company's past experience with bad debts.

• It is important for companies to accurately estimate the pr...read more

Contingent liabilities are potential liabilities that may arise in the future depending on the outcome of uncertain events.

• Contingent liabilities are not recorded on the balance sheet but disclosed in the footnotes.

• They are dependent on the occurrence of a specific event, such as a lawsuit or warranty claim.

• Examples include pending lawsuits, product warranties, and guarantees on loans.

• Companies must assess the likelihood of the contingent liability occurring and estimate the ...read more

The Golden Rules of Accounting are basic principles that guide the process of recording financial transactions.

• The Golden Rule of Accounting states that Debit what comes in and Credit what goes out.

• This rule helps maintain the balance in the accounting equation: Assets = Liabilities + Equity.

• For example, when cash is received from a customer, it is debited to increase the cash account and credited to decrease the accounts receivable account.

Audit is a systematic examination of an organization's financial records to ensure accuracy and compliance with regulations.

• Audit involves reviewing financial statements, transactions, and internal controls.

• The purpose of an audit is to provide assurance to stakeholders that the financial information is reliable.

• Auditors must be independent and objective in their assessments.

• Examples of audits include external audits conducted by accounting firms and internal audits performed...read more

A journal entry for rent outstanding is recorded to show unpaid rent expenses.

• Debit Rent Expense account for the amount of rent owed

• Credit Rent Payable account for the same amount

• Example: Debit Rent Expense $1,000, Credit Rent Payable $1,000

Provision is an amount set aside for a specific purpose or expense.

• Provision is a financial term used in accounting.

• It is an amount set aside for a specific purpose or expense.

• Provisions are made to cover future expenses or losses.

• Examples include provisions for bad debts, warranties, and taxes.

• Provisions are recorded as liabilities on the balance sheet.

• They are adjusted over time based on changes in circumstances.

• Provisions are important for accurate financial reporting and ...read more