1.What is Assertions? PPE, Inventory Assertions?

Assertions are statements made by the management of a company regarding the accuracy,
completeness, and validity of the financial information presented in their financial statements.
These statements are made to provide assurance to stakeholders that the financial information
is reliable and trustworthy.

PPE (Property, Plant, and Equipment) Assertions refer to the accuracy and completeness of
the information related to the company's fixed assets, such as buildings, machinery, and
equipment.

Inventory Assertions refer to the accuracy and completeness of the information related to the
company's inventory, including the existence, ownership, and valuation of inventory items.

2. What is MATERIALITY with example?

Materiality refers to the significance or importance of a financial item or event in the context
of a company's financial statements. If an item or event is material, it can potentially impact
the decisions of users of financial statements. Materiality is determined by considering both
quantitative and qualitative factors.

For example, if a company has a total revenue of $1 million and discovers an error in their
financial statements that overstates their revenue by $10,000, this error may not be
considered material as it only represents 1% of the total revenue. However, if the same error
occurred in a company with a total revenue of $100,000, the error would be considered
material as it represents 10% of the total revenue.

3. What is Performance Materiality?

Performance materiality is a concept used in auditing, which refers to the amount or level of
materiality set by an auditor for the purpose of planning and conducting an audit. It is
typically lower than the overall materiality level and is used to determine the extent of audit
procedures to be performed on account balances or transactions. Performance materiality is
determined by considering the risks associated with specific accounts or transactions and the
level of assurance required by the auditor. The objective of performance materiality is to
ensure that the auditor obtains sufficient evidence to support their opinion on the financial
statements while maintaining efficiency in the audit process.

4. Types of Materiality
There are four main types of materiality:

1. Planning materiality: This is the overall materiality level set by the auditor at the planning
stage of the audit. It is used to determine the scope of the audit and the extent of audit
procedures to be performed on financial statements as a whole.

2. Performance materiality: As discussed above, this is the materiality level set by the auditor
for specific accounts or transactions to ensure sufficient evidence is obtained while
maintaining efficiency in the audit process.
3. Misstatement materiality: This refers to the level of misstatement in an account or
transaction that would be considered material to the financial statements as a whole. It is used
by auditors to determine whether adjustments need to be made to the financial statements.

4. Tolerable misstatement: This is the maximum amount of misstatement that the auditor is
willing to accept in an account or transaction without adjusting the financial statements. It is
determined by considering planning and performance materiality levels, as well as other
factors such as the nature and size of the account or transaction.

5. Analytical Procedures and Control Risk

Analytical procedures involve the use of financial and non-financial data to identify
relationships and trends that may be indicative of potential misstatements or risks in the
financial statements. These procedures can help auditors determine whether financial
statements are materially misstated.

Control risk refers to the risk that a material misstatement could occur in an account or
transaction due to a failure in internal controls. Auditors assess control risk in order to
determine the extent of testing required to obtain sufficient evidence about the accuracy of
financial statements.

6. Vouching and Verification of Assets and Liabilities

Vouching involves tracing transactions from the financial statements back to the original
source documents, such as invoices and receipts, to ensure that they are valid and accurate.
This helps auditors identify any potential misstatements or errors in the financial statements.

Verification involves physically inspecting assets and liabilities to ensure that they exist and
are accurately recorded in the financial statements. This includes counting inventory,
confirming accounts receivable balances with customers, and obtaining bank statements to
verify cash balances.

7. Difference between Vouching and Verification

Vouching involves tracing transactions from the financial statements back to the original
source documents, while verification involves physically inspecting assets and liabilities to
ensure that they exist and are accurately recorded in the financial statements. Vouching is
focused on validating the accuracy of transactions and ensuring that they are properly
supported by documentation, while verification is focused on ensuring that the assets and
liabilities actually exist and are properly recorded in the financial statements. Vouching is
typically used for transactions that have already been recorded in the financial statements,
while verification is used to confirm the existence of assets and liabilities that are reported in
the financial statements.

8. Are Bad Debts and Contingent Liabilities are same?

No, Bad Debts and Contingent Liabilities are not the same. Bad Debts refer to amounts owed
by customers or clients that are unlikely to be paid back, while Contingent Liabilities refer to
potential obligations that may arise in the future depending on the outcome of a future event
(such as a lawsuit or government investigation). Bad Debts are typically recorded as an
expense on the income statement, while Contingent Liabilities are disclosed in the footnotes
to the financial statements.

9. Bargain Purchase?
"A bargain purchase in business acquisitions occurs when a company buys another
company's assets and liabilities for a price lower than their fair value. This discrepancy
usually results in a gain for the acquiring company, which reflects the extra value gained
through the acquisition. It can be a positive sign for the acquiring company, but also
warrants careful evaluation of the valuation process."

10. Matching Concept

The matching concept is a core accounting principle that dictates expenses should be
recorded in the same period as the revenue they relate to. In essence, it ensures that a
company's financial statements accurately reflect its profitability by aligning expenses with
the revenue they helped generate. This principle is crucial for presenting a true picture of a
company's financial performance over time

11. Fundamental Accounting Assumptions

In accounting, there are four fundamental accounting assumptions that serve as the
foundation for financial reporting. These assumptions are:

1. **Going Concern Assumption:** This assumption assumes that a company will continue
to operate indefinitely, allowing it to record its assets and liabilities as if it will continue to do
business in the foreseeable future. In an interview, you can say:

"The going concern assumption is one of the fundamental accounting assumptions. It

presumes that a company will continue its operations indefinitely, which allows us to record
assets and liabilities as if the business will continue to operate in the foreseeable future. This
assumption is critical for preparing accurate financial statements."

2. **Accrual Basis Assumption:** The accrual basis of accounting records revenue and
expenses when they are earned or incurred, not when cash is received or paid. In an
interview:

"The accrual basis assumption is another fundamental accounting concept. It means that
we record revenue when it's earned and expenses when they're incurred, regardless of
when cash actually changes hands. This approach provides a more accurate picture of a
company's financial performance."

3. **Consistency Assumption:** This assumption requires a company to use the same

accounting methods and principles consistently from one period to the next. In an interview:

"The consistency assumption stipulates that a company should use the same accounting
methods and principles from one period to another. This ensures comparability and
reliability in financial reporting, allowing stakeholders to make meaningful comparisons over
time."

4. **Materiality Assumption:** This assumption allows companies to ignore insignificant

amounts when preparing financial statements. Materiality is subjective but should be
applied in a way that doesn't mislead users of the financial statements. In an interview:

"The materiality assumption allows companies to exclude insignificant amounts from their
financial statements. It's based on the idea that including immaterial details could obscure
the true financial picture. However, it's important to exercise judgment and ensure that
material information is not omitted."

These fundamental accounting assumptions are crucial in ensuring that financial statements
provide a fair and accurate representation of a company's financial position and
performance.

12. Substantive Procedures

Substantive procedures are audit techniques employed by auditors to obtain audit evidence
regarding the completeness, accuracy, and validity of financial statement transactions and
balances. These procedures involve detailed testing of financial transactions, account
balances, and disclosures to ensure they are free from material misstatement. Substantive
procedures are a critical component of the audit process and help auditors form an opinion
on the fairness of a company's financial statements

13. Deferred Tax Liability

"A deferred tax liability is an accounting term referring to the amount of income tax a
company will need to pay in the future because of temporary differences between its
financial statements and tax returns. These differences typically arise from items like
depreciation, revenue recognition, and expense recognition. Companies recognize deferred
tax liabilities to account for the future tax obligations resulting from these temporary
differences."

14. How to handle Pressure situation?

Handling pressure situations is something I've learned to do effectively through experience.
When faced with high-pressure situations, I follow a systematic approach. Firstly, I remain
calm by taking deep breaths and focusing on the task at hand. I prioritize tasks based on
urgency and importance, ensuring that critical issues are addressed first. I'm also a strong
believer in effective time management, breaking down tasks into smaller, manageable steps.
Communication is key in these situations; I keep my team or colleagues informed of any
challenges we're facing and seek their input when needed. Lastly, I draw on my problem-
solving skills to find creative solutions. I've found that this approach helps me stay
productive and maintain a positive attitude even when the pressure is high

15. Manage a situation where you managed to handle stressful situation

When responding to a question about managing a stressful situation, it's helpful to use the
STAR method (Situation, Task, Action, Result) to structure your response. Here's a sample
answer:

**Situation:** "In my previous role as a project manager, we were nearing a critical deadline
for a major client project. The project had encountered unexpected technical issues, and
tensions were running high among the team."

**Task:** "My task was to ensure that we not only met the deadline but also maintained
the quality standards our client expected. It was a high-stakes situation because the success
of the project had significant implications for our client relationship."

**Action:** "To manage this stressful situation, I took several steps. Firstly, I convened an
emergency meeting with the team to discuss the challenges we were facing openly. I
encouraged everyone to share their concerns and ideas for solutions. This open
communication helped alleviate some tension and fostered a sense of teamwork."

"I also decided to redistribute some of the workload, allocating team members to specific
issues based on their expertise. This helped streamline our efforts and prevented any one
person from becoming overwhelmed."

"I personally took on some of the more complex technical challenges, working alongside
team members to find solutions. I maintained a positive and solution-oriented attitude
throughout, providing encouragement and support to the team."

**Result:** "As a result of these actions, we not only met the deadline but also exceeded
the client's expectations in terms of the quality and functionality of the project. The client
was extremely pleased, and our team emerged from this stressful situation even stronger
and more cohesive. We also implemented post-project reviews to learn from the experience
and develop strategies for handling similar challenges in the future."

This response demonstrates your ability to handle stress, lead a team through a crisis, and
deliver successful outcomes even in challenging circumstances.

16. If one situation is given, then how will you do audit?

To conduct an audit in a specific situation, I would start by understanding the context and
scope. Then, I'd create a detailed audit plan, assess risks, perform substantive testing,
maintain thorough documentation, evaluate findings, communicate results, and ensure
quality control throughout the process. Adaptation to the unique situation and compliance
with audit standards are key priorities."

17. Inventory related accounting

Inventory-related accounting is the process of managing and reporting a company's

inventory. It involves tracking the quantity and cost of goods held for resale, production, or
use. Companies typically use methods like FIFO (First-In-First-Out) or LIFO (Last-In-First-Out)
to value inventory on their balance sheets. Effective inventory management is crucial for
accurate financial reporting and assessing a company's profitability and liquidity.

18. Internal Audit

Internal audit is an independent and objective assurance and consulting activity. It helps
organizations by evaluating and improving the effectiveness of their risk management,
internal controls, and governance processes. Internal auditors provide insights and
recommendations to enhance operational efficiency, financial integrity, and compliance with
regulations and company policies. Their work contributes to the overall success and
reliability of an organization's operations and financial reporting."

19. Revenue Model as per IFRS, IndAS115

Under IFRS (IFRS 15) and Ind AS (Ind AS 115), the revenue model is based on a five-step
approach. This approach outlines how revenue should be recognized from contracts with
customers:

Identify the Contract: Determine if a contract exists with a customer, with specific criteria for
contract identification.

Identify the Performance Obligations: Identify the distinct goods or services that the
company has promised to transfer to the customer.

Determine the Transaction Price: Establish the transaction price, which is the amount
expected to be received in exchange for fulfilling performance obligations.

Allocate the Transaction Price: Allocate the transaction price to each performance obligation
in the contract based on its relative stand-alone selling price.

Recognize Revenue as Performance Obligations are Satisfied: Recognize revenue when the
company satisfies each performance obligation, either over time or at a point in time, as
determined by specific criteria.
These standards aim to provide a more comprehensive and consistent approach to revenue
recognition, ensuring that revenue reflects the transfer of goods or services to customers as
they occur. This approach helps improve the comparability and transparency of financial
statements across organizations and industries."

20. Discrepancies on Physical Verification of PPE

Discrepancies in the physical verification of PPE refer to differences between the recorded
book value of assets and their actual physical existence and condition. When such
discrepancies are identified, it's crucial to investigate and reconcile them. This typically
involves conducting a thorough review, updating records if necessary, and assessing the
reasons for the discrepancies. It's essential to ensure the accuracy of the financial
statements and to maintain proper controls over PPE assets.

21. How materiality will be decided?

Materiality is determined by considering the impact that a misstatement or omission in

financial information could have on the decision-making of users of those financial
statements. In practice, materiality is assessed through a combination of quantitative and
qualitative factors. Quantitatively, it involves evaluating the financial magnitude of the
misstatement in relation to key financial metrics, such as net income or total assets.
Qualitatively, it considers the context, nature, and circumstances of the misstatement, as
well as its potential to influence stakeholders' decisions. Materiality is a professional
judgment that depends on the specific circumstances and should be applied to ensure that
financial statements provide a true and fair view of a company's financial position and
performance

22. Detection risk and Inherent risk

Detection Risk:
"Detection risk is the risk that our audit procedures may not catch a material misstatement
in the financial statements. We control detection risk by adjusting the nature, timing, and
extent of audit procedures based on the assessed inherent and control risks. When inherent
risk is high, we conduct more extensive procedures to enhance the likelihood of detecting
errors or fraud."

Inherent Risk:
"Inherent risk is the inherent susceptibility of an assertion or account balance to material
misstatement before considering internal controls. It factors in the nature of the account,
industry complexities, transaction intricacies, and system reliability. High inherent risk signals
a greater likelihood of material misstatements, requiring a more rigorous audit approach to
address the inherent risk effectively.

23) a) How you did Stat Audit?

To conduct a statutory audit, I follow a structured approach. Firstly, I thoroughly understand

the client's business, industry, and specific audit requirements. Then, I plan the audit, which
includes assessing risks, determining materiality, and developing an audit program. During
the fieldwork phase, I perform substantive testing, including sampling, examining financial
documents, and verifying transactions. I also assess the effectiveness of internal controls
when necessary. After collecting audit evidence, I analyze the findings and assess any
potential material misstatements. Finally, I prepare the audit report, outlining my findings
and opinion on the fairness of the financial statements. Throughout the process, I maintain
independence, professional skepticism, and compliance with auditing standards and
regulations

b) What you did in concurrent audit and Bank Stat Audit

Concurrent Audit:
"In a concurrent audit, I perform real-time monitoring of a bank's transactions, verify
transaction accuracy, ensure compliance with internal policies and regulations, detect fraud,
and provide timely reports to bank management to maintain the integrity of operations."

Bank Statutory Audit:

"In a bank statutory audit, my role is to assess the accuracy and compliance of a bank's
financial statements with accounting standards and regulatory requirements. This involves
planning the audit, gathering audit evidence, evaluating internal controls, ensuring
regulatory compliance, and providing an audit opinion on the fairness of the financial
statements."

24. Verification of PPE, Inventory, Accounts receivables

Verification of Property, Plant, and Equipment (PPE):
"In the verification of PPE, I review the company's records to identify and list all PPE assets. I
physically inspect selected assets to ensure they exist and are in good condition. I also
examine supporting documentation for acquisitions, disposals, and depreciation to verify the
accuracy of the financial statements. My goal is to confirm that PPE assets are appropriately
valued, recorded, and disclosed in accordance with accounting standards."

Verification of Inventory:
"When verifying inventory, I perform a physical count of selected inventory items to ensure
their existence and condition. I reconcile the physical count with the recorded inventory
balance. Additionally, I assess the company's inventory valuation methods (e.g., FIFO, LIFO,
or weighted average) and confirm they are applied consistently and in accordance with
accounting standards. My objective is to validate the accuracy of inventory values and
disclosures."

Verification of Accounts Receivables:

"In the verification of accounts receivables, I examine the company's accounts receivable
records and aging schedules. I select a sample of customer accounts and confirm the
balances with customers to ensure their accuracy. I also assess the adequacy of the
allowance for doubtful accounts to account for potential uncollectible amounts. The goal is
to verify that accounts receivables are properly stated and disclosed in the financial
statements."

25. Impairment loss and Depreciation – Factors and Differences

Depreciation is the systematic allocation of an asset's cost over its useful life to match
expenses with revenue. It's influenced by factors like initial cost, estimated useful life, and
residual value. Impairment loss, on the other hand, is recognized when an asset's value
drops significantly below its carrying amount due to factors like obsolescence or changes in
market conditions. It's based on factors such as changes in economic conditions or
technological advancements. Both depreciation and impairment loss reduce an asset's book
value, but depreciation is a routine, ongoing process, while impairment loss is an exceptional
adjustment triggered by specific events

26. Income Tax return – What information will you get from client to file IT Return?

To file an income tax return for a client, I typically request key information such as personal
details, income sources (W-2, 1099, K-1 forms), deductions, and credits documentation,
business or self-employment information if applicable, investment details, tax withholding
and estimated payments records, banking information for refunds, health insurance data,
and any other supporting documents like receipts. Gathering this information ensures
accurate and compliant tax filing while maintaining client confidentiality and security

27. FORM 3CA and 3CB

Form 3CA:

Form 3CA is a report that is to be submitted when the taxpayer is required to get their
accounts audited under various sections of the Income Tax Act, such as Section 44AB. This
form is used when the audit is conducted under the provisions of the Income Tax Act and
other applicable laws.
Form 3CB:

Form 3CB is a certificate issued by a chartered accountant who conducts a tax audit. It is a
statement of factual findings and conclusions drawn during the audit. This form is not
submitted to the tax authorities but is provided to the taxpayer as an auditor's certificate.
In summary, Form 3CA is a report submitted to the tax authorities, while Form 3CB is an
auditor's certificate provided to the taxpayer. Both forms are essential in the tax audit
process to ensure compliance with the Income Tax Act and other relevant laws.

28. How to know financial status from financial statements?

To assess a company's financial status from financial statements, I examine key elements in
each statement. On the balance sheet, I look at asset and liability values for liquidity and
financial stability. The income statement reveals revenue trends, profitability, and expenses.
The cash flow statement provides insights into cash generation and management. I calculate
essential ratios, analyze trends, and consider external factors. This comprehensive analysis
allows me to gauge the company's financial health and make informed decisions

29. What did you do in Physical Stock Verification?

In physical stock verification, I conducted a detailed physical count of the company's

inventory items. This involved physically inspecting and counting each type of inventory on
hand, including raw materials, work-in-progress, and finished goods. I compared the physical
count to the inventory records in the company's system to identify any discrepancies. If
discrepancies were found, I investigated the causes, such as shrinkage, damaged goods, or
data entry errors. The goal was to reconcile the inventory records with the actual physical
count to ensure accurate financial reporting and inventory managemen

30. What is Audit?

Audit is a systematic examination of financial information, records, or operations to verify

accuracy, compliance with laws and regulations, and reliability. It's conducted by
independent professionals to provide assurance to stakeholders and identify material
misstatements or irregularities

31. How Auditor uses performance materiality?

"Auditors use performance materiality as a threshold to assess the significance of
misstatements in individual account balances or classes of transactions. It is set at a lower
level than overall materiality and is used to guide audit procedures. If a misstatement in an
account or class of transactions exceeds the performance materiality threshold, it is
considered significant and warrants additional audit attention. Performance materiality
allows auditors to focus their efforts on areas that have a higher likelihood of containing
material misstatements, ensuring a more efficient and effective audit process.

32. Debt Covenant

Debt covenants are provisions in a loan agreement that establish rules and requirements for
the borrower. They can include financial metrics such as debt-to-equity ratios, interest
coverage ratios, or minimum cash balances. Operational covenants may restrict actions like
asset sales or additional borrowing without lender consent. Violating debt covenants can
trigger penalties or default, which may lead to accelerated repayment or other adverse
consequences for the borrower."

In essence, debt covenants are safeguards for lenders to mitigate risk and ensure that
borrowers meet their financial obligations and maintain financial stability throughout the
loan term.

33. Debt Extinguishment

Debt extinguishment is the act of fully or partially paying off a debt. It can occur through
various means, including making scheduled payments, early repayment, negotiation, or
settlement. Once the debt is extinguished, the borrower no longer has a legal obligation to
the lender for that particular debt, and it is considered settled or paid in full

34. What is Contingent Liablity? Where do you know it in financial statements?

Contingent liabilities are possible future obligations that depend on uncertain future events.
They are disclosed in the financial statements' footnotes or accompanying notes to inform
stakeholders about these potential liabilities. Common examples include pending lawsuits,
product warranties, or guarantees on loans to third parties. The disclosure ensures
transparency and allows users of financial statements to assess the potential impact on the
entity's financial health and performance

35. OCI (Other Comprehensive Income)

Other Comprehensive Income (OCI) is a component of the comprehensive income statement

that accounts for gains and losses that impact a company's financial position but are not part
of the net income calculation. Items included in OCI can include unrealized gains or losses on
investments, foreign currency translation adjustments, and certain pension-related
adjustments. OCI provides a more comprehensive view of an entity's financial performance
and is reported in the financial statements, typically in the equity section or as a separate
section of the income statement

36. How to Audit Cash and Bank Balances?

To audit cash and bank balances, I start by planning the audit, assessing risks, and obtaining
bank confirmations directly from the client's banks. I review bank reconciliations, physically
count cash if applicable, and meticulously vouch transactions to supporting documents.
Internal controls are also tested, and analytical procedures help identify anomalies. Any
discrepancies are investigated and documented. The goal is to ensure the accuracy and
integrity of cash and bank balances, providing assurance to stakeholders and complying with
auditing standards.

37. How to ensure Completeness and Accuracy of Financial Statements?

To ensure the completeness of financial statements, I plan the audit meticulously, document
controls, perform substantive testing, use analytical procedures, and maintain thorough
documentation. To ensure accuracy, I plan the audit to address accuracy risks, conduct
substantive testing, reconcile accounts, trace transactions, employ external confirmations,
and apply professional judgment. These steps help guarantee that financial statements are
both complete and accurate, providing stakeholders with reliable and trustworthy
information.

38. What are Cut-off procedures?

Cut-off procedures in auditing involve examining transactions and events at the end of an
accounting period to confirm that they are recorded in the correct period. This includes
reviewing sales and purchase invoices, shipping documents, receiving reports, and other
relevant documentation to determine the timing of transactions. By conducting cut-off
procedures, auditors ensure that revenue and expenses are allocated to the appropriate
accounting period, preventing misstatements in the financial statements due to timing
errors or manipulation.

39. Difference between Test of details and Analytical procedures

Test of details involves a detailed examination of specific financial items or transactions for
accuracy and completeness. It provides specific evidence about individual components. On
the other hand, analytical procedures involve a broader analysis of financial data to assess
reasonableness and consistency. They provide a high-level view and help identify trends or
anomalies. Both are essential audit techniques, with test of details offering detailed
evidence, while analytical procedures provide a broader context for assessing financial
statements."

40.What is the need for preparation of Cash Flow Statements? Methods of Cash Flow
Statements?

The Cash Flow Statement is essential as it assesses liquidity, solvency, and financial health. It
provides transparency by reconciling net income with cash flows. Cash Flow Statements can
be prepared using two methods: the direct method, which reports actual cash flows, or the
indirect method, which starts with net income and adjusts for non-cash items and changes
in working capital. The choice depends on data availability and reporting preferences.

41. Internal Controls

"Internal controls are the mechanisms and practices put in place by an organization to
protect its assets, maintain the integrity of financial information, and ensure compliance
with relevant laws and regulations. They encompass a range of activities, such as segregation
of duties, authorization procedures, physical safeguards, and regular reconciliations.
Effective internal controls are essential for minimizing risk, preventing fraud, and maintaining
the reliability of financial reporting

42. Difference between Statutory and Internal Audit

Statutory audits are legally mandated external audits conducted to verify the accuracy of
financial statements for external stakeholders. They are mandatory, conducted by
independent auditors, and focus on compliance with laws and regulations. On the other
hand, internal audits are conducted voluntarily by the organization's internal audit
department. They assess internal controls, operational efficiency, and risk management,
aiming to improve processes and internal governance."

43. Tolerable error

Tolerable error, often referred to as the acceptable error or materiality threshold, is the
maximum allowable level of error or misstatement in financial statements that auditors
consider acceptable without qualifying their opinion. It serves as a benchmark for auditors
to assess the significance of errors and deviations from accounting standards during the
audit process. When errors exceed the tolerable error threshold, auditors are required to
investigate and report them as material
44. Explain process of Audit along with its stages

The audit process consists of several stages:

Audit Planning: Understanding the client's business and planning the audit.
Risk Assessment: Identifying and assessing audit risks.
Internal Controls Evaluation: Reviewing the client's internal controls.
Substantive Testing: Testing transactions and account balances.
Audit Evidence: Collecting and evaluating evidence.
Audit Reporting: Formulating audit opinions and issuing reports.
Follow-up: Addressing any post-audit matters or recommendations

45. What is your knowledge about Power BI

Power BI is a Microsoft business intelligence and data visualization tool. It connects to

various data sources, transforms and models data, and creates interactive reports and
dashboards. Users can leverage DAX for advanced calculations, publish reports to the Power
BI service, and share insights securely. It's known for its ease of use and powerful data
analytics capabilities, making it a valuable tool for data-driven decision-making."

46. Cash and Bank balance Verification

"Cash and bank balance verification is a critical audit procedure aimed at confirming the
accuracy and existence of cash and bank balances in financial statements. This involves
reviewing bank reconciliations, confirming with financial institutions, and conducting
physical counts of cash on hand to ensure the reliability of financial reporting and prevent
errors or fraud."

47. Accumulated depreciation vs Depreciation

Accumulated depreciation is a contra-asset account on the balance sheet that represents

the total depreciation recognized over time for fixed assets. It offsets the asset's value. In
contrast, depreciation is an annual expense on the income statement that allocates the cost
of a fixed asset over its useful life. It's the ongoing recognition of an asset's decreasing
value."

48. Capitalization?
Capitalization is the accounting practice of treating certain costs as assets on the balance
sheet rather than as immediate expenses on the income statement. It is done for
expenditures that are expected to generate future economic benefits, such as long-term
investments, development of fixed assets, or research and development costs associated
with a new product or project. By capitalizing these costs, their value is recognized gradually
over time through depreciation or amortization, aligning with the benefits they provide to
the organization

49. Difference between V-Lookup and H-Lookup

VLOOKUP and HLOOKUP are Excel functions for searching and retrieving data. VLOOKUP
searches vertically, using a leftmost column, while HLOOKUP searches horizontally, using the
top row. VLOOKUP is commonly used for vertical data retrieval, while HLOOKUP is used for
horizontal data retrieval."

50. What are Financial Instruments

Financial instruments are contracts or assets that can be bought, sold, or traded in financial
markets. They encompass a wide range of assets, including stocks, bonds, derivatives,
currencies, loans, and more. Financial instruments facilitate investment, risk management,
and capital raising for individuals, businesses, and governments

51. Audit Opinion and its types?

An audit opinion is a formal statement by an auditor regarding the accuracy of financial

statements. There are three main types:

Unqualified Opinion (clean) - no significant issues.

Qualified Opinion - specific issues or limitations.
Adverse Opinion - major issues affecting fairness.
These opinions provide stakeholders with insights into the reliability of financial statements.

52. What is Financial Lease

A financial lease, or capital lease, is a lease agreement where the lessee is treated as the
owner of the leased asset for most of its useful life. This type of lease is used for acquiring
long-term and high-value assets. The lessee typically bears responsibilities like maintenance
and insurance and may have an option to purchase the asset at the end of the lease term.
Financial leases are recorded on the lessee's balance sheet as both an asset and a liability
53. Risk of Material Misstatements

The risk of material misstatement (RMM) is the risk that the financial statements of an entity
contain significant errors or misstatements that could go undetected by the auditor. It
comprises two components: inherent risk and control risk. Inherent risk represents the
susceptibility of financial statement components to misstatement due to their nature, while
control risk relates to the risk that internal controls will not prevent or detect such
misstatements. Auditors assess and manage RMM to plan and execute effective audit
procedures."

54. TDS

Tax Deducted at Source (TDS) is a tax collection mechanism in India. It involves deducting a
certain percentage of tax from payments made to individuals or entities, such as salaries,
interest, rent, or contractor payments. The deducted tax is then deposited with the
government on behalf of the payee. TDS ensures a steady collection of taxes throughout the
year and reduces tax evasion."

55. Significant Class of Transactions

Significant classes of transactions are categories of financial activities within an organization

that have a material impact on its financial statements. Auditors pay special attention to
these transaction types during the audit process because errors or misstatements in these
areas can have a significant influence on the accuracy and reliability of the financial
reporting

56. CARO

The Companies (Auditor's Report) Order (CARO) is an order issued by the Ministry of
Corporate Affairs in India. It outlines the specific requirements and content that auditors
must include in their reports when auditing the financial statements of companies in India.
CARO is aimed at enhancing transparency and ensuring compliance with legal and regulatory
provisions by requiring auditors to provide detailed assessments of a company's financial
condition and compliance with various requirements.

57. Schedule III

Schedule III is a part of the Companies Act, 2013, in India, and it lays down the format and
structure for the presentation of financial statements by companies. It specifies how the
balance sheet, profit and loss account, and cash flow statement should be prepared and
presented. Schedule III aims to standardize financial reporting practices, making it easier for
stakeholders to understand and compare the financial statements of different companies."

58. Cash and Cash Equivalents

Cash and cash equivalents (CCE) are highly liquid assets held by a company, including actual
cash and short-term, easily convertible investments with maturities of three months or less.
CCE represents funds that can be quickly accessed to meet short-term financial needs and is
a key indicator of a company's liquidity and ability to cover its immediate obligations.

59. IndAS 116, 115, 16, 36, 2, 23, 7, 109, 38, 40

IndAS 116 - Leases: IndAS 116 prescribes the accounting treatment and disclosure
requirements for lease transactions, replacing the previous IndAS 17. It requires lessees to
recognize most leases on their balance sheets, treating them as right-of-use assets and lease
liabilities.

IndAS 115 - Revenue from Contracts with Customers: IndAS 115 provides a framework for
recognizing revenue from customer contracts. It outlines principles for recognizing revenue
when goods or services are transferred to customers.

IndAS 16 - Property, Plant, and Equipment: IndAS 16 prescribes the accounting treatment for
property, plant, and equipment. It covers recognition, measurement, depreciation, and
disclosure of these assets.

IndAS 36 - Impairment of Assets: IndAS 36 deals with the testing and recognition of
impairment losses for assets. It requires regular assessments to determine if assets' carrying
amounts exceed their recoverable amounts.

IndAS 2 - Inventories: IndAS 2 sets out the accounting treatment for inventories, including
measurement at cost or net realizable value, and methods for cost calculation.

IndAS 23 - Borrowing Costs: IndAS 23 prescribes how to account for borrowing costs as
either capitalizable or expensable when acquiring, constructing, or producing a qualifying
asset.

IndAS 7 - Statement of Cash Flows: IndAS 7 outlines the presentation and disclosure
requirements for the statement of cash flows, categorizing cash flows into operating,
investing, and financing activities.
IndAS 109 - Financial Instruments: IndAS 109 provides comprehensive guidance on
accounting for financial instruments, including classification, measurement, and impairment.

IndAS 38 - Intangible Assets: IndAS 38 outlines the accounting treatment for intangible
assets, including recognition, measurement, amortization, and impairment.

IndAS 40 - Investment Property: IndAS 40 deals with accounting for investment properties,
which are held for earning rentals, capital appreciation, or both.

60. Journal entry for Provision for Doubtful debts, Bad debts and Deferred Revenue

[Debit] Bad Debt Expense

[Credit] Provision for Doubtful Debts (or Allowance for Doubtful Debts)

[Debit] Provision for Doubtful Debts (or Allowance for Doubtful Debts)
[Credit] Accounts Receivable (specific customer's account)

[Debit] Cash (or Bank)

[Credit] Deferred Revenue (or Unearned Revenue)

61.Pivot Table

Pivot Table is a data analysis tool in spreadsheet software that helps users summarize and
analyze large datasets. It enables users to rearrange and manipulate data to create
meaningful insights. Users can group, filter, and aggregate data, making it easier to identify
patterns, trends, and relationships within the data

62. Difference between Audit Plan and Audit Programme

An audit plan is a high-level document outlining the audit's strategy, scope, and objectives,
providing a broad overview. In contrast, an audit program is a detailed, step-by-step set of
instructions for auditors, specifying the specific procedures and criteria to be followed
during the fieldwork. While the audit plan is flexible and strategic, the audit program is
precise and operational, guiding the actual audit tasks.

63. Difference between Test of Controls and Test of Details

A Test of Controls assesses the effectiveness of internal controls and their design and
operation. It focuses on the control environment. On the other hand, a Test of Details
examines individual transactions and account balances for accuracy and completeness,
primarily focusing on financial statement amounts. Both are essential audit procedures,
serving different purposes in the audit process

64. Key Audit Matter Para( SA 701, 706), EOM

Key Audit Matter (KAM) Paragraphs (SA 701 and SA 706):

Purpose: KAM paragraphs are used to highlight the most significant areas of the audit that
required significant auditor attention. These areas have the highest risk of material
misstatement or involve complex judgment.
Content: KAM paragraphs provide detailed information about the specific audit matters,
including why they are significant, the audit procedures performed, and the auditor's
findings and conclusions.
Auditor's Responsibility: It is the auditor's responsibility to identify and communicate KAMs
to enhance transparency and provide users with insights into the audit process.
Emphasis of Matter (EOM) Paragraphs:

Purpose: EOM paragraphs draw attention to important matters in the financial statements
that, while not affecting the auditor's opinion, are relevant to the users' understanding of
the financial statements.
Content: EOM paragraphs provide additional context or explanations related to specific
items or events in the financial statements. They are used when the auditor believes it is
necessary to provide clarity or context to users.
Auditor's Responsibility: EOM paragraphs are included at the auditor's discretion when they
believe it's essential to enhance the clarity and understanding of the financial statements.

65. What is Internal Financial Control? Difference between Internal Audit and Internal
Financial Control?

Internal financial control refers to the policies, procedures, and safeguards implemented by
an organization to ensure the reliability of financial reporting, compliance with laws and
regulations, and the effectiveness and efficiency of operations.
Internal Audit is a comprehensive function that assesses various aspects of an organization,
including operations, compliance, and financial controls. Its objective is to improve
governance and risk management. On the other hand, Internal Financial Control specifically
focuses on financial processes and controls related to financial reporting and compliance. Its
main purpose is to ensure the reliability of financial reporting."

66. Why this company? Why this Domain? Why should I hire you? Where you want to see
yourself after 5 years?
These are common interview questions that assess your suitability for a specific job and your
career goals. Here are concise responses for each question:

**1. Why this company?**

- "I've researched your company extensively, and I'm impressed by your commitment to
innovation, your market leadership, and your positive company culture. I believe my skills
align well with your goals, and I'm excited about the opportunity to contribute to your
success."

**2. Why this domain?**

- "I've always been passionate about [domain], and I see tremendous growth potential in
this field. It aligns with my interests and expertise, making it a natural choice for me to
pursue a career in this domain."

**3. Why should I hire you?**

- "You should hire me because of my strong track record of [mention relevant skills and
achievements]. I am highly motivated, adaptable, and I thrive in challenging environments.
I'm confident that my contributions will positively impact the team and help achieve the
company's objectives."

**4. Where do you see yourself in 5 years?**

- "In five years, I see myself in a more senior role within the company, contributing to
strategic decision-making and mentoring junior team members. I'm committed to
continuous learning and growth to take on increased responsibilities and make a significant
impact on the organization's success."

Tailor your responses to your unique experiences and the specific job you're applying for to
make them more compelling during the interview.

67. Strength and Weakness?

Strengths:

"One of my key strengths is my strong analytical ability. I excel at dissecting complex

problems, breaking them down into manageable parts, and developing effective solutions.
This skill has been valuable in my previous roles, allowing me to contribute to data-driven
decision-making."
Weaknesses:

"I've recognized that I tend to be overly critical of my own work at times, which can
occasionally lead to spending more time on tasks than necessary. However, I've been
actively working on finding a balance between striving for excellence and managing my time
efficiently to ensure productivity."

68. Recent changes in Budget

69. General and Specific purpose financial statements

General Purpose Financial Statements: These are comprehensive financial statements

prepared according to established accounting standards (GAAP or IFRS) and are meant to
provide a wide range of users, including investors, creditors, and the public, with a complete
view of a company's financial performance and position. They typically include an Income
Statement, Balance Sheet, Cash Flow Statement, and Statement of Changes in Equity.

Specific Purpose Financial Statements: These are tailored financial statements created for a
specific audience or purpose outside regular reporting requirements. Examples include tax
returns, internal management reports, or financial statements prepared for specific
contractual agreements. They are customized to meet the needs of a particular group of
users or specific reporting requirements.

70. Which Materiality would you use in case of Debtors?

In the context of debtors (accounts receivable), the materiality threshold for financial
reporting varies depending on factors like the company's size, industry, and regulatory
requirements. There's no fixed threshold, but it's typically based on the relative significance
of debtor balances to the company's financial statements. It's influenced by factors like
company size, industry norms, user expectations, and financial covenants. Companies often
establish materiality thresholds based on historical practices and industry standards.

71. What are cash and cash equivalents?

Cash and cash equivalents (CCE) are liquid assets on a company's balance sheet that can be
quickly turned into cash within three months or less. Cash includes physical currency and
bank account balances. Cash equivalents are short-term, highly liquid investments like
Treasury bills or money market funds with maturities of three months or less. CCE measures
a company's short-term liquidity and its ability to meet immediate financial needs.
72. How will you verify bank balance if you didn’t have bank statement?

To verify a bank balance without a bank statement:

Contact the Bank: Call or visit the bank and inquire about the balance.

Online Banking: Check the balance via the bank's website or mobile app if you have online
banking access.

ATM: Use an ATM affiliated with your bank and your ATM card to check the balance.

Request a Statement: Request a copy of your statement by contacting the bank if you are
the account holder.

Mobile Banking Alerts: Use mobile banking alerts for balance updates.

Account Summary: Visit the bank branch or ATM for an account summary or mini-statement.

73. What is Sales Turnover Ratio? What is it’s use?

The Sales Turnover Ratio, also known as the Inventory Turnover Ratio, measures how
efficiently a company manages its inventory. It's calculated by dividing the cost of goods sold
(COGS) by the average inventory.

High Ratio: Indicates efficient inventory management and quick sales.

Low Ratio: Suggests slower inventory turnover, which may lead to obsolescence

74. Tell me about SA700 and types of Audit opinion

SA 700 is an auditing standard that guides auditors in forming opinions and reporting on
financial statements. There are two main types of audit opinions:

Unqualified Opinion (Clean Opinion): It signifies that the financial statements are accurate
and comply with accounting standards.

Qualified Opinion: This opinion is given when the auditor has some concerns but believes
that, overall, the financial statements are accurate and in compliance with accounting
standards.
75. Explain Walk through with an example?

A "walkthrough" is a method often used in various fields, including business processes,

software development, and auditing, to understand and document a process or system step
by step. It involves physically or mentally going through each step of a process to gain a
comprehensive understanding of how it works. Let's illustrate this concept with an example
of a financial process walkthrough:

A "walkthrough" is a method often used in various fields, including business processes,

software development, and auditing, to understand and document a process or system step
by step. It involves physically or mentally going through each step of a process to gain a
comprehensive understanding of how it works. Let's illustrate this concept with an example
of a financial process walkthrough:

Example: Walkthrough of an Expense Reimbursement Process

Imagine you are an auditor tasked with assessing the effectiveness and accuracy of your
company's expense reimbursement process. To conduct a walkthrough, you would do the
following:

Preparation: Before starting the walkthrough, gather relevant documentation, such as the
company's written policies and procedures for expense reimbursement.

Select a Sample Transaction: Choose a representative expense report from the recent past.
This report will serve as your guide for the walkthrough.

Begin at the Beginning: Start at the beginning of the expense reimbursement process,
typically when an employee incurs an eligible expense.

Interview employees to understand

76. If your boss is very harsh and gets anger easily, how will you convince him to help you if
you have any doubt?

To approach a harsh boss for help when you have doubts:

Timing: Choose a suitable time when your boss is not stressed.

Be Prepared: Research and try to solve the issue independently first.
Respectful Tone: Maintain composure and show respect.
Use "I" Statements: Express your need for assistance.
Acknowledge Expertise: Recognize your boss's knowledge.
Be Specific: Clearly state your doubt or question.
Effective and respectful communication is key when seeking help from a challenging boss

77. Any observations made in Articles?

In the context of Chartered Accountancy (CA) articleship:

It offers practical experience in accounting, audit, and taxation.

Typically lasts for a specific duration (e.g., three years in India).
Provides diverse exposure in various work environments.
Supervised by experienced CAs who mentor and guide.
Involves learning opportunities in audits, taxation, and more.
Fosters ethics, professionalism, and integrity.
Candidates may face challenges due to demanding work.
Successful completion is a significant step toward CA qualification.

78. How many Accounting Standards are there?

there are 42 Indian Accounting Standards (Ind AS) in India

39 Accounting Standards (AS) in India.

79. Trade payable cycle?

The "trade payable cycle" is the time it takes for a company to pay its suppliers after buying
goods or services on credit. It involves:

Purchasing goods or services on credit.

Receiving an invoice from the supplier.
Recording the invoice as a liability in accounts payable.
Paying the supplier within the agreed credit period.
Efficient management of this cycle is crucial for maintaining healthy cash flow and financial
stability.

80. Perpetual vs Periodic

Perpetual Inventory System:

Real-Time Tracking: Updates inventory continuously.

Accuracy: Offers high accuracy for real-time inventory data.
Complexity: Requires sophisticated systems.
COGS: Calculates COGS per sale with actual costs.
Periodic Inventory System:

Periodic Tracking: Updates inventory periodically (e.g., monthly or annually).

Accuracy: May be less accurate between updates.
Simplicity: Simpler and less resource-intensive.
COGS: Calculates COGS periodically, often based on estimates.

81. Assertions related to Expenses and Fixed Assets?

Assertions Related to Expenses:

Existence: Expenses recorded actually exist and were incurred during the reporting period.

Completeness: All relevant expenses have been included, and there are no undisclosed
costs.

Valuation: Expenses are accurately stated at their actual costs, neither overestimated nor
underestimated.

Allocation: Expenses are appropriately distributed among different periods, functions, or

cost centers per accounting standards.

Assertions Related to Fixed Assets:

Existence: Fixed assets listed in the financial statements actually exist and are owned by the
company.

Rights and Obligations: The company has legal ownership or control over the fixed assets,
and there are no encumbrances or restrictions.

Completeness: All fixed assets are included, and there are no undisclosed assets.

Valuation: Fixed assets are recorded at their correct values, reflecting depreciation or
impairment as required.

Presentation and Disclosure: Fixed assets are properly presented and disclosed in the
financial statements.

82. Provision for Bad debts and Recovery of Bad Debts – Concepts and Entries
Provision for Bad Debts:

Concept: The provision for bad debts, also known as the allowance for doubtful accounts or
bad debt reserve, is an accounting adjustment made by businesses to account for the
possibility that some of their accounts receivable may not be collected. It's an estimate of
the amount of receivables that are expected to become uncollectible in the future.
Recovery of Bad Debts:

Concept: Sometimes, previously written-off bad debts are later recovered. When this
happens, it's recorded as a recovery of bad debts, and the accounting entries must reflect
the collection of these amounts.

83. Disposal of Assets effects

The disposal of assets has the following effects:

Balance Sheet:

Decreases total assets.

Removes the asset and its accumulated depreciation.
Income Statement:

Recognizes a gain or loss on disposal, calculated as the selling price minus the book value of
the asset.
The gain or loss affects net income.
Cash Flow Statement:

Reflects any cash received from the disposal as an inflow.

Cash flows from investing activities are impacted.
Footnotes/ disclosures:

Details about the disposal and any related gain or loss are typically disclosed in the financial
statements' footnotes or accompanying notes.

84. Bad debts and Provision of Bad debts journal entries

- Debit Bad Debt Expense: $1,000

- Credit Accounts Receivable: $1,000

- Debit Bad Debt Expense: $2,000

- Credit Allowance for Doubtful Accounts: $2,000

85. External Confirmation

External confirmation is an auditing procedure to independently verify financial data by

directly obtaining confirmation from third parties like customers, suppliers, banks, or
lenders. It helps ensure the accuracy and reliability of the client's financial information,
enhancing audit quality and trustworthiness.

86. Unrecorded liability

An unrecorded liability is a debt or obligation that a company has incurred but hasn't been
documented on its balance sheet. It often includes contingent liabilities or future payment
obligations, like those from operating leases, warranties, or pending lawsuits. While not
immediately recognized on the balance sheet, they are typically disclosed in financial
statement footnotes to provide transparency to stakeholders. Identifying and accounting for
unrecorded liabilities is crucial for accurate financial reporting.

87. Accounts receivable verification

Accounts receivable verification is a critical auditing process to ensure the accuracy of

reported receivables. It involves:

Reviewing Internal Controls: Assessing company controls related to receivables.

Aging of Receivables: Categorizing accounts by age to identify potential issues.

Confirmation: Sending letters or emails to customers to confirm account balances.

Analytical Procedures: Using data analysis and historical trends to identify irregularities.

Substantive Testing: Detailed examination of specific transactions and supporting

documents.