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Potential Viva Questions

The document outlines potential viva questions and suggested answers related to accounting concepts such as journalizing transactions, posting to the ledger, preparing trial balances, and understanding financial statements. Key topics include the importance of chronological transaction recording, the double-entry accounting system, and definitions of assets, liabilities, and capital. It emphasizes the significance of accurate record-keeping for financial analysis and decision-making.

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abhijit kumar borah
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3 views

Potential Viva Questions

The document outlines potential viva questions and suggested answers related to accounting concepts such as journalizing transactions, posting to the ledger, preparing trial balances, and understanding financial statements. Key topics include the importance of chronological transaction recording, the double-entry accounting system, and definitions of assets, liabilities, and capital. It emphasizes the significance of accurate record-keeping for financial analysis and decision-making.

Uploaded by

abhijit kumar borah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Potential Viva Questions & Suggested Answers:

1. What is the purpose of Journalizing transactions?

Answer: Journalizing is the process of recording business transactions in the journal in


chronological order. It is the first step in the accounting cycle, helping to organize transactions
systematically. Each journal entry includes the date, accounts affected, and amounts debited and
credited.

2. Why do we post journal entries to the ledger?

Answer: After journalizing, we post entries to the ledger to group similar transactions together.
The ledger helps in determining the balances of various accounts, making it easier to prepare the
trial balance and financial statements.

3. What is the purpose of preparing a Trial Balance?

Answer: A trial balance is prepared to verify the accuracy of the ledger entries. It ensures that
total debits equal total credits. If they do, it indicates that the ledger has been correctly posted.
The trial balance serves as a basis for preparing the financial statements.

4. Can you explain the difference between a balance sheet and a trial balance?

Answer: A trial balance is a statement that lists all the ledger balances to verify that debits equal
credits, while a balance sheet shows the financial position of a company at a specific point in
time. The balance sheet lists assets, liabilities, and equity, and it is derived from the trial balance.

5. Why is it important to record transactions in chronological order in the


journal?

Answer: Recording transactions in chronological order ensures that no transactions are missed
and that each is accurately accounted for. This order helps maintain a clear and organized record
of business activities, which is crucial for financial analysis and decision-making.
6. Can you explain the concept of 'Double Entry' in accounting?

Answer: Double-entry accounting means that every transaction affects at least two accounts: one
is debited, and the other is credited. This system ensures that the accounting equation (Assets =
Liabilities + Equity) stays balanced. For example, if the company buys goods on credit, the
purchases account is debited, and the creditors' account is credited.

7. Why do we have to create a Balance Sheet after posting in the ledger?

Answer: A balance sheet is created to show the financial position of the company, including its
assets, liabilities, and equity at a specific point in time. It helps stakeholders understand how the
company’s resources are financed (either by debt or owner’s equity) and how they are utilized.

8. How would you handle an error in the trial balance?

Answer: If the trial balance does not balance, I would recheck the journal entries, ledger
postings, and calculations to identify any mistakes. Common errors include transposition errors,
incorrect posting of amounts, or omitting transactions. Once the error is found, I would correct it
and recheck the trial balance.

9. What are 'Assets' and 'Liabilities'?

Answer:

 Assets are resources owned by the business that are expected to bring future economic
benefits, like cash, machinery, and buildings.
 Liabilities are the obligations of the business that it owes to outsiders, such as loans,
creditors, and accounts payable.

10. How do you determine the value of 'Capital' in the Balance Sheet?

Answer: The value of capital is determined by the owner’s investment in the business. It is
calculated as the difference between the company’s assets and liabilities. In the balance sheet,
capital is shown under the liabilities section as it represents the owner’s equity in the business.
11. What is the meaning of 'Debtors' and 'Creditors' in the Balance Sheet?

Answer:

 Debtors are customers who owe money to the business for goods or services purchased
on credit.
 Creditors are suppliers or vendors to whom the business owes money for goods or
services received on credit.

12. What do you mean by 'Drawings' in the books of accounts?

Answer: Drawings refer to the amount of money or goods withdrawn by the owner from the
business for personal use. It is recorded as a reduction in the capital account.

13. Why is 'Discount Allowed' recorded as an expense?

Answer: Discount allowed is recorded as an expense because it reduces the income earned from
sales. When a business allows a discount to its customers, it lowers the amount receivable,
thereby reducing the revenue from that particular sale.

14. Why do we record expenses like 'Rent' and 'Salaries' in the books of
accounts?

Answer: Expenses like rent and salaries are recorded to track the costs incurred in running the
business. These expenses reduce the profit of the company and are crucial for calculating net
income at the end of the accounting period.

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