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Accounts Receivable Interview Questions

Here are some sample interview questions on accounts receivable that you may face in your job interview. Let us have a look at these questions and their relevant answers so that you get an idea how to answer these questions in your job interview.

Question 1: How the debenture holders differ from the creditors?

Answer: Debenture holders are different from the creditors because debenture holders are those who provide long term loans at a specific rate of interest in terms of cash, whereas creditors are those who provide only short term credits in terms of cash required for buying goods as well as other commodities.

Question 2: What is the difference between the International Accounting Standards and the Indian Accounting Standards?

Answer: The difference between the International as well as the Indian Accounting Standards is that, in International Accounting, the proposed dividend entry is made in that year in which it is declared, whereas in the Indian Accounting Standards, the proposed divided entry is passed in that year for which the dividend is declared.

For instance: Dividend for the 2008-2009 declared on 12th of December 2009 for the Financial Accounting Year = 2008-2009

According to the Indian Accounting Standards this entry would be passed in the 2008-09 Accounts records, but according to the International Accounting Standards this entry would be passed in the year 2009-10 Accounts records.

Question 3: What is the meaning of the term “trade receivables”?

Answer: In general, trade receivables are those amounts which are billed by a business or a vendor to its customers upon delivering the goods or services to them in the ordinary course of transaction. These billings are documented using the typical procedures on formal invoices, which are then summarized in a report named as accounts receivable aging report. But, in the general ledger, the trade receivables are recorded in a separate accounts receivable account, and are classified under the title current assets on the balance sheet if the payment is expected to be received from the customers within a span of one year.

Question 4: Explain the term contribution margin ratio?

Answer: The general meaning of the term contribution margin ratio is that it is the percentage of the contribution margin of a firm to its sales. A product’s price when subtracted from its variable costs that results in increase in the profit earned for each unit sold is known as the contribution margin. The total contribution margin which is generated by any entity represents the total earnings that are available to pay for its fixed expenses and generate a profit. Following is the formula for calculating the contribution margin ratio:

Contribution margin / sales = contribution margin ratio

Question 5: What do you understand by the term “derivatives” in terms of accounts?

Answer: A derivative in its most general sense is a contract between two parties that specifies the terms and conditions such as the dates of payment, resulting values of the underlying entities, estimated amounts, etc under which the dealings are to be made between the concerned parties. As the name itself suggests, it is a financial instrument that derives its value either from some of the real goods or stocks. In simple terms, it is a contract between two parties that needs to be followed for the exchange of amounts based on the action of services or goods.

Question 6: What does the term “inter company transaction” mean according to accounts receivable?

Answer: Inter company transaction is the term used for referring to transactions that take place between more than a couple of entities of the same group of an organization. In simple terms, it means that the receivable of one entity is equivalent to the payable of another entity. Before making the final balance sheet of the organization or company, all the inter company transactions are eliminated to avoid any misconceptions.

Question 7: Explain the term “trial balance” and what is its purpose?

Answer: A list of all the revenue as well as the capital accounts also referred to as general ledger accounts is termed as the trial balance. This list is contained in the ledger of a particular business. As the name itself suggests, the trial balance is to prove that there is a balance between all the debit and credit values. The name of the nominal ledger account as well as the value of that nominal ledger account are contained in this which are used for making documents such as profit and loss statement, balance sheet, and other financial reports as well. If there is a certain mismatch between the debit and the credit amounts, it shows that there is some error in the nominal ledger account.

Question 8: What does the term “BRS” stand for and what does it mean?

Answer: The term BRS is the abbreviation for the word Bank Reconciliation Statement. BRS in its general sense is a statement which is prepared by the companies or organizations in order to cross check the balance amount in the organization's records, according to the bank statement stated on a particular day or date.

Some payments are directly made by the bank based on the organization's request.

Question 9: What is the meaning of customer master record in terms of banking?

Answer: The permanent record that contains all the vital information about all the entities related to a particular transaction and/or the associated materials of exchange is referred to as “A Customer Master Record”. It is very important to load all this information into the system before the transactions take place in order to make sure that all the related transactions or inquiries will have consistent and updated data and reports generation as well as analysis can be done in an ordered manner. These records can be edited or changed according to the necessity and this procedure is termed as maintaining with respect to SAP.

Question 10: State the goals of accounts receivable.

Answer: When the customers are not able to make their payments as soon as the sales take place, accounts receivable comes into the picture. The aim of accounts receivable is to maintain records as well as summaries of all the transactions whose payments are due.

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