A blog written by Abishek Sriram, CA, Chennai
“Yes, every candidate has this problem! Including CA intermediates!”
This was my answer to a question about candidates’ knowledge of basic journal entries. My recruiter was surprised by my answer. There are numerous companies, at both ends of the spectrum of revenue size and complexities that employs lakhs of #accounting, #tax professionals. These professionals are mostly #commercegraduates working on roles with 0-5 years of experience in #accountingjobs, #taxjobs, and #auditjobs.
Even candidates, who wrote their CA Intermediate exam, find it difficult to answer basic journal entry questions! It makes me wonder what they wrote in their exams, and how they expect to clear. B. Com graduates that I interviewed struggled much more on this subject and fared worse with my basic questions.
Some of the questions that I asked were:
- What are the Golden Rules of Accounting?
- What is the difference between Prepaid and Accrued Expenses?
- What is the basic Journal Entry for Prepaid Expense? Is there any other entry that needs to be passed post this?
- What is the Entry for Audit Fee Payable?
- Part-payment of 50% received as a cheque for an invoice raised for Rs 100,000. What would be the journal entries for a sales transaction, and subsequent collection?
Some of the common mistakes that I came across are:
- Absence of basic understanding of the classification of an account as Asset, Liability, Income, or Expense.
- Wrongly classifying an account as Debit instead of Credit and vice versa.
Ability to understand a business transaction and record the correct #journalentry is a basic expectation for Accountants and even more for #Audit professionals. If #Accountants don’t understand this properly, the books they maintain will not be correct. This in turn will lead to subsequent audit issues and numerous corrections, wasting the time of senior management as well as an escalation of audit fees.
Thus, I would sincerely advise my fellow professionals to read up and be thorough with basic journal entries, especially in the areas of closing entries, transfer entries, and recording of transactions along with the tax impact. Thorough knowledge of journal entries is an important and non-negotiable criterion for cracking interviews of a Big 4 or any reputed organization, including mid-sized firms or companies.
Best wishes to an enriching career in #financejobs, @accountingjobs, @taxjobs, and @auditjobs!
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