Technical Questions of R2R

Question 1:- What is Bank Reconciliation:-

Answer:- Bank Reco is the process of matching the closing balance of the
bank statement with the closing balalnce of Bank ledger (SAP
Ledger) for a specfied period.

In my current organization, i am peparing the bank reconciliation of

two banks on daily, weekly & monthly basis. I have to compare both
the files & highlight the mismatch & take action accordingly.

Question 2:- What are the reasons that causes bank reconciliation to
prepare?

Answer:-
1. Cheque issued but not presented:- Sometimes we issue a
cheque to the vendor but vendor forget or delay in depositing the
same into bank.

2. Debited by Bank but not credited by us:- Bank Charges

3. Credited by Bank but not debited by us:- For example Interest

on Investment.

4. Debited by us but not credited by Bank:- For Example when we

deposit any cheque at month end but it will be cleared in the next
month. This is also the case of time & difference.

5. Other reasons like Dishonour of Cheque, Clerical error etc.

Question 3:- Which balance do you take while preparing the bank
reconciliation?

Answer:- I will take either the closing balance of the bank

statement or the closing balance of SAP Ledger

Question 4:- What is the process to prepare the bank reconciliation?

Answer:- For preparing Bank Reconciliation, First I get the bank

statement from the Bank portal, I log in to the bank , go to the bank
statement tab, select the respective period & export in Excel.
Now we go FBL3N, Select the Bank Ledger followed by Co Code &
select the period & export the data in Excel.

Now, we have two Sheet, No 1 is the bank statement & second

one is the bank ledger that we need to reconcile by the use of
vlookup & highlight the mismatch if any.

Question 5:- What we do after preparing the bank reconciliation?

Answer:- After preparing the bank reconciliation, I need to work
on open items. For Example for Vendor Entries if open, I need to approach
to the AP team for incoming Payment, I need to approach to the AR
Team.
If the period is open then we ask them to take the entries in the
same period else they take the entry in current period.

Question 6:- You are going to prepare the bank reconciliation &
you have taken the closing balance of SAP Ledger which item will
you add & which you subtract?

Answer:- If we are taken the closing balance of Bank Ledger (SAP

Ledger) then we will add the following items:-
1. Cheque Issued but not presented
2. Credited by bank but not debited by us

we need to subtract the below items:-

1. Debited by bank but not credited by us
2. Debited by us but not credited by bank

If we are taken the closing balance of Bank Statement then we have

to do vice versa.

Question 7:- There is a bank charges of Rs 4500 but mistakenly you

have entered as 45000/- so what would you do in this case?

Answer:- In this case, we have two options,

1. Either to revere the complete entry (FB08) & take the fresh entry
(FB50)

2. We have to rectify this entry by FB50 by 40500/- in which we debit

the bank & credit the bank charges.

Question 8:- How many transaction that you need to reconcile per
day in bank reconciliation?

Answer:- 300 to 350 transaction per day.

Question 9:- How long will you take to prepare the bank reconciliation?

Answer:- It depends on the number of transaction for example for

300 to 500 transaction, i need to spend 1 to 2 hours as i also have to
work on open items.

Question 10:- We have the same closing balance in both Bank

Statement & Ledger so do we need to prepare the bank
Reconciliation?
Answer:- Yes, because there may be transaction where debit &
credit are matching in both bank Statement & Ledger.

Questions :- There is vendor cheque which is opened since last 2 Months

What should you do in this case?

Answer:-In this case we need to highlight this to the AP team so that they
apprach to the vendor for depositing the same into bank before it get stale.

Question:- When the cheque will get stale?

Answer:- 3 Months

Question 11:- Which formula do you apply while preparing the bank
reconciliation?

Answer:- Vlookup:- Is used to retrieve the data from a range of Cell

based on Column No.
=vlookup(lookup value, Range, Column No, 0)

Question 12:- In Which Bank, does the company has an account?

Answer:- Sorry, i cannot share this is against the company policy.

Question 13:- How much is the balance in the bank account?

Answer:- Sorry, i cannot share this is against the company policy.

Question 14:- What is Accruals?

Answer:- Accruals Accounting of principle states that every transaction is to

be recorded in the system when they incur. Accrual Expense means the
expense in which we have taken the services but we have not received
the bill or posted in the system. In that case we go for accrual.
Once We receive the actual Invoice then we have to reverse the
previous entry of Accruals.

Every 25 of the month we have send the mail to every department

regarding the accruals In which we have taken the services but the
bill against the said services has not been received or booked in an
accounting system.
Expense Account Dr
To Accruals Account---B/s Liabilities

Question 15:- What is the Journal Entry for distributing goods as

free sample?

Answer:- Advertisement Account Dr/ Charity Account Dr

To Purchase Account
Question 16:- What is Prepaid Expense?

Answer:- Prepaid Expense is the expense that is paid in advance.

For example Insurance, AMC, Rent etc.

An Entity initially records this transaction as a prepaid expense &

transfers it to Profit & Loss account over the usage of time.
In Prepaid, First we have to pass the Entry (Prepaid
Expense Account Dr To Bank Account).

As per the confirmation by the AP team over the mail regarding the
prepaid expense & we have to maintain the tracker in Excel & pass
the accounting entry at every month end

Expense Account Dr
To Prepaid Expense Account

This is the GL to GL recurring entry that we need to pass every

month end by FBR2.

Question 17 :- What is the backup to Post the Prepaid Entry?

Answer:- Proper documentation (Insurance Policy Copy) along with

the Approval, Document No of the Entry Posted.

Question 18:- You have paid an advance Rent of Rs 45,000 for 3

months to XYZ Ltd on 1st April 2020.

Pass necessary Accounting Entry?

The First Entry Would be

1st April 2020

Prepaid Rent Account Dr 45K-----------B/s---Assets

To Bank Account 45K

Now we have to transfer this prepaid expense to P&L Account &

the accounting entry would be

30th April 2020

Rent Account Dr 15K

To Prepaid Rent Account 15K

This is a recurring entry that we need to pass every month by using

T code FBR2.

Question 19:- You have paid an advance Rent of Rs 60,000 for 3 months
to XYZ Ltd on 1st April 2020 & you forget to take the entry in the month of
May’20.
Pass necessary Accounting Entry?

The First Entry would be

01st April 2020

Prepaid Rent Account Dr 60K

To Bank Account 60K

Now we have to transfer this prepaid expense to P&L Account &

the accounting entry would be

30th April 2020

Rent Account Dr 20K
To Prepaid Rent Account 20K

31st May 2020 ..Forget to take the entry.

30th Jun 2020

Rent Account Dr 40K

To Prepaid Rent Account 40K

Question 20:- Whirlpool India has taken the AMC (Annual

Maintenance Cost) of Printers & AC from AIDC Ltd of Rs 1,02,300 on
07 May 2020.

1. Pass the Necessary Accounting Entry?

2. Treatment of Prepaid at Month End?
3. Prepare the Audit Schedule?

Answer 1.
07 May 2020 -
Prepaid Account Dr 1,02,300
To Bank Account 1,02,300

Balance Sheet
Liabilities Assets --------
Prepaid Expense 1,02,300

31st May 2020

AMC Account Dr 7,006

To Prepaid Account 7,006
(1,02,300 *25/365)= 7006

P&L
Expenses
AMC Charges 7,006

Balance Sheet
Assets
Prepaid Expense 102,300
Less Prepaid (7,006)
95,294

Note: This is a recurring entry that we need to pass every month.

Question 21:- What is prepaid Income?

Answer:- Prepaid income means the income that is received in

advance. For e.g Rent, Insurance etc
An entity initially records this transaction as a prepaid income &
transfer it to Profit & loss account over the period of time.

Bank Account Dr
To Prepaid Income Account ---Liablities

At Month:-
Prepaid income Account Dr
To Income

Question 22:-What is Inter Company?

Answer:- When there is a transaction between two legal entities of

the same organization or between the parent company & its
subsidiaries.

Question 23:- What is Intra Company?

Answer:- When there is a transaction between two branches of the

same organization. For Example:- Whirlpool is a US Based
Company & It has subsdiary in India & India has two branches one
in delhi & one in Gurgaon So the transaction between Delhi &
Gurgaon is called Intra Company transaction & the transaction
between Whirpool Us & India is called Inter Company transaction.

Question 24:- Do you reconcile B/s?

Answer:- In Reco of B/s, we need to reconcile the items of B/s like prepaid
Expense, Amortization, GST Reconciliation,Bank Reconciliation,
Inter Company Reco, Accruals etc.

Question:-25 A Paid to B on behalf of C, What is the accounting entry in this

case?

A B
C
B Account Dr Bank
Account Dr B Account Dr
 To Bank To A Account
To A

Question 26:- What is the process to prepare the intercompany reconciliation?

Answer:-When transaction between two legal entities of the same organization or

between the parent company & its subsdiaries. In Intercomopany Reco
we get the data from the subsdiaries that we need to reconcile with
our data of FBL3N. Sometimes there may be a mismatch in both the data
like the payable or receivable, Payment related data or short payment
or under payment by the subsdiaries.

We go FBL3N, get the data from various ledger like IC Sales, IC Sales Return
BanK & select the perioed & Export it in Excel. Now we need to reconcile
this data with the data shared by the subsdiaries.

Question 27:- What is the Journal Entry of Amortization?

Answer:- Amortization Expense Account Dr

To Accumlated Amortization

Question 28:- What is outstanding Expense?

Answer:- Outstanding expense means the expense which has been

booked but not yet paid

Expense Account Dr-------------P&L---Expense

To Outstanding Expense Account-------------B/s---Liabilities

Question 29:- What is Outstanding Income?

Answer:- Outstanding income means the income which is earned but

not yet received.

Outstanding Income Account Dr -----------------B/s----Assets

To Income Account-------------P&L----Income Side

Question 30:- What is Fixed Assests?

Fixed Assets are those assets which is used for a longer period & that
can not be converted into cash easily or quicly.

For Example:- I Purchased Air Condition of Rs 60,000 from Vijay Sales

Air Condition Account Dr 60,000

To Vijay Sales 60,000
B/S
Assets
Air Condition 60,000
(Accumated Dep) 6000
Net Value 54,000

Question 31:- What is Depreciation?

Answer:- Dep is the reduction in the value of Fixed Assets due to wear &
tear

I charge depreciation @ 10% per year on the above assets

Depreciation Account Dr 6000---------------------P&L

To Accumlated Depreciation 6000-------------B/s, It will be
deducted from
the respective assets

Questin 32:-What is Accumlated Dep?

Answer:-It is the total amount of depreciation calculated during the FY

Question 33:- I sold the above asstes of Rs 58,000/-

Bank Account Dr 58000

Accumlated Dep dr 6000
To Sale of Assets 60,000
To Profit on Sale of Assets 4000

Question 34:-I Sold the above assets of rs 50,000/-

Bank Account Dr 50,000

Loss on Sale of Assets 4000
Accumlaed Dep Dr 6000
To Sale of Assests 60000

Assets
Air Condition 60,000
(Accumated Dep) 6000
Net Value 54,000

Question 35:-I Sold the same assets of rs 62,000

Bank Account Dr 62000

Accumalted Dep Account 6000
To Sale of Assets 60000
To Profit on Sale of Assets 8000

Question 36:-I Purchased F&F of rs 100000 on 01st April 2021 from Vijay Sales
We charges Dep @1% on Monthly Basic

We sold the above assets 89000 on 01St June 2022.

01st April 2021:- F&F Account Dr 100000

To Vijay Sales Account 100000

30th April 2021:- Dep Account Dr 1000

To Acc Dep Account 1000

31st May 2021:- Dep Account Dr 1000

To Acc Dep Account 1000

30th June 2021:- Dep Account Dr 1000

To Acc Dep Account 1000

31st July 2021:- Dep Account Dr 1000

To Acc Dep Account 1000

31th Aug 2021:- Dep Account Dr 1000

To Acc Dep Account 1000

30th Sep 2021:- Dep Account Dr 1000

To Acc Dep Account 1000

31st Oct 2021:- Dep Account Dr 1000

To Acc Dep Account 1000

30th Nov 2021:- Dep Account Dr 1000

To Acc Dep Account 1000

31st Dec 2021:- Dep Account Dr 1000

To Acc Dep Account 1000

31th Jan 2022:- Dep Account Dr 1000

To Acc Dep Account 1000

28th Feb 2022:- Dep Account Dr 1000

To Acc Dep Account 1000
31th Mar 2022:- Dep Account Dr 1000
To Acc Dep Account 1000

B/s
F&F 100000
Acc Dep (12000)
88000

30th April 2022:- Dep Account Dr 1000

To Acc Dep Account 1000

31th May 2022:- Dep Account Dr 1000

To Acc Dep Account 1000

B/s
F&F 88000
Acc Dep (2000)
86000

Accumlated Dep:- 14000 (12000 + 2000)

Bank Account Dr 89000

Acc Dep Dr 14000
To Profit on Sale of Assets 3000
To Sale of Assets 100000

Question 37:- What is Provision?

Answer:- Provision is the amount that we set aside to cover the

future liability.

For Example:- We have sold some goods to ABC Ltd of Rs 1,00,000

& they have paid 60,000 rs and the balance we have a doubt to
recover it.

Sales
Abc Account Ltd 100000
To Sales Account 100000

B/S
Debtors 100000
-60000
40,000
-40000
-------------
 0
Bank Account Dr 60,000
To ABC Ltd 60,000

P&L Account Dr 40,000--------------P&L--Exp

To provision for doubtful debt Account 40,000---Liabilities

Bad Debts Account Dr 40,000----------------P&L Debit---Exp

To ABC Ltd 40,000

Reverse

Provision for doubtful debt Account Dr40,000

To P&L Account Dr 40,000

Question 38: We have sold goods to Ramesh of Rs 40,000. Ramesh

has paid 28000 and the balance we have a doubt to recover from
Ramesh. Later on Ramesh has paid 5000 and the balance went
to Bad debts. Pass Necessary Journal Entry.

Answer:-
Ramesh Account Dr 40,000
To Sales 40,000

B/s
Debtors 40,000
-28000
-5000
7000

Bank Account Dr 28000

To Ramesh Account 28000

P&L Account Dr 12000

To Provision for Doubtful Debt 12000

Bank Account Dr 5000

To Ramesh Account 5000

Bad Debts Account Dr 7000

To Ramesh account 7000

Bank Account Dr 5000

Bad Debts Account Dr 7000
To Ramesh Account 12000

Reverse
Provision for Doubtful Debt Account Dr 12000
To P&L Account Dr 12000
Question 39:- What is Deferred Revenue Expenditure?

Answer:- Deferred revenue expenditure means the expenditure that

is incurred during an accounting period but the benefit is to be
derived over the period of time.

For Example Advertisement in a Metro

Question 40:- What is contingent liability?

Answer:- It is liability or a potential loss that may or may not occur

depend on the outcome of the event.

For Example:- Product Warranties

Question 41:- On this ERP are you working on?

Answer:- I am working on SAP

Question 42:- On which module of SAP are you working on?

Answer:- I am working FI/CO Module:- Financial Accounting &

Controlling

Question 43:- On Which T Codes are you currently working on?

Answer:- FB50, F-02, FBL3N, FS10N, FBR2, F-03, FB08, FBRA, FB02 & FB03

Question 44:- What is GL?

Answer:-means general ledger that is used for keeping record of a company

total financial accounts. GL is a part of P&L & B/s

Question 45:- What is GL to GL Entry?

Answer:- It means where there are two or more GL, we need to post the entry
by FB50 & it also impacts the books of accounts.

For example:- Bank Charges Account Dr

To BAnk

Depreciation Accounts Dr
To Accumlated Dep Accounts

Question 46:-Do you participate in month End Activities?

Answer:- Yes, I participate at various month end activites that is

starting from 25th of every month & end at 15th of the next month.
During this tenure, we have to prepare various reports &
reconciliation like Bank Reconciliation, Passing the prepaid entries,
Accruals, Prepaing Amortization sheet, maintaing the tracker of Accruals,
Prepare the Cost Center Report, Inter Company Reconciliation,Reconciliation
of GST and Debtor Report & Creditor Report.

25th Mail to Every Department & Pass the GL To GL Entry, Tracker Main
30th:- Accruals
31st:- Prepaid Entries & Tracker

01st:- Reconcilition to Bank

Question 47:- What do you mean by Analysis of ledger?

Answer:- In analysis of ledger, we need to analysis the ledger of two or

more months to check whether the transactions posted are correct or not.
For example In case of Rent, we need to extract the ledger of two months
to check whether the amount seems same or not. In case of any incorrect
entry by the AP team, we need to highlight it & get it rectified. We also
put our remaks as well.

Question 48:- How do you prepare the data of Month End Closing?

Answer:- First on 25th of every month, i write a mail to every

department regarding the submission of accruals invoice. On the
basis of the data, we have to maintain it in Excel tracker & pass the
entries accordingly.

In the same way, after checking the prepaid excel tracker, we have
to pass the recurring entry. We also maintain reports of various
ledgers like creditors report, Debtors Report, Cost Center reports
Inter Co Reco, GST Reco etc.

Question 49:- What is MIS Reporting & what type of Report do you
prepare?

Answer:- MIS means management information system, any report

that we need to prepare it in excel, have to share with the
management is called MIS Reporting. We prepare various reports
like Cost Center Reports, Debtors, Creditors, analysis of ledger
etc.

Question 50:- How comfortable are you in Excel?

Answer:- I am very much comfortable in Excel, Even i prepare the

files without mouse.

I am normally using basic operation to advanced including Vlookup,

Sumif, Countif, If Conditions, Pivot Tables, Macro etc.
Question 51:- How will you rate yourself out of 10?

Answer:- 7.5 to 8 because Excel is very wide & it is very difficult to

cover the entire excel.

Question 52:- What is Macros?

Answer:- Macros is used to record the function, create the

shortcut of it & use it accordingly.

Where there is a repetitive task in excel, we record that function &

create a shout cut that saves our time.

Question 53:- What is Vlookup?

Answer:- Vlookup is used to retrieve the data from the range of

cells based on Column No.
=vlookup(Lookup Value,Table array, Column No, 0)

Question 54:- What is the drawback of Vlookup?

Answer:- The drawback of vlookup is when we have the duplicate

data then vlookup gives you the first result rather than second.

Question 55:- What is Sumif?

Answer:- Sumif is used to add all the number in a range of cells

based on criteria

=sumif(Range,creteria,Sumrange)

Question 56:- How many line items have you worked on?

Answer:- 5000 to 7000 line items.

Question 57:- What is Amortization?

Answer:- Amortization means breaking of any intangible assets into

further periods for example Depreciation & prepaid Expense.

Question 58:- What is difference between FBL3N & FS10?

Answer:- FBl3N is used for GL line item Display where we can see
the debit & credit entry of a ledger while FS10N is used to display
the account balance where we see the total debit & credit for a
particular period.

Question 59 :- What is Difference Between GL & Cost Center?

Answer:- GL is used for a External Reporting & Cost Center is
used for a Internal reporting and Cost Center is always assigned to
the Expense.

Cost Center is used to allocate the cost of the company as per department wise.

Question 60: What is the T Code to reverse the wrong Entry?

Answer: FB08 is used to reverse the Entry in SAP.

Reversals are of two types:-
Reversal of Open Item Reversal of Cleared Item
FB08 FBRA

Question:- How to reverse the Entry by FB08?

Answer:- We go to FB08, Enter the doc No, Co Code & FY Then we also need
to mention the revsreal reason & Click on display before reversal & Save it.

Question 61:- How do you clear the Ledger?

Answer:- There is a T Code F-03 that is used to clear the General

Ledger.

Question 62:- Why do we need to clear the GL?

Answer:- We need to clear the GL Account just to clear the books of

accounts. Every knoff Entry should come in Cleared Items.

Question 63:- What is your daily routine?

Answer:- Since i am in Indian Shift, So my day starts at 10 Morning, with

reconciling the bank, i daily reconcile two bank & it take around 2
hours to complete it.
For the open items in Bank reconciliation we need to coordinate
with the cross functional teams & update it. Apart from the bank
reconciliation, we also pass the GL to GL entry in SAP.
We also prepare various reports like Cost Center Report, Prepaid
report, analysis of ledger,reconciliation of various ledgers of P&L & B/s etc.

Question 64:- What is reclass Entry?

Answer:- Reclass entry means rectifying the ledger to make it correct.

Question 65:- What you do in your GST Reconciliation?

Answer:-GST Reconciliation:- In GST reconciliation we need to reconcile

the date of CGST & SGST input. For that we need to Go to FBL3N
& export both the ledger for a specified period. Now we have to
reconcile both the data by using Vlookup & highlight the
mismatch. This file we need to send to our manager along with
the cross functional team for taking the action accordingly.

Question 66:- What is Accrued Revenue?

Answer:-Accrued revenue is revenue that has been earned by providing a

good or service, but for which no cash has been received. Accrued revenues
are recorded as receivables on the balance sheet to reflect the amount of
money that customers owe the business for the goods or services they purchased.

Accrued Income Account Dr

To Income Account

Question 67:- What is unearned Income?

Answer:- Unearned Income means the income that is not earned from work.
It includes Interest on saving account, financial prize, dividends etc.

Bank Account Dr
To Unearned Income Account---Current Liablity

Question 68:- What is the difference between Amortization & Depreciation?

Answer:-

Amortization:- means expenses for intangible assets

Deprectaion:- means expenses for tangible assets

Amortization:- directly reduces the asset in the balance sheet

Deprectaion:- indirectly reduces the assets via Accumlated Dep

((((((((Amortization and depreciation are two methods of calculating the value for
business assets over time.

Amortization is the practice of spreading an intangible asset's cost over that

asset's useful life.

Depreciation is the expensing a fixed asset as it is used to reflect its

anticipated deterioration.

Amortization and depreciation differ in that there are many different depreciation
methods, while the straight-line method is often the only amortization method used.

The two accounting approaches also differ in how salvage value is used, whether
accelerated expensing is done, or how each are shown on the financial
statements.)))))
Question 69:- What is the difference between Provision & Reserve?

Answer:-Provision is the amount that we set aside to cover the future liablity
For Example:-Provision for doubtful debt, Provision for taxation etc.

Reserves are made to give strength to the financial position of the company.

For Example:-Reserves are general reserve, workmen compensation fund etc.

Question 70:- What are the types of financial statements?

Answer:- Balancesheet, Income Statement, Cash Flow Statement, Statement of

shareholder equity.

Question 71:- What is accounting principles?

Answer:-Accounting principles are the rules and guidelines that companies

and other bodies must follow when reporting financial data.

Question 72:- What is R2R Cycle?

Answer:- Recording:-
Record the transaction that have the financial impact as per accounting
principle

Closing Cycle:- Close the books of accounts & block the period in terms of
no entry would be posted in the said period

Consolidation:- means combining assets, liablities and other financial terms

of two or more entity into one.

Reporting:-Submission of financial data to the stakeholders, to the govt

etc.

Question 73:- What is Recurring entry?

Answer:- Recurring entry means the entry that we need to pass at a regular
interval of time.