Basic Interview Question and Answers on Accounting?

What is a journal entry in Accounting? 

  

• Journal entry is an entry to the journal.
• Journal is a record that keeps accounting transactions in chronological order, i.e. as they occur.
• Ledger is a record that keeps accounting transactions by accounts.
• Account is a unit to record and summarize accounting transactions.

All accounting transactions are recorded through journal entries that show account names, amounts, and whether those accounts are recorded in debit or credit side of accounts.

   

  

Double-Entry Recording of Accounting Transactions

  

• To record transactions, accounting system uses double-entry accounting.
• Double-entry implies that transactions are always recorded using two sides, debit and credit. 
• Debit refers to the left-hand side and credit refers to the right-hand side of the journal entry or account.

  

The sum of debit side amounts should equal to the sum of credit side amounts.

A journal entry is called "balanced" when the sum of debit side amounts equals to the sum of credit side amounts.

   

  

T-Account:

• This form looks like a letter "T", so it is called a T-account. 

T-account is a convenient form to analyze accounts, because it shows both debit and credit sides of the account.