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Table of contents
1.
Easy R2R Process Interview Questions
1.1.
1. What is the R2R process?
1.2.
2. What is amortization?
1.3.
3. What are the three different kinds of accounts?
1.4.
4. What are the three most important financial statements?
1.5.
5. What is the journal entry for donated goods?
1.6.
6. What is the free samples journal entry?
1.7.
7. What is Executive Accounting?
1.8.
8. What are the receivables?
1.9.
9. What is working capital?
1.10.
10. What are Retain Earnings?
2.
Medium R2R Process Interview Questions 
2.1.
11. What is the difference between Reserves and Provisions?
2.2.
12. Suggest improving the company's working capital flow.
2.3.
13. What is GAAP?
2.4.
14. What is a Contra Account?
2.5.
15. What are Contingent Liabilities?
2.6.
16. What are Accruals?
2.7.
17. Define the term 'Depreciation.'
3.
Hard R2R Process Interview Questions
3.1.
18. What are the different kinds of depreciation?
3.2.
19. What do you mean by DPO?
3.3.
20. What are the many forms of accounting liquidity ratios?
3.4.
21. What is a Bank Reconciliation Statement? And why is it created?
3.5.
22. What are Credit Notes and Debit Notes?
3.6.
23. What is the difference between Trade Discount & Cash Discount?
3.7.
 24. What are the Retained Earnings and Dividends?
3.8.
25. What are Fictitious assets?
4.
Conclusion
Last Updated: Mar 27, 2024

R2R Process Interview Questions and Answers

Author Kanak Rana
2 upvotes

R2R(Record to report) is a Finance and Accounting management process. It requires gathering, processing, and porting timely and exact info to give planned, financial, and working feedback. It is only to understand how a business works.

R2R Process Interview Questions

R2R also has plans for making up and reporting all accounts. Usually kept in general or book and controlled by a controller. The steps are as follows:

  • Data collection.
  • Data extraction.
  • Data verification.
  • Change of data.
  • Posting of vouchers.
  • Voucher storage in a de-normalized and compressed format.

Let's look into some good questions for the topic r2r process interview questions.

Easy R2R Process Interview Questions

1. What is the R2R process?

Answer - R2R is a finance and accounting management process that needs meeting, working, and giving good and exact financial data. R2R posts planned, economical, and working feedback on the company works to management and other partners.

2. What is amortization?

Answer - Amortization is only tried to abstract aid. On the other hand, depreciation is used for real assistance. Amortization is the value decline caused by the distribution and a non-real aid cost over various accounting periods.

For example, suppose a small business, a fake Company. They Spend 500,000 on R&D. And expect to continue it for five years. In that case, it may elect to amortize. This display $100,000 in the yearly statements for five years.

3. What are the three different kinds of accounts?

Answer - If you don't want to sound wrong and much different from the crowd, clarify your answer briefly and clearly (one line about each is ideal).

Following are the three types of accounts.

  • Real - Real accounts include all assets in a business, whether real or non-real.
  • Personal - Personal accounts are tied to a person, entity, or legal body.
  • Nominal- This category includes all costs and losses or income and gains accounts

4. What are the three most important financial statements?

Answer - The three financial statements are income, balance sheet, and cash flow. 

  • Income Statement: It is under revenue, income, profit, and loss for an accounting period.
  • Balance sheet: It would display a company's current assets, duty, and capital situation.
  • Cash Flow Statement: This statement checks a company's cash and cash-like flows during an accounting period.

5. What is the journal entry for donated goods?

Answer - When a company decides to donate items to charity, it must account for those donations in the formal financial statements. In this situation, buying is decreased by the correct cost of things.

6. What is the free samples journal entry?

Answer - When a company wants to promote a new product or line of products. It may decide to give away free samples to consumers. In this situation, the purchase account is added. Then, the advertisement account is in debt.

7. What is Executive Accounting?

Answer - Executive Accounting is planned mainly for service-based companies. Executive accountants are in charge of properly planning a yearly cost of a company. The executive accountant checks each department's budget, considering the company's overall financial objectives, before impacting the company. 

8. What are the receivables?

Answer - Bills receivable are the earnings or payments a supplier or company receives from its clients. Any time a company is a due money for goods or services that have been supplied but have not yet been paid for, a receivable is formed. This might result from a sale to a consumer using shop money, a monthly payment due after receiving the goods or services, or a monthly payment plan.

9. What is working capital?

Answer - Working capital is the money used to cover all of the short-term costs of the company, which are for one year.

It is different from other companies' benefits and current debt. Working capital pays the short-term debt, purchases inventory, and daily operating expenses.

10. What are Retain Earnings?

Answer - Retained earnings are a company's net earnings or profits after dividend payments. The term "retained" conveys that those earnings were not paid out to investors as dividends but kept by the company as an important accounting term.

As a result, retained earnings fall when a company loses money or pays dividends and rise when new profits are generated.

Medium R2R Process Interview Questions 

11. What is the difference between Reserves and Provisions?

Reserves

Provisions

Reserves are created to support a company's financial position and to cover unknown charges or losses. Provisions cover the particular debt, such as a provision for doubtful debts.
Reserves are created when the company is profitable. Provisions are made in any case, whether a company makes profits or losses.
They can also be used to pay dividends to shareholders. Since they are planned for specific debt, they cannot be used to distribute dividends.
They are made by deducting funds. The P&L Appropriation Account. They are formed by debiting the profit and loss account.
Creating reserves for the firm is not required, it is done mainly for caution. It is legally required to make provisions.
Reserves are recorded on a balance sheet's liability side. Provisions are either displayed on a balance sheet's liabilities or deductions from the asset in question.

12. Suggest improving the company's working capital flow.

Answer - Stocks can be the key to increasing the company's working money. We have complete control over the stock part of the working money. We can put pressure on our creditors to pay us immediately.

  • Still, we don't directly impact them because they are independent legal bodies, and they are the ones who give us business in the last.
  • We may be open to delaying supplier payments, but this destroys business relationships and weakens industry goodwill. 
  • In addition, if we delay payments, they may refuse to enhance things in the future. 
  • Maintaining funds in bank cash may help the flow of working capital, but it comes at an opportunity cost.
  • With this in mind, inventory management can help increase the company's working capital.
  • With all of this in focus, it can be believed that goods management can seriously help advance the company's working capital. Overstocking should be prevented, and list turnover should be high.
  • Electronic commerce, telecommunications, and other businesses operate with negative working funds. So, before responding, conduct some research on working funds.

13. What is GAAP?

Answer - GAAP's full form is Generally Accepted Accounting Principles. For the Institute of Chartered Accountants of India and the rules of the Companies Act, 1956.

It is a collection of accounting levels and common industry terms companies use to

  • Maintain correct financial data.
  • Summarize accounting data into financial statements.
  • Whenever it is required necessary, reveal information.

14. What is a Contra Account?

Answer - It's an account employed to reduce or balance the value of a related account. In the case of a specific kind of account, it holds the opposing sign.

A credit balance will exist in a contra account if an account has a debit balance (such as an asset account). In contrast, a liability account is correct.

15. What are Contingent Liabilities?

Answer - Contingent liabilities are debts that a company may or may not suffer, depending on the outcome of a future event. The happening of this type of duty is entirely dependent on the events of a likely future event.

Assume Dell begins a patent violation action against Asus, and Asus not only know that it may be required to pay for violations but also evaluate the overall amount. In this situation, Asus will record the expected amount as a Contingent Liability in their records.

16. What are Accruals?

Answer - Accruals are another often sent issue in the finance and accounting interview questions list. They are costs or earnings that were suffered or generated but were not recorded in the books of accounts. Adjustment notes are included in the financial statements to reveal after an accounting time period.

  • Accrued expense is a cost that has been suffered but has not been recorded in the books of accounts. As financial statements, it is required to have an adjustment entry in the books of accounts.
  • Accrued revenue is the income that has been earned but is not yet recorded in the books of accounts. An adapting entry, similar to arising cost, will also be necessary for this plan.

17. Define the term 'Depreciation.'

Answer - These are the most common accounting interview question. You might state that depreciation refers to the declining value of any asset in use. Calculating a company's net income in each accounting period is required.

Must read, TCS NQT

Hard R2R Process Interview Questions

18. What are the different kinds of depreciation?

Answer - This is a follow-up question to the last accounting interview question. Mention the standard depreciation methods listed below.

  • Depreciation in a Straight Line
  • Double Declining Balance
  • Production Units
  • Discounted Cash Flow

As variables, all of these procedures have comparable inputs.

  • Practical Life - The duration during which an asset remains a cost-effective alternative for a company. The investment is no longer helpful after this time.
  • Salvage Value - The value of an asset after it has been depreciated. A company can sell it at a lower price.
  • Total Asset Cost - This is the total cost of the asset, including taxes, shipping, and other fees.

You can highlight how they are computed to support this accounting interview response.

  • The formula for annual Straight Line Depreciation is:
    Total Asset Cost - Estimated Salvage Value divided by Asset Useful Life = Depreciation Expense.
  • The formula for computing the Double Declining Balance is as follows:
    (Total Asset Cost - Estimated Salvage Value divided by Asset Useful Life) x 2 = Depreciation Expense.
  • The formula for production Units:
    (Cost basis – salvage value) divided by Estimated units produced over useful life = Units of production rate.
  • The formula for DCF is:
DCF formula

19. What do you mean by DPO?

Answer - DPO, or Days Payable Outstanding, is the classic number of days. The company should take to clear all its credit purchases with suitable suppliers. DPO is a monthly responsibility for a company. The day of clearing the installment payment may vary monthly, so the average is used to know the payment period.

The formula for knowing DPO is as follows:

Accounts payable closing divided by Purchase per day

Or

(Average accounts payable divided by COGS) * Number of days where COGS is the cost of goods sold.

20. What are the many forms of accounting liquidity ratios?

Answer - In accounting, there are five very basic types of ratios:

  • The Current Ratio
    The higher the company's current ratio, the better its skill to deal with short-term financial challenges. The current ratio is checked as Current Asset /Current Debt.
  • The Net Working Capital Ratio
    It shows if a company has enough finances to carry out short-term activities. It is shown as follows: 
    Current Asset - Current Debt = Net working capital ratio
  • Quick ratio
    The quick ratio is also known as the acid test or liquid ratio. It represents the company's skills to satisfy short-term tasks. If the quick ratio falls below one, the company is not in a position to manage short-term loans. 
    Liquid Assets / Current Debt(Liabilities) = Quick Ratio
  • Super-Quick Ratio
    This ratio is one step ahead of the current ratio. It is added up by dividing a company's super fast assets by its current debt. It is known as the super quick or cash ratio because of other liquidity measures. It only favors "super quick assets."
    (Cash + Marketable Securities) / Current debt = Super Quick Ratio
  • The Cash Flow Operating Ratio
    It is solved by dividing working cash flow by current debt. It has been seen that an excellent working cash flow ratio results in the company's liquidity state.
    In this case, cash flow from working will consist of All income from working + Non-cash-based expenses - Non-cash-based revenue.
    Current debt comprises balance payments, creditors, donations, supply, short-term loans, etc.

21. What is a Bank Reconciliation Statement? And why is it created?

Answer - Almost all finance and accounting interview questions collection include at least one question on BRS, knowing how important this topic is. 

A Bank Reconciliation Statement is a statement that is created to coordinate the bank balance shown on the bank statement. Also, the passbook with the bank balance is shown in the cash book. 

Both inner sources, such as the cash book, and outer sources. Such as the bank statement or passbook is coordinated, and any variance is known and correctly documented.

Reasons for preparing a BRS:

Scope

Comments

Mistakes and Errors A bank reconciliation statement can help uncover flaws. And mistakes in your cash or passbook.
Explains Delay Can you notice any delays in checking clearance or collection?
Fraud Detection Timely reconciliations aid in the prevention and detection of cash-related fraud.

22. What are Credit Notes and Debit Notes?

Answer - Be prepared to answer this question in accounting interviews for Accounts Payable and Accounts Receivable positions.

Debit Note: When a customer returns items to the seller, he sends a debit note. Informing the seller of the amount and quantity returned and requesting a refund.

Credit Note: When a seller gets products from a buyer, he prepares and sends a credit note to the buyer, as info that the money for the returned goods is in the form of a credit note.

23. What is the difference between Trade Discount & Cash Discount?

Trade Discount

Cash Discount

It is a decline in the list prices of the goods given by the seller of goods and services. It is a reduction in the invoice price granted by the provider of goods or services to the buyer.
It is supplied for business reasons such as trade practices, high quantity orders, etc. It is given as good motivation to pay a bill on time.
Trade discount is not individually documented in the books of accounts. All transactions recorded in the buy or sales book are only in net amount. The cash discount is recorded separately in the book. And as a cost in the Profit and Loss A/C.
Both credit and cash transactions allow for trade discounts. Cash discounts are only allowed on cash payments.
A trade discount is given based on a purchase. A cash discount is given based on payment.

 24. What are the Retained Earnings and Dividends?

Answer - Dividends can be paid in either cash or shares. Dividend payments in cash result in a cash outflow, which is recorded as net decreases in the records and accounts. 

  • The asset value on the balance sheet drops as the firm loses control of its liquid assets in the form of cash dividends, impacting RE.
  • Stock dividends do not result in a cash outflow. Instead, the stock payout transfers a portion of the retained earnings to common stock.
  • For example, if a company distributes one share as a dividend for each share held by investors. The price per share falls by half since the number of shares effectively doubles. 
  • Since announcing a stock dividend does not create any real value for the company, the per-share market price is changed in the amount of the stock dividend.
  • A rise in shares does not affect the company's balance sheet because the market price is immediately updated. It lowers the per-share value shown in capital accounting and affects the RE.
  • A growth-oriented company may not pay dividends or minimum sums. This occurs as the firm would use retained earnings to fund services to achieve more growth. 
  • The benefits include R&D, marketing, working capital needs, capital spent, and assets. Such firms have a high level of retained earnings over time.
  • An ageing company may not have many options. Or high-return progress to using its cash. And may prefer to distribute dividends. Such businesses typically have poor RE.

25. What are Fictitious assets?

Answer - Fictitious assets are not assets, and they are deceptive or false. They are expenses and losses that could not write down during the accounting period in which they occurred. Examples include initial costs, business advertising expenses, the discount granted on the issuance of shares, the loss experienced on the allocation of debentures, etc. Fictitious assets are shown on the balance sheet's asset side.

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Conclusion

This article discusses the R2R process interview questions in detail in detail. We started with a simple basic introduction to R2R. And then, go through the R2R process interview questions from start to end.

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