SAP FICO Interview Questions for Freshers

 

03.        Concepts of accounting:

·         Separate entity concept                     

·         Going concern concept

·         Money measurement concept                   

·         Cost concept

·         Dual aspect concept                         

·         Accounting period concept

·         Periodic matching of costs and revenue concept        

·         Realization concept.

04.        Conventions Of Accounting

·         Conservatism 

·         Full disclosure

·         Consistency

·         D materiality.

05.        Systems of bookkeeping

·         Single entry system

·         Double entry system

 

54.        Types of a company:

·         Statutory companies

·         Government company

·         Foreign company

·         Registered companies:

ü  Companies limited by shares

ü  Companies limited by guarantee

ü  Unlimited companies

ü  D. Private company

ü  E. Public company

57.        Characteristics of a company:

·         Voluntary association

·         Separate legal entity

·         Free transfer of shares

·         Limited liability

·         Common seal

·         Perpetual existence.

67.        Deemed public Ltd. Company: A private company is a subsidiary company to public   company it satisfies the    following terms/conditions Sec 3(1)3:

·         Having minimum share capital 5 lakhs

·         Accepting investments from the public

·         No restriction of the transferable of shares

·         No restriction of no. Of members.

·         Accepting deposits from the investors

68.        Secret reserves: secret reserves are reserves the existence of which does not appear   on the face of balance sheet. In such a situation, net assets position of the business is stronger than that disclosed by the balance sheet.

These reserves are crated by:

·         Excessive dep.of an asset, excessive over-valuation of a liability.

·         Complete elimination of an asset, or under valuation of an asset.

75.        Functions of financial manager:

·         Investment decision

·         Dividend decision

·         Finance decision

·         Cash management decisions

·         Performance evaluation 

·         Market impact analysis

205.      Methods of depreciation:

Unirorm charge methods:                

·         Fixed installment method

·         Depletion method

·         Machine hour rate method.

Declining charge methods:

·         Diminishing balance method

·         Sum of years digits method

·         Double declining method

Other methods :

·         Group depreciation method

·         Inventory system of depreciation

·         Annuity method

Depreciation fund method

                        Insurance policy method.

206.      Accrued Income: Accrued Income means income which has been earned by the business during the accounting year but which has not yet become due  and, therefore, has not been received.

207.      Gross profit ratio: It indicates the efficiency of the production/trading operations.

Formula : Gross profit  

                         -------------------X100

                             Net sales       

208.      Net profit ratio:  it indicates net margin on sales

Formula: Net profit   

            --------------- X 100

                         Net sales

209.      Return On Share Holders Funds : It indicates measures earning power of equity capital.

Formula :

profits available for Equity shareholders 

                                    -----------------------------------------------X 100

             Average Equity Shareholders Funds

210.      Earning per Equity share (EPS): It shows the amount of earnings attributable to each equity share.

Formula :

profits available for Equity shareholders  

                                    ----------------------------------------------                                           

                                                Number of Equity shares

211.      Dividend Yield Ratio: It shows the rate of return to shareholders in the form of dividends based in the market price of the share

                 Formula :    Dividend per share

                                    ----------------------------  X100

                                   Market price per share

212.      Price Earning Ratio:  It a measure for determining the value of a share. May also be used to measure the rate of return expected by investors.

                     Formula : Market price of share(MPS) 

                                          -------------------------------X 100

                                       Earning per share (EPS)

213.      Current Ratio: It measures short-term debt paying ability.

                      Formula : Current Assets       

                                         ------------------------      

                                     Current Liabilities

214.      Debt-Equity Ratio: It indicates the percentage of funds being financed through borrowings; a   measure of the extent of trading on equity.

                     Formula :   Total Long-term Debt

                                          ---------------------------  

                                        Shareholders funds

215.      Fixed Assets Ratio: This ratio explains whether the firm has raised adepuate long-term funds to meet its fixed assets requirements.

                   Formula           Fixed Assets    

                                    -------------------

                                                Long-term Funds

216 .     Quick Ratio: The ratio termed as ‘ liquidity ratio’. The ratio is ascertained y comparing the liquid assets to current liabilities.

Formula :    Liquid Assets        

                                    ------------------------           

                                     Current Liabilities

217.      Stock turnover Ratio: The ratio indicates whether investment in inventory in efficiently used or not. It, therefore explains whether investment in inventory within proper limits or not.

              Formula:   cost of goods sold 

                             ------------------------

                                  Average stock

218.      Debtors Turnover Ratio: The ratio the better it is, since it would indicate that debts are being collected more promptly. The ration helps in cash budgeting since the flow of cash from customers can be worked out on the basis of sales.

             Formula:      Credit sales                                 

                               -------------------

                                Average Accounts Receivable

219.      Creditors Turnover Ratio: It indicates the speed with which the payments for credit purchases are made to the creditors.

             Formula:            Credit Purchases              

                                    -----------------------

                                       Average Accounts Payable

220.      Working Capital Turnover Ratio: It is also known as Working Capital Leverage Ratio. This ratio Indicates whether or not working capital has been effectively utilized in making sales.

               Formula:            Net Sales        

                                    ----------------------------       

                                       Working Capital

221.      Fixed Assets Turnover Ratio: This ratio indicates the extent to which the investments in fixed assets contributes towards sales.

Formula:             Net Sales          

                                    --------------------------

                                        Fixed Assets

222.      Pay-out Ratio: This ratio indicates what proportion of earning per share has been used for paying dividend.

Formula:   Dividend per Equity Share 

                        --------------------------------------------X100

                    Earning per Equity share                  

223.      Overall Profitability Ratio: It is also called as “ Return on Investment” (ROI) or Return on Capital Employed  (ROCE) . It indicates the percentage of return on the total capital employed in the business.

             Formula :  

                          Operating profit     

------------------------X 100

                           Capital employed

The term capital employed has been given different meanings a.sum total of all assets whether fixed or current b.sum total of fixed assets, c.sum total of long-term funds employed in the business, i.e., share capital +reserves &surplus +long term loans –(non business assets + fictitious assets). Operating profit means ‘profit before interest and tax’

224.      Fixed Interest Cover Ratio: The ratio is very important from the lender’s point of view.  It indicates whether the business would earn sufficient profits to pay periodically the interest charges.

Formula :    Income before interest and Tax 

                                   ---------------------------------------                                                    

                         Interest Charges

225.      Fixed Dividend Cover Ratio:  This ratio is important for preference shareholders entitled to get dividend at a fixed rate in priority to other shareholders.

Formula :     Net Profit after Interest and Tax 

                                   ------------------------------------------              

Preference Dividend

226.      Debt Service Coverage ratio: This ratio is explained ability of a company to make payment of principal amounts also on time.

Formula :     Net profit before interest and tax

                                    ----------------------------------------     1-Tax rate

                                                Interest + Principal payment installment  

227.      Proprietary Ratio: It is a variant of debt-equity ratio . It establishes relationship between the proprietor’s funds and the total tangible assets.

                  Formula :     Shareholders funds

----------------------------

 Total tangible assets

228.      Difference between joint venture and partner ship:

·         In joint venture the business is carried on without using a firm name, In the partnership, the business  is carried on under a firm name.

·         In the joint venture, the business transactions are recorded under cash system In the partnership, the business transactions are recorded under mercantile system. In the joint venture, profit and loss is ascertained on completion of the venture In the partner ship , profit and loss is ascertained at the end of each year.

·         In the joint venture, it is confined to a particular operation and it is temporary. In the partnership, it is confined to a particular operation and it is permanent.

229.      Meaning of Working Capital: The funds available for conducting day to day operations of an enterprise. Also    represented by the excess of current assets over current liabilities.

low statement:

·         A Cash flow statement is concerned only with the change in cash position while a funds flow analysis is concerned with change in working capital position between two balance sheet dates.

·         A cash flow statement is merely a record of cash receipts and disbursements. While studying the short-term solvency of a business one is interested not only in cash balance but also in the assets which are easily convertible into cash.

282.      Difference Between the Funds flow and Income statement :

·         A funds flow statement deals with the financial resource required for running the business activities. It explains how were the funds obtained and how were they used, Whereas an income statement discloses the results of the business activities,   i.e., how much has been earned and how it has been spent.

·         A funds flow statement matches the “funds raised” and “funds applied” during a particular period. The source and application of funds may be of capital as well as of revenue nature. An income statement matches the incomes of a period with the expenditure of that period, which are both of a revenue nature.

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