Nonprofit Accounting Interview Preparation Guide
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Nonprofit Accounting Frequently Asked Questions by expert members with experience in Nonprofit Accounting. These questions and answers will help you strengthen your technical skills, prepare for the new job test and quickly revise the concepts

61 Nonprofit Accounting Questions and Answers:

1 :: How accounting contribute to the community?

Accounting helps communities in many ways. Accountants help the communities manage their money and they take care of their taxes yearly. They also manage their money, help set a budget for them and teach them to manage their money wisely.

2 :: What is VC money in financials?

It depends on the form in which the money comes in. If it was invested as equity (either Common or Preferred Stock), it shows up on the balance sheet as Paid in Capital. If it came in as debt (such as bridge loan, secured note, etc.) it shows up as debt that must be repaid by the company.

3 :: Define offset accounting?

The one reduces the gross amount of another account to derive a net balance. Accumulated depreciation, which is a contra account to fixed assets to obtain book value, is an example of an offset account.

4 :: Explain the difference between bookkeeping and accounting?

Bookkeepers are responsible for maintaining the "business checkbook", much like a personal checkbook. They record routine money transactions like customer payments into a "cash receipts journal" and checks to vendors into a "cash disbursement journal." They also process payroll. At month end they transfer or "post", the "journal" totals to the "general ledger" in preparation for financial statements prepared by the accountant.

Accountants are responsible for the design and management of the financial systems that bookkeepers use. They prepare monthly financial statements and tax returns at year-end. Accountants may also prepare budgets for management and loan proposals for bankers; and perform cost analysis for the company's products or services.

5 :: What is responsibility accounting?

They are Collection, summarization, and reporting of financial information about various decision centers (responsibility centers) throughout an organization; called activity accounting or profitability accounting. It traces costs, revenues, or profits to the individual managers who are primarily responsible for making decisions about the costs, revenues, or profits in question and taking action about them. Responsibility accounting is appropriate where top management has delegated authority to make decisions. The idea behind responsibility accounting is that each manager's performance should be judged by how well he or she manages those items under his or her control.

6 :: Explain the difference between public and private accounting?

Public accounting includes any accounting work that a company performs for another company. Examples would be audits, tax compliance, consulting, etc. The "Big 4" (KPMG, Deloitte & Touché, Price Waterhouse Coopers, and Ernst & Young) are the dominant firms that provide public accounting services.

Private accounting is accounting work that is done for your own company. Every company has some form of an internal accounting department and those employees would be considered private accountants.

7 :: What is the importance of computerized accounting to manual?

Computerized accounting is quicker and easier than manual accounting and less subject to unintentional error.

8 :: What is cash float in accounting?

Cash float is the time between when you authorize a bank to disperse funds from your bank account and when it actually leaves your account.

9 :: What is social responsibility accounting?

It is a new phase to development of accounting and its birth to increase the social awareness. In addition, it is the social effects of business decisions in addition to the economic effects.

10 :: What is Tell me consistency concept in accounting?

Consistency is a concept used when applying accounting methods to a business, the business must continue to use that particular method. For an example if a company is charging depreciation using the straight-line method, they must stick with the straight-line method.

11 :: Described register when referring to accounting or bookkeeping?

Register was the name of the Company that mfg. the first Green line spread sheets. Paper sheet ledgers were originally used to maintain credit records etc.

12 :: Described the disadvantages of back-flush accounting?

One of the main disadvantages of the system is that it only works under some quite strict requirements. If these are not met, the system will become unbalanced and may be quite unusable, or a nightmare to maintain.

Standard costs must be reliably estimated and variances kept to a minimum. The premise of the system is that a sale triggers the manufacturing process, therefore buildup of work in progress or finished goods needs to be avoided Another drawback is that detailed information for management purposes may not be available where needed, and the production control therefore needs to be all the stronger. The cost accounts used in back-flush accounting may be more difficult to reconcile to financial accounts needed for reporting.

13 :: Define the word credit mean in terms of accounting?

The word "credit" is part of the equation of double entry bookkeeping.
In order for bookkeeping entries to balance, there must always be a debit (left side, abbreviated by "dr") and credit (right side, abbreviated by "cr") entry that equal one another.

For example, to record an Office Supply Store purchase (on account ~ a payable), the entry would be:
Office Supplies Exp $500.00(dr)
Accounts Payable $500.00(cr)

If an entry does not balance the totals for debits and credits, your books will be out of balance.

14 :: Are assets a permanent account?

Assets, Liabilities, and Stockholder's Equity are all permanent accounts.

15 :: What is accounting training outside of public practice?

Training outside Public Practice is an alternate route to become a chartered accountant. However, you cannot perform statutory audits; instead, you specialize in financial management.

17 :: What is book value?

Carrying amount (original value of the asset minus accumulated depreciation)

18 :: Described the Accounting entries for branch accounts?

★ DR investments in branch
★ Cr cash
★ Cash sent to branch

19 :: Which steps you would take before approving an invoice for payment?

Following steps should be taken.
1) Validate the invoice once it matched for checking any holds.
2) If workflow is implemented, then initiate approval for the invoice. Once the invoice is approved/Approval not required (status in case WF is not implemented) you can go for payments.
3) Create accounting after approval of invoice. Finally, for payments you need to format and build.

20 :: Can you described the meaning of invoice?

Invoice is a statement which contains the under mentioned details compulsorily:
1. Invoice Number
2. Invoice date
3. Name and address of the person
4. Name and address of the person to whom invoice is made (Buyer of goods and service)
5. Description of goods / services involved
6. Applicable rates and taxes with percentages
7. Rate of the goods / services
8. Quantity of the goods and services
9. Quality or any other specifications
10. Price / Value of the goods and services
11. Invoice must be signed by the person making it
12. Terms and conditions of making the payment