Top 22 Journal Entries Questions And Answers For Interview

A journal is a primary book of accounts in which financial transactions are kept in record. It provides data-wise records of all transactions. However, journal entries questions and answers are quite important for the interview. The journal provides data-wise entries of all the transactions. Additionally, it can boost the scope of your brand value to a greater level. All the records you can maintain in the double-entry system. Most of the time, a journal recording is based on a double-entry system. Here, the total of the debit column is equal to the total of the credit column. You need to follow the process to complete a journal entry.

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Golden Rules Of Journal Entry In Accounting

If you want to follow the golden rules of Journal entry, you have to follow certain processes or rules. Journal entries questions and answers for interviews are numerous and many interviewers ask the golden rules of accounts in most cases.

What Are The Basics Of Journal Entry?

A Journal entry is a record of the business transactions in your business’s books. Furthermore, for every transaction at least two journal entries you need to make. However, all the transactions can create lots of problems in your industry. There are certain things you need to make your choices while meeting your requirements with ease. Additionally, you need to understand the basics of journal entries to meet your requirements with ease. There are certain steps you need to follow:-

• How much cash does the business have?
• How much money does it owe?
• The value of the business itself.
• What does it own?
• How is tax treated?

What Goes Into The Accounting Journal Entry?

Each accounting journal entry should have the following:-

• The reference number and the entry date of the journal entry should be there to complete the entry.
• A column you must maintain to know what accounts are affected.
• Columns for the debit and credit accounts must be maintained.
• A footer line with a brief description must be the main reason for the entry.

Examples Of Journal Entries

Shyam started a business with cash of Rs 6,00,000.

1st May 2024   Cash A/c
                    To Capital A/c

6,00,000

6,00,000

Vinod started a business with cash of Rs 1,00,000, furniture of Rs 2,00,000, and building of Rs 10,00,000.

      Cash A/c            Dr 
     Furniture A/c       Dr
     Building A/c        Dr
       To Capital A/c         Cr

1,00,000
2,00,000
10,00,000

13,00,000

Journal Entries Questions And Answers For Interviews

Students often feel nervous when some common journal entries questions and answers come to their plate in the interview. So, to get over from this situation let’s analyze some important questions about it.

1. What Is A Journal Entry In Accounting?

A journal entry is an initial recording of all the financial transactions in the entire accounting system. It comprises of accounts affected, date, and amounts debited and credited. Additionally, you will also receive a brief description of the transactions. Furthermore, journal entries will help you to ensure accurate record keeping and it will serve as the basis for developing all the financial transactions.

2. What Are The Key Components Of A Journal Entry?

There are several key components of a journal entry system. Some of the key components of the journal entry system are as follows:-

• Date.
• Accounts.
• Debit and credit Amounts.
• Narration and description.

3. How To Decide Which Account To Debit And Which Account To Credit In Journal Entries?

You need to decide which account to debit and which account to credit depending on the type of transactions and account nature. This comprises asset, liability, equity, revenue, or expense). There are certain basic rules of thumb here.

• Assets and expenses increase with debits and decreases with credits.
• Liabilities, revenues, and equities increase with credits and decrease with debits.

4. Can You Explain The Double Entry Accounting System?

The double-entry accounting system consists of the principle that every financial transaction has equal as well as opposite effects. This is the debit and credit equation to meet your needs. Assets = liabilities + Equity. Thus it can keep things balanced. However, each transaction is recorded in two accounts thus making it easier to track all the financial health.

5. What Is The Difference Between Journal Entry & Ledger Entry?

A journal entry is an initial record of the transaction while the ledger entry is one of the subsequent classifications of the transaction. That too comes in an individual account. Once all the transactions are there in the journal they appear in the ledger. Thus it organizes entries by account thus it helps to track balances.

6. How Do You Handle Errors In Journal Entries?

If any kind of errors are before posting then it is corrected in the journal itself. If it is found after posting then journal entries adjustment of accounts are affected. For example, if Rs 500 is mistakenly entered as a credit in place of a debit then an additional Rs 1000 can be entered as a debit to correct the initial error. This will reverse the initial entry effect.

7. What Is A Compound Journal Entry?

In most cases, a compound journal entry is a transaction that affects more than two accounts. It involves when a company pays multiple expenses all at once. However, you must get through the process to have a better idea of it. All the revenues and expenses are recognized in the correct period with proper compliance with a matching period. Additionally, this can make things work perfectly well in your favor. Unearned revenue and depreciation are some of the core examples of compound journal entries.

8. Describe a situation Where You Created A Complex Journal Entry In A Previous Role.

This question is relevant to the interview experience so the response should focus on real examples. The candidate should explain the purpose of the entry, any challenges encountered, and the accounts involved.

9. What Is A Contra Account, and How Is It Used In Journal Entries?

A contra account offsets the balance related to the account. Accumulated depreciation is one of the examples of it. This is a contra-asset account that reduces the balance of an asset account. Contra accounts are credited to reduce assets or debit to reduce liability.

10. What Are The Journal Entries For Depreciation?

The basics for journal entry depreciation are to debit the depreciation expense account and to credit the accumulated depreciation account. It is one of the common journal entries questions and answers for depreciation of assets. Purpose of Journal entries for depreciation The main purpose of depreciation journal entries is to properly record the value and the cost of the assets over their useful life. Example

    Depreciation Expense A/C                Dr.
               To Accumulated Depreciation A/C              Cr.

26,000

26,000

11. What Is The Journal Entry For Bad debts?

Before reading the journal entry for Bad Debt, it is essential to know what bad debt is. The simple answer to this question is that in a fiscal period when a company prepares the financial statements, it needs to know the portion of the collectible receivables it believes to be uncollectible. Purpose of Journal entries for bad debt Recording bad debt expenses on any financial statement helps you lower all accounts receivables to display accurate income. Example

          Bad Debt Expense A/C               Dr 
                         To Accounts Receivable A/C         Cr

8,500

8,500

12. What Is The Journal Entry For Prepaid Expenses?

A prepaid expense in most cases is paid in advance. However, recurring expenses like insurance and rent can be paid for one-time payments. It covers the cost of expenses for several months. As it is one of the most journal entries questions and answers. Purpose of Journal entries for prepaid expenses Journal entries for all the prepaid expenses are important to ensure that business financial statements accurately reflect all its financial condition. Example

                 Prepaid Rent A/C          Dr
                          To Cash A/C               Cr

10,000

10,000

13. What Is The Journal Entry For Accounts Receivable?

Accounts receivable are the assets in the seller’s books as the customer owes the sum of money against such goods. Trade receivables are maintained debtor-wise thus allowing businesses to manage overdue sales as well as non-payments. Purpose of journal entries for Accounts receivable Accounts receivable journal entries’ main purpose is to track and record the company’s sales to customers on credit. Example

        Accounts Receivable A/c           Dr
                      To Sales A/C               Cr

5,200

5,200

14. What is The Journal Entry For Accounts Payable?

Accounts payable as per the accounting terms that are used to describe the money owed to the vendors or the suppliers for the services brought on credit. The sum of any or all outstanding payments is owed by one organization to its suppliers. Journal entries questions and answers encircles accounts payable entries with utmost priority. Purpose of journal entries for accounts payable The purpose of accounts payable journal entries is to record all the transactions of the company for creditors. Those who have purchased goods and services on credits. Example

            Purchase A/c                       Dr
                  To Accounts Payable A/c             Cr

8,900

8,900

15. What Is The Journal Entry For Sales?

Journal entries for sales are easy to use and describe so, you must go through the complete process of it. Some of the common journal entries for sales are as follows:- Purpose Of Journal Entries for Sales In most cases, the sales journal is used to record the company’s receivables such as credit sales for goods or services. Example

                  Cash or Bank A/c               Dr
                          To Sales A/c                       Cr

5,800

5,800

Journal entry for sales (Goods Sold To Nupur In Credit)

           Nupur A/c                      Dr
                 To Sales A/c                   Cr

2,000

2,000

16. What Is The Journal Entry For Expenses?

Journal Entries for all the expenses help to keep the records for all the general ledger accounts. It helps you to track the information for business expenses. The date on which they incurred and how much the expense cost here matters a lot. Expense calculation method is one of the important journal entries questions and answers. Purpose of Journal entries for expenses The objective of recording expenses through journal entries is to accurately record all the financial transactions. This will help the businesses to maintain compliance with accounting standards and regulations. Journal entry for expenses related to office supplies

          Office Supplies A/C              Dr
                       To Cash A/c                Cr

5,000

5,000

17. What Is The Journal Entry For Deferred Revenue?

Recording all the deferred revenue means generating a debit to your assets and credit to all your liabilities. As all the deferred revenue is recognized. It debits all the deferred revenue accounts and it also credits all the income statements. Purpose of journal entries for deferred revenue The purpose of the journal entries expenses is to record accurately all the financial transactions. As it will help the business to maintain compliance with accounting standards and regulations. Journal entries questions and answers will help you to sort out revenue expenses in proper order. Journal entry for deferred revenue expenditure of Rs 1200 subscription spread out across a year

               Cash A/C                        Dr
                   To Deferred Revenue A/C              Cr

1,200

1,200

18. What Is The Journal Entry For Fixed Assets?

Journal Entry for fixed assets will help you maintain the record of all transactions in the balance sheet. We debit the asset accounts for all the fixed assets as we have added value to our fixed assets. Fixed asset recording is one of the common journal entry questions and answers for the user. Purpose of journal entries for fixed assets Fixed assets journal entries record the acquisition, disposal of fixed assets, and depreciation. It helps to maintain long-term assets like equipment, machinery, and buildings. Journal entry for Purchase of fixed assets to accounts payable

            Fixed Assets A/C                    Dr
                  To Accounts Payable A/C                Cr

3,000

3,000

19. What Is The Journal Entry For Bills For Exchange?

The drawer is the person who draws and makes the bills and sends them to the drawee or the payer for the acceptance of the bill. Once this bill is accepted it becomes the Bills receivable for the drawer and Bills payable for the drawee. It is one of the common journal entries questions and answers. Purpose Of Journal Entries For Bills Of Exchange The main purpose of Journal entries for bills of exchange is to get the details of transactions and how it affects accounts and balances. Journal Entry For the issue of Bill

          Bills Receivable A/C        Dr
                To Drawee A/C                 Cr

4,500

4,500

20. What Is The Journal Entry For Petty Cash?

Whenever your petty cash accountant puts the money in the Petty cash fund they must make journal entries in your books. Additionally, it is essential for accurate bookkeeping of your accounts. An entry in the Petty Cash account must show a decrease in cash account and an increase in your petty cash account. The petty cash settlement is one of the common journal entries questions and answers. Purpose of journal entries for petty cash The main purpose of journal entries of Petty Cash is to record all the minor transactions that affect the business requirements. Example

         Petty Cash A/C            Dr
               To Cash A/C                    Cr

6,000

6,000

21. What Is The Journal Entry For Dividend Declaration?

A dividend declaration is one of the formal actions often taken by the board of directors about the time it will be paid to shareholders. It is an accounting record of all dividend declarations. This is used to record the company’s liability to pay the dividend. Journal entries questions and answers preparation will become easier for you once you maintain the dividend declaration process. Purpose Of Journal Entry For Dividend Declaration The main purpose of dividend declaration is to record a company’s liability to make payments of dividends to its shareholders. Journal entries questions and answers also encircle the purpose of the entry as well. Journal Entry For Dividend Declaration

         Retained Earnings A/C              Dr
                  To Dividends Payable A/C              Cr

5,60,000

5,60,000

22. What Is The Journal Entry For Redemption Of Debentures?

Repayment of the debentures to all the debenture holders or the discharge of the liability on the account of any debentures is known as redemption of debentures. Purpose Of Journal entries for redemption of debentures The main purpose of the redemption of debentures is to record all the repayments of the debt of the company to its debenture holders. Debentures issued at par and redeemed at par

          Bank A/c                Dr
               To debenture application and allotment A/C       Cr

100

100

Final Takeaway

Hence, these are some of the core aspects of journal entries that you should know from your end. Additionally, you must prepare these journal entries questions and answers for your interview. Try to follow the correct process from your end. You can share your views and opinions in our comment box this will help us to know your take on this matter. Once, you follow the correct solution things can become easier for you.

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ICA Edu Skills Team

Working with businesses in diverse industries. I'm passionate about helping others understand and manage their finances effectively. This blog is where I share practical tips, insightful guides, and the latest updates on accounting, taxation, GST, TallyPrime, and advanced Excel. Feel free to ask questions, leave comments.

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