SJK Agency

-2-002
Q1. Bill of exchange vs Bank guarantee - meaning, differences.
Ans. A bill of exchange is a binding agreement between a buyer and seller, while a bank guarantee is a guarantee from a bank to cover a payment obligation:
Bill of exchange
A written order from a buyer to a seller to pay a specific amount of money at a specific date. Bills of exchange are often used to protect transactions, finance international trade, and hedge against currency risk. Banks typically act as third parties to ensure payment and receipt of funds.
Bank guarantee
A guarantee from a bank to cover a payment obligation to a third party if the applicant is unable to pay. Bank guarantees can reduce financial risk and encourage sellers to expand their business on credit. However, bank guarantees can be expensive and may limit working capital.
Here are some other differences between bills of exchange and bank guarantees:
Risk: With a bank guarantee, the risk is on the beneficiary of the guarantee. With a bill of exchange, there is a risk that the bill won't be accepted or that payment won't be received after it's accepted.
Flexibility: A bill of exchange endorsement is less flexible than a bank guarantee because approval is required for each bill of exchange.
Discounting: A bill of exchange can be discounted, which can be good for cash flow.
Q2. What are Bank Guarantee and types?
Ans. There are several types of bank guarantees, including:
Financial guarantee
Ensures that money will be repaid if a party doesn't complete a project or operation
Performance guarantee
The bank will compensate the beneficiary if there's a delay in performance or operation
Bid bond guarantee
Ensures that the highest bidder has the authority and capability to implement a project
Advance or deferred payment guarantee
A guarantee that backs up a contract's performance
Shipping guarantee
A guarantee given to the carrier for a shipment that arrives before any documents are received
Loan guarantee
The institution that issues the loan guarantee will take on the financial obligation if the borrower defaults
Confirmed payment guarantee
The bank pays a specific amount to a beneficiary on behalf of the client by a certain date
Bank guarantees are a risk management tool that ensure a bank will uphold a contract if the applicant and counterparty are unable to do so.
Q3. Who is Banker's Bank and why give reasons?
Ans. The Reserve Bank of India (RBI) is known as the banker's bank in India. Here are some of the reasons why:
Regulates banking
The RBI regulates the banking sector and the issue and supply of the Indian rupee.
Advises banks
The RBI advises banks on financial matters to help them function properly.
Lends money to banks
Commercial banks in India are required to keep a certain amount of their deposits with the RBI. The RBI can lend this money to banks in times of need.
Manages government funds
The RBI manages the central government's money and is responsible for the management of public debt.
Supports government projects
The RBI supports the government in its developmental policies and projects.
Banker's Bank : Why Is RBI Named As The Banker's Bank
The RBI was established in 1935 under the Reserve Bank of India Act, 1934.
Q4. Difference between Letter of credit and Indemnity?.
Ans. A letter of credit (LC) is a contractual agreement that protects both exporters and importers, while indemnity is a protection against loss or damage:
Letter of credit
A bank commits to pay the exporter once the goods are shipped and the required documentation is presented. The date of payment is set in advance, making it more likely that the payment will be made on time. However, LCs are usually only used for single transactions, and can be expensive and time consuming.
Indemnity
A contractual agreement where one party agrees to pay for any losses or damage caused by another party. Indemnity can also refer to insurance compensation paid for damage or loss. For example, a letter of indemnity (LOI) is a promise where an insurer takes responsibility for losses or damages caused by the insured party. LOIs are often used when valuable items are being shipped, or when one party borrows something of value from another.
Q5. Explain Consequences of Cheque bouncing?. How to avoid cheque bouncing situations?
Ans. A bounced cheque can have a number of consequences, including:
Criminal liability: The drawer can be held criminally liable under Section 138 of the Negotiable Instruments Act. This can result in a fine of up to twice the cheque amount, imprisonment for up to two years, or both.
Civil suit: The payee can pursue a civil suit to recover the amount.
Bank fees: The issuer may have to pay cheque bounce charges to their bank.
Damaged credit score: A bounced cheque can negatively impact the issuer's credit score. This can make it difficult to obtain loans, credit cards, or other financial products in the future.
Account restrictions: Repeated bounced cheques can lead to account restrictions.
Difficulty opening new accounts: It can be difficult to open new checking and savings accounts after a bounced cheque.
To avoid a bounced cheque, you can:
Sign up for overdraft protection through your bank
Link a savings account to your checking account
Inform the payee of the cheque and compensate them immediately along with bank penalty
Ask the payee for more time if you are in genuine financial crunch
Pay up the sum to the payee within the grace of 30 days.
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-2-001
Q1. What is NPA in banking?
Ans. Non-Performing Assets (NPAs) denote loans or advances provided by banks or financial institutions that cease to generate revenue for the lender due to the borrower's failure to fulfill payments on the principal and interest of the loan for a minimum of 90 days.
Q2. what is concurrent audit in banking?.
Ans. Concurrent audit is a systematic examination of financial transactions on a regular basis to ensure accuracy, authenticity, compliance with procedures and guidelines. The emphasis under concurrent audit is not on test checking but on substantial checking of transactions.
Q3. What is internal audit in banking?
Ans. Internal audit is a department, independent of line management, whose prime responsibility is to review the quality and effectiveness of the controls within the banks to manage and mitigate risk and protect the assets of the bank.
Q4. What is repo rate in banking?
Ans. Repo rate, also known as repurchase agreement or repurchasing option, refers to the interest rate at which commercial banks borrow money from the central bank, pledging government securities as collateral. The term "repo" is derived from "repurchase agreement," reflecting the contractual nature of the transaction.
Q5. What is cbr in banking?
Ans.Correspondent Banking Relationship (CBR) refers to an arrangement between two banking institutions, where one bank (the correspondent bank) provides services to another bank (the respondent bank) that it cannot perform on its own.

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-LJ-01
Q1. Gross profit is
A) Cost of goods sold + Opening stock
B) Excess of sales over cost of goods sold
C) Sales fewer Purchases
D) Net profit fewer expenses of the period
Answer: B

Q2. Net profit is computed in the
A) Profit and loss account
B) Balance sheet
C) Trial balance
D) Trading account
Answer: A

Q3. In order to find out the value of the closing stock during the end of the financial year we,
A) do this by stocktaking
B) deduct the cost of goods sold from sales
C) deduct opening stock from the cost of goods sold
D) look in the stock account
Answer: A

Q4. Which of these best explains fixed assets?
A) Are bought to be used in the business
B) Are expensive items bought for the business
C) Are items which will not wear out quickly
D) Are of long life and are not purchased specifically for resale
Answer: D

Q5. The charges of placing commodities into a saleable condition should be charged to
A) Trading account
B) P & L a/c
C) Balance Sheet
D) None of the above
Answer: B
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Hi all expect new series of questions and answers

LJ-10
Q1. What would I do if my job suddenly disappeared? You need to find a new one. This will take time. Unemployment insurance or severance payments likely won’t close the gap in income.

Action: You need an emergency fund or the ability to borrow.

2. What is my plan for retirement? The question might be: “Will I be able to retire?” You have retirement assets at work. You contribute over time. Is it enough?

Action: You need to run basic retirement scenarios and have a plan to accumulate enough assets in time.

3. What if something happened to me? You likely are a dual-income family. Raising a family takes everything you earn. If one of you were no longer in the picture, income would suffer while expenses continued.

Action: Insurance offers protection. There are many kinds of life insurance. You may have some through your job, but what if you no longer had your job?

4. How much money automatically disappears from my bank account? Rent, car payments, insurance bills and your gym membership are a few examples.

Action: Know the amount. Not all these expenditures are essential. Some might be out of date. You might have dropped the gym, but they didn’t drop you. Review those charges.

5. How much do I spend out of pocket in an average month? Eight dollars a day on lunch doesn’t sound like a lot, but over 20 days, it’s $160 after tax dollars every month. You take cash advances and make impulse purchases.

Action: Review your credit card and bank statements. Figure out how much you spend. Determine where it goes. Money talks. It says goodbye.

-LJ-11
Q1. Definition Of Financial Planning
Answer : Financial Planning is the process of estimating the capital required and determining it’s competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise.
Q 2. What Is In A Financial Planning?
Answer : Financial Planning is an ongoing process to help you make sensible decisions about money that can help you achieve your goals in life; it's not just about buying products like a pension or an ISA
Q3.What Is A Financial Plan For A Business?
Answer : Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives. Usually, a company creates a Financial Plan immediately after the vision and objectives have been set.
Q4. What Is Financial Planning And Analysis?
Answer :Financial analysis uses the output from financial planning to assess profitability, liquidity, solvency, and stability for organizations. It also involves the use of benchmarks and comparisons to similar organizations to help companies make decisions about business strategies.
Q5. Why Is It Important To Have A Financial Plan?
Answer :The Importance of Having a Financial Plan. Creating a financial plan helps you see the big picture and set long and short-term life goals, a crucial step in mapping out your financial future. When you have a financial plan, it's easier to make financial decisions and stay on track to meet your goals.

-LJ10
1. Which of the below statements is incorrect?

5S is a system for organizing spaces so work can be performed efficiently, effectively and safety.
Seiri is the last step of 5S system.
DMAIC and DMADV are the two main Six Sigma methodologies.
TPM system focuses on eight pillars of success.
ANS- Option 2 : Seiri is the last step of 5S system.
2. From the figures given below, ascertain the marginal cost per unit:

October November
No. of units produced 10,000 9,000
The total cost of production Rs. 80,000 Rs. 74,000
Rs. 4 per unit
Rs. 6 per unit
Rs. 5 per unit
Rs. 8 per unit
Answer
Option 2 : Rs. 6 per unit
Q3.Which of the following is the correct sequence of the steps for the distribution of overhead?

Collection or Estimation, allocation, apportionment, re-apportionment, absorption
Collection or Estimation, apportionment, allocation, re-apportionment, absorption
Collection or Estimation, apportionment, re-apportionment, allocation, absorption
Collection or Estimation, allocation, apportionment, absorption, re-apportionment
Answer
Option 1 : Collection or Estimation, allocation, apportionment, re-apportionment, absorption
Q4. method of assigning overhead when?

Several well differentiated products are manufactured
Direct labour costs are low
Only one product is manufactured
The manufacturing process is complex
Answer
Option 3 : Only one product is manufactured
Q5 Describe the/method of costing to be applied in case of Nursing Home:

Operating Costing
Process Costing
Contract Costing
Job Costing
Answer -
Option 1 : Operating Costing

LJ-9
Question 1.
The art of recording all business transactions in a systematic manner in a set of books is called-
(a) Accounting
(b) Book – keeping
(c) Ledger
(d) None of these.
Answer: (b) Book – keeping
Question 2.
The process of recording, classifying and summarizing all business transactionsQuestion 3.
Cash, goods or assets invested by the proprietor in the business for earning profit is called-
(a) Profit
(b) Capital
(c) Fixed assets
(d) None of these.
Answer: (b) Capital

Question 4.
The person, firm or institution who does not pay the price in cash for the goods purchased or the services received is called-
(a) Creditor
(b) Proprietor
(c) Debtor
(d)None of these.
Answer: (c) Debtor

Question 5.
Book – keeping is-
(a) An art
(b) A science
(c) An art and science both
(d) None of these.
Answer: (c) An art and science both in order to know the financial result is called –
(a) Book – keeping
(b)Accounting
(c) Journalizing
(d) None of these.
Answer: (b) Accounting

-LJ-10
Q1. Gross profit is
A) Cost of goods sold + Opening stock
B) Excess of sales over cost of goods sold
C) Sales fewer Purchases
D) Net profit fewer expenses of the period
Answer: B

Q2. Net profit is computed in the
A) Profit and loss account
B) Balance sheet
C) Trial balance
D) Trading account
Answer: A

Q3. In order to find out the value of the closing stock during the end of the financial year we,
A) do this by stocktaking
B) deduct the cost of goods sold from sales
C) deduct opening stock from the cost of goods sold
D) look in the stock account
Answer: A

Q4. Which of these best explains fixed assets?
A) Are bought to be used in the business
B) Are expensive items bought for the business
C) Are items which will not wear out quickly
D) Are of long life and are not purchased specifically for resale
Answer: D

Q5. The charges of placing commodities into a saleable condition should be charged to
A) Trading account
B) P & L a/c
C) Balance Sheet
D) None of the above
Answer: B
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LJ-08
Q1 What are the different types of liquidity ratios in accounting?
Ans. Basically, there are five different types of ratios in accounting:

Current Ratio
The higher the company has current ratio, the better is the company’s strength to handle short-term financial issues. It is calculated by – Current ratio = Current Asset/ Current Liabilities
Net-Working Capital Ratio
It articulates whether or not a company has sufficient funds to carry out short-term operations. It is calculated by – Current Asset – Current Liabilities
Quick ratio
The quick ratio is also known as the acid test ratio or liquid ratio which illustrates the company’s short-term liquidity to meet any short-term obligations. If the quick ratio is below 1:1, the company is not in a good state to handle short-term debts. Quick ratio = Liquid Assets / Current Liabilities
Super-Quick Ratio
Super Quick Ratio = (Cash + Marketable Securities) / Current Liabilities
The operating Cash Flow ratio
It is calculated by dividing cash flow from operations with current liabilities. It is observed that a sound operating cash flow ratio makes the firm’s liquidity position better.
Here cash flow from operations will generally include:
All revenues from operations + Non-cash based expenses – Non-cash based revenue
Whereas Current Liabilities will include:
Balance payments, creditors, provisions, short term loans, etc.
Q2. What is the Accounting Information System (AIS)?
Ans. This is a frequently asked accounting interview question thus you should know everything about AIS.

AIS is a computer-based method used for tracking accounting activity and involves – collecting, storing, processing, organizing, and summarizing accounting data and transactions. It also helps in cumulating financial transactions and essential financial reports, which helps stakeholders in decision making. Using AIS for storing and processing financial data helps in the following tasks:

Measure the financial performance
Evaluate the finances of the company and compare it with the previous period to draw a conclusion
Avoid any miss-handling of data
Connects Information Technology with GAAP principles
Q3. How to perform an income statement analysis?
Ans. The income statement is the company’s core financial statement highlighting the profits and losses of the company. It involves:

All revenues – expenses (both operating and non-operating activities)

To analyze this statement, financial analysts consider vertical analysis and horizontal analysis.

Vertical analysis:
It involves comparing the up and down of the income statement to the revenue (in percentage). The key metrics involved are:
Cost of Goods Sold (COGS)
Gross profits
Depreciation
Interest
Earnings Before Tax (EBT)
Tax
Net earnings
Horizontal analysis
It involves comparing the year-over-year (YoY) change of each line in the income statement. To perform this analysis:

Take the value in Period N and
Divide it by value in Period N-1
Subtract the value by 1 (gives the percent change)
Q4.Explain real and nominal accounts with examples.
Ans. A real account is an account of assets and liabilities. E.g. land account, building account, etc.

A nominal account is an account of income and expenses. E.g. salary account, wages account, etc.
Q5.What is double-entry bookkeeping? What are the rules associated with it?
Ans. Double-entry bookkeeping is an accounting principle where every debit has a corresponding credit. Thus, the total debit amount is always equal to the total credit. In this system, when one account is debited then another account gets credited at the same time.
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