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This video provides a comprehensive review of essential accounting concepts and common interview questions, covering final accounts, cash flow, depreciation, provisions, reserves, and fund flow statements, aiming to equip viewers for accounting interviews.
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Hello everybody, my name is Shepra Singh
and I welcome all of you to another
video on basic accounting interview
questions and answers from careerite. In
part one of the video in this series, we
covered commonly asked questions on
important topics like bookkeeping,
journal, ledger, subsidiary books, bank
reconciliation statement, rectification
of errors and the balance sheet. In part
two, we discussed basic but essential
questions related to nonprofit
organizations and
partnership. In addition to these, we
have also shared detailed videos on
accounts payable and accounts
receivable. So, make sure to check them
out also. Today let's move a step
forward and see some important interview
questions on basic topics like uh
trading account, cashbook, cash flow
statement, depreciation and its methods,
provisions and reserves, asset disposal
account and a very important topic the
fund flow statement. If you're really
serious about cracking any accounting
interview, the questions covered in
these videos are a must know. Make sure
you watch this video till the end
without skipping any part of it. And
once you are done with this video, don't
forget to check out other videos also.
The links are provided in the
description box below. Ready? Fantastic.
Let's start. Question number one. Can
you name the final accounts we prepare
in case of sle
proprietorship? Quite simple and easy.
The final accounts that we prepare in
case of proprietorship are trading
account, P&L account and balance sheet.
Trading account and P&L account are
together known as income statement and
three of them together are known as
final accounts. Going a little deeper,
your question number two can be why is
income statement created? Now see income
statement means trading account plus P&L
account we just saw. So the question
basically is why are these two created?
To answer the question, let's go to our
basics. Trading account helps to
determine gross profit and loss and P&L
account help to determine net profit and
loss which you are interested in finding
out as a business. The figures you get
from here allow you to compare with the
previous year's profits. This gives you
an idea about the direction in which the
business is going. The details of your
income and expenses are very very
important because these allow you to
control them better. You are able to
find a clear picture about the reserves
the business has just in case you need some
some
uncertainties and then you are able to
calculate the ratios like gross profit
ratio, net profit ratio etc with the
help of these documents. So you see both
of these documents allow you to get a
deeper look into your business based on
which you can make your decisions and
that is why it is very important for a
business to prepare them. Now the next
two questions that I'm going to bring
before you can be the follow-up
questions to this question number two
and the questions can be tell us a bit
about trading account. So see trading
account is a financial statement that
shows the result of buying and selling
of goods and services in a given period.
It helps determine the gross profit or
gross loss of the business. On the debit
side, it records things like opening
stock or inventory, net purchase and
direct expense. These purchases only
include the goods and material bought
with an intention to resale. They do not
include any assets bought by the company
like land or machinery
etc. Now the important thing to pay
attention to here is direct expenses are
the expenses you incur in the process of
production. Example your wages, power,
fuel, factory rent, royalties, duties on
purchase, carriage that is freight etc.
On the credit side, you have sales,
services rendered, closing stock of the
inventory. The difference between the
two side tells you if it is a gross
profit or loss for the business. If the
total of credit side is greater than the
total of debit side, you make a profit
and vice versa. The gross profit or loss
is transferred to the P&L account. Your
question number four can be tell us
something about P&L account. Now P&L
account is the second step in the
preparation of final accounts and shows
the financial performance of an
enterprise. It pertains to a particular
accounting period and follows acral
basis of accounting. Items like gross
profit, indirect income are recorded on
the credit side of the statement.
Indirect income includes things like
rent received, discount received,
commission earned, interest received,
etc. So you see this indirect income is
the income you receive from sources
other than selling your product or
service. Now what do you record on the
debit side? So debit side records items
like gross loss and indirect expenses.
These indirect expenses can include
things like salaries, rent, stationary
charges, advertisement cost, any legal
charges you have paid, telephone
charges, depreciation, interest, etc.
The important thing to mention here is
the net profit or loss that you get from
here impacts the capital of the
organization. It either makes the
organization stronger or weaker. Now our
next question is a tricky one that's
usually asked here. Pay attention. The
question is can we say that trading
account is a part of P&L account? So
yes, we can say that trading account is
a part of P&LN account because the gross
profit or loss you post to the P&L
account is assertained from trading
account only. This is simple but many
candidates get confused here. Make sure
that you don't coming to another
important question. Tell us a bit about
the balance sheet. Okay. So balance
sheet is a statement that shows the
financial position of a business on a
given date. It records all the assets
and liabilities of a company on a given
date. It is prepared from real and
personal accounts. Excess of assets over
the outside liabilities is the capital
and demonstrates the financial soundness
of the company. And since everything is
recorded in in an organized manner, it
shows the amount of assets a company
owns under a particular head also. At
the same time, it also shows the amount
of liabilities it owes to the outsiders
and the
proprietors. It provides a base for the
opening entry for the next accounting
year and helps you understand the
solvency status of the company. With the
next question, the interviewer might go
a little deeper and the question can be
which items are recorded on the assets
and liabilities side of a balance sheet.
So see liabilities represent the
obligations or debt of the debts of the
business. These may be external
liabilities that is payable to the
outsiders or the internal liabilities
that is owner's funds. Common items that
are included here are sunundry
creditors, bills payable, bank
overdraft, EPF, loan and advance taken
that is the credit balance of it,
reserve or reserve fund, capital of
partners etc.
And the assets represent what the
business owns both current and
non-current. They can include items like
cash in hand or bank. Then your bills
receivable, sunry debtors, loans and
advances given uh that is the debit
balance of it. Closing stock,
investments, furniture and fittings,
plant and machinery, loose tools. Then
your land and building, building
premises and then your patents and
trademarks, goodwill, all of these are
included under the assets part of the
business. Okay, let's move on to a very
tricky question with this. What do you
know about the terms grouping and
marshalling? Now see, if you're not
prepared, this question is going to come
as a big surprise to you. So pay
attention. Both of these terms grouping
and marshalling are actually related to
the presentation of balance sheet.
When you list all the items of similar
nature under a specific accounting head,
it is called as grouping. For example,
your current assets is a group which
includes things like cash at hand, cash
at bank, inventory, debtors, etc.
Similarly, sunundry creditors, bills
payable, outstanding expenses, all of
these are grouped under current liabilities.
liabilities.
Marshalling is an arrangement of assets
and liabilities in a particular order in
the balance sheet. It deals with the
order in which these assets and
liabilities are presented in the balance
sheet. The two most commonly used
methods of this arrangement are the
first one is in the order of liquidity
that is the assets are listed from most
liquid to least liquid and the second
one is in the order of permanence. In
this case, the assets are listed from
most permanent to mo least permanent.
For example, your land and building,
plant and machinery, stock, dattors,
cash. This is the order. Okay. If need
be, please feel free to replay this
question, but make sure that you have
understood it
properly. Great. Let's move on to
question number nine with this. Tell us
something about the cash flow statement.
Another important question. So see cash
flow statement is a tool that is used
for financial analysis. It shows how the
cash flows in and out of the
organization. And the best part is it
gives us the specific reasons for the
difference between the opening and
closing balance of the cash in the
organization. That is where did the cash
come from and where did it go. You get a
clear picture of this. Cash inflow
happens from activities like cash sales,
cash received against the trade
receivables, commission or royalty. Then
your insurance claim that you have
received. Cash from sale of investment,
sale of fixed assets, sale of
securities, loans and advance received.
Then proceeds from the issue of equity
shares, preference shares or debentures.
All of these are your sources of cash.
And cash may outflow for payments like
uh cash purchases, cash that you pay
against the trade payables, operating
expenses. Then if you uh buy any
investments, cash purchases of any fixed
assets, loans and advances that you give
or if you buy back any of your equity
shares for cash, that is a payment. Then
redemption of preference shares,
redemption of debentures, all of these
items are where the cash goes out. So
the cash flow statement actually gives a
very clear picture of the liquidity in
an organization and is extremely useful
for creditors, investments and
management to make informed decision
about that particular business. The
follow-up question to this can be what
are the advantages of preparing a cash
flow statement. So see cash flow
statement first of all helps with
short-term planning for the business
because now you precisely know your
sources and applications of fund. What
this does is it allows you to have a
better control over both of these
things. It also helps you assess the
liquidity and solveny of an
organization. That is your ability to
pay for your short-term and long-term
liabilities as an organization.
And now since you know if there's a
surplus or deficit of cash in the
organization, you're able to manage your
cash more
efficiently. And you're also able to
compare your actual cash flow statement
with what you budgeted for. So it
provides you a comparative study also.
what's going right, what's going wrong.
You get a clear picture of that and you
also get a clear uh understanding of the
actual reasons for the current status
where you are at and what corrective
actions are required if you want to
emerge out stronger from here. Okay. Now
we are moving to a little practical
question. Pay attention. The question is
suppose you deposit the cash you have in
hand into your bank account. Will this
be regarded as cash flow? So no, this
transaction cannot be regarded as cash
flow. Why? Because it is simply that the
cash is changing the place in this case.
There's no inflow or outflow of cash
happening here. Right? Similarly, if you
withdraw cash from your bank, it won't
be recorded in the it it won't be
recorded in the cash flow either because
what is happening here again is it is
changing the place. There's no inflow or
outflow of cash happening here. Question
number 12. Can you name some commonly
used subsidiary books? Okay. So, first
of all, let's quickly see what are
subsidiary books. We know that all the
transactions in a business are to be
recorded and they're recorded in a
journal book. Now, just imagine that the
business is growing up and you keep
recording all the transactions, sales,
purchase, cash, everything in one
journal book. Will you be able to locate
a specific entry in the time of need? In
this case, it'll be difficult, right?
So, what do we do here? We record the
entries in separate dedicated books. For
example, record sales of goods in one
book, purchases in another, cash
transactions in another and so on. What
are these books? These books are called
as subsidiary books. There are six types
of subsidiary books that you have. cash
book, purchase book, sales book,
purchase return book, sales return book,
and journal proper. Okay, now pay
attention because the next question
tests your conceptual knowledge and is
one of examiner's absolute favorites.
The question is, do you pass the journal
entry for the transactions that you have
recorded in the subsidiary books? So no,
the journal entry for the transactions
that you have recorded in subsidiary
books is not passed. The total of the
subsidiary books is directly posted to
the ledger. For example, if you have a
purchase book, you would directly pass
on the total to the ledger. Why? Because
you have already entered everything. You
have already passed on the entries in
the subsidiary box. Okay. Now let's move
on to a question on depreciation which
is another important
topic. The question is what is
depreciation? So first of all
depreciation means fall in the book
value of tangible
assets. This fall is permanent, gradual
and continuing in nature. Which means
that the value of these tangible assets
falls slowly, continuously and cannot be
reversed. It is actually an expense that
doesn't involve cash. And since it is an
expense, it is debited to the PNN
account. Now the important thing to
notice here is depreciation reduces the
book value of the goods but the market
value may not necessarily fall. While
your books may say that the value of
your furniture is 10,000 rupees after
depreciation, you may still manage to
find a buyer who buys it for 15,000
rupees which is the market value of your
asset. And a very important thing to
remember here is depreciation accounting
is actually the process of allocation
and not
valuation. Now for those of you who
don't know what allocation means here
when you distribute the cost minus
salvage value that is the scrap value of
an asset over its useful life it is
called as allocation. Now this question
is asked so many times in the interview
and a lot of candidates get confused
here. So make sure that you are clear
with it. Pay attention and if you need
please replay this much part of the
video that is this question so that you
can catch it better. Now the followup
question to this can be is depreciation
charged on all fixed assets? So yes
depreciation is charged on all fixed
assets except land. Why not land? This
is because land has an infinite economic
life. Another important thing to know
and remember for the interviews pay
attention. Moving on to question number
16 with this. What is the difference
between depreciation, amortization and
depletion? So see fall in the value of
tangible assets due to use, passage of
time, obsolescence or accident is called
as depreciation.
Amortization is also fallen value but it
applies to intangible assets that is
your patents, copyrights, uh the
goodwill etc. and depletion it is used
in con uh context of exhaustion of
vasting assets like your query mine etc.
So when you keep mining coal the coal
reserves deplete in that sense. Question
number 17. What would happen if you do
not charge
depreciation? Okay, so we know that
depreciation is an expense. Now just
imagine if you do not consider an
expense altogether, what would happen to
your financial accounts? Would your P&L
statement show the correct financial
position of your business? Could it not
show unnecessarily exaggerated value of your
your
assets? The value of your asset would
reduce with time and use. But if you do
not charge depreciation, the books would
show unnecessarily extorted value of
these assets which will be misleading
for you as a business
owner. Depreciation is considered while
calculating the cost of production also.
If you don't consider it, your cost of
production will show up lower than what
it actually is and you would not be able
to price your items or products properly.
properly.
Then if you charge depreciation and
retain it in the business, it provides
you the funds to replace the asset that
is under consideration. Otherwise, if
you do not charge this this
depreciation, you won't be able to
provide for this. And lastly, for legal
compliance, it is very important to charge
charge
depreciation. Now, see this question is
again very very important. Please feel
free to replay it if you have not got it
completely. But make sure that you have
understood it well and you are prepared
to answer it in the interviews. Moving
on to another important one. Name the
factors you consider for providing
depreciation. Now see the three
important factors you consider while
providing depreciation are number one
the historical cost of your asset.
Basically how much did it cost in all to
get the asset to the factory and
functional. This could include your cost
of the asset, the freight that you might
have paid, installation charges, and any
other cost to get it operational. Then
your estimated residual or scrap value
that you can receive at the end of
useful life of this asset. And the
estimated useful economic life of the
asset is the third important thing, the
third important criteria that you need
to take into consideration while
calculating the depreciation. Because
every tangible asset would have an
estimated life but the exception here is
land as we just discussed a while back
because the land has got unlimited economic
economic
life. Now a natural follow-up question
to this can be what are the different
methods of charging the
depreciation. So see there are two prime
methods of charging the depreciation.
The first one is when depreciation is
charged to the asset account and the
second one is when provision for
accumulated depreciation account is
created. Simple till here. What's
important actually here is the entries
you pass to record these. Let's see
them. Let's see the entries according to
the first method. That is when the
depreciation is charged to the asset
account. In this method, we directly
reduce the value of the asset by
charging depreciation to it. This means
the asset now appears in the books at
its written down value. So the two
entries that you pass are these. This
entry reduces the value of the assets in
the books and this entry is passed at
the end of the accounting period to
close the depreciation account and
reflect it as an expense in the P&L
account. Pay attention again two very
important entries that are very very
important from the point of view of the
interview. Now the second method is when
you have a provision for the
depreciation account. This method is
used when we do not reduce the assets
value directly but instead we maintain a
separate account which is called as the
provision for depreciation or
accumulated depreciation account. How
would the entries look in this case? The
entries would look like this. In this
case the first entry here increases the
provision that is accumulated
depreciation without directly reducing
the asset in the asset account. And this
second entry if you look at it closely
this is the same closing entry as we saw
in the method one. It is used to
transfer depreciation expense to the
profit and loss account at the end of
the accounting period. This is quite
easy but at the same time it is very
very important to know these entries
because interviewers especially love
such questions. Please feel free to
replay this question. Pause the video on
both the slides and take a good look at
the entries. They'll help you
tremendously during the interviews and
definitely make you stand out from other
candidates who are present there. Our
question number 20 is what are the
different methods to calculate
depreciation. Now there are two most
commonly used methods that are used for
calculating the depreciation. The first
one is straight line method which is
also called as fixed percentage on
original cost or fixed installment
method. What happens in this method is a
certain percentage of the assets cost is
written off every year as
depreciation. For example, 10%
depreciation on the original cost every
year. Now this means that the
depreciation every year is uniform and
hence the name is straight line method.
The second method that we use is return
down value method that is diminishing
balance, reducing installment method or
reducing balance method. It is also
called as by these names. In this case,
the depreciation is charged on the book
value of the asset which keeps reducing
every year because of the depreciation
that you have charged in the previous
years and that is how these two methods
are different from each other. Okay,
let's move on to question number 21. Now
what do you understand by provision? So
see provision is an amount that is
charged to the profit and loss account
to provide for a known liability.
The amount of which can be can't be
determined with certainty but it can be estimated
estimated
reasonably. Since it is charged on
profit, it reduces the net profit for
the year. For example, it could be the
provision for depreciation, doubtful uh
debts, then repairs, taxes, etc. When
you don't know the exact amount you
would need to pay for something,
provisions are created. So you see it is
like a temporary retention of profit for
a specific future obligation. It helps
the business stay prepared for expected
but uncertain
expenses. Great. Let's move on to
question number 22 with this. What are
reserves? So see reserves is the amount
that you set aside from profit to meet
known or unknown future contingencies
that may arise. the uh they are not
created to meet any specific liability
but the basic purpose to create these
reserves is to strengthen the overall
financial position of the
organization. Reserves represent
appropriation of profit. For example,
you may create a general reserve,
reserves for expansion, reserves for
increased cost of replacement
etc. Now most of the candidates would
stop their answer here itself. But if
you want to stand out, try adding some
more details. For example, some of the
important things about reserves that you
can talk about are reserves belong to
the proprietor. They appear on the
liabilities side of the balance sheet
because they represent profits that have
been retained in the business which are
owed to the owners. Actually when
reserve is invested in outside
securities, it is called as reserve
fund. So these are the additional
details that actually add weight to your
answer. Also you can go on to say that
reserves are debited to the profit and
loss appropriation account not to the
P&L account as it is. That's why they do
not affect the net
profit. They created after the profit is
already determined. Now you can see
yourself a new question is getting
created here which may be asked just as a
a
oneliner for those of you who do not
know what appropriation is.
Appropriation means distribution or
allocation of net profit after all the
expenses taxes and adjustments have
already been made. So if you see in
simple words once the profit is
finalized a part of it is set aside or
distributed this is called appropriation
of profit. simple. If need be, I highly
recommend that you replay this question
and try to get a hang of it because this
is a very important question that is
usually asked in the interviews.
Question number 23. What are the various
types of reserves? Now see there are two
types of reserves. The first one is
revenue reserve. This is created out of
revenue profits. That is the revenue
that you have earned from your main
business. And the second one is capital
reserve. This revenue reserve can be
further classified into general reserve
that is it is the amount that is set
aside from for general purpose not any
specific purpose. They strengthen the
financial position of the company. And
the second one is specific reserve. You
set aside a specific reserve and this
can be used for that specific purpose
only. So you see this is for a
particular purpose. for example, workman
compensation reserve, debenture re
redemption reserve, etc. Now let's come
to capital reserves. Capital reserves
are set aside from capital profits that
you make. For example, you may set uh
sell a land or something like that and
you may reserve some amount that is
capital reserve and these capital
reserves are not available for
distribution of dividend in normal
cases. Capital profit can arise from
selling your fixed assets, redemption of
debentures, then selling of shares,
premium issue of shares or debentures
etc. So this extra information is to
give you an insight into what capital
profit may consist of. Okay, let's move
on to question number 24 with this.
Okay, now question number 24 is very
interesting. Have you ever heard of
secret reserve? So yes, secret reserve
it is also called as hidden reserve. It
is a reserve whose existence is not
explicitly shown in the balance sheet as
the word itself suggests
secret. It is created deliberately to
strengthen the financial position of the
company without disclosing it openly.
Now the question that arises here is how
is it actually created? So you create
this reserve by showing the assets at a
lower value and liabilities at a higher
value. Also you try to write off the
assets at a higher value. This reserve
basically shows a conservative picture
of the organization's financial position
and safeguards its interest in any
unforeseen losses. Right? Okay. Let's
move on to question number 25. Now
suppose I sell off an asset before its
book value becomes zero. How would you
charge a depreciation in this year of
sale in this case? Now you can pause the
video for a moment. Take a good look at the
the
question. Now if you try to simplify the
question it is basically asking you is
how much depreciation would you charge
in the year of sale of an
asset? Doesn't it? Now it becomes
easier. Fantastic. Let's see what
happens here. So we know that we charge
the depreciation for the whole year that
is 12 months of the financial year.
Suppose I sell the asset at the end of 6
months only in that year. So my
depreciation would be charged for these
6 months only. It won't be charged for
the whole 12 months. Right? Does that make
make
sense? Great. If need be, you can replay
this question again and gain the clarity
if you need to. The question is simple.
It is just asking you how much
depreciation would you charge if you
sell the good before the year
ends if some months are still remaining?
Okay, moving on to another interesting
question. Are the sales proceeds always
equal to the book value of the
asset? Now, it's simple but actually a
tricky one and definitely one of the
interviewers's favorites. That is why
I've got it here. So the book value of
an asset we know is its value after the
depreciation has been charged and sales
proceeds is the value you actually
managed to sell this asset at right and
all of us know that these values can be
absolutely different. For example, the
book value of your asset after charging
the depreciation might be 1 lak rupees.
But in the real life, you may actually
manage to sell it for rupees 1 lakh
20,000 or you might have to sell it for
80,000 rupees. If you manage to sell it
at a price higher than the book value,
it's profit and vice versa. Okay? So we
can see that the book value and the
actual value the sales proceeds do not
always have to be the same and actually
if you see they are rarely the
same. Great. Now we are moving to
another very important topic that is
fund flow
statement. So the first question from
fund flow statement could be are there
any other names used to refer to the
fund flow statement. This one is very
simple very basic still good to know. So
the fund flow statement can also be
called as statement of changes in
financial position. Then many a times it
is also referred to as statement of
sources and applications of funds. And a
more casual common one is where got and
where gone statement. Informal but often
used to explain in simple terms where
the funds came from and where they
actually were
used. Okay. Now our question number 28
is why do organizations prepare the
funds flow statement at all? So see
there are several important reasons for
the organizations to prepare a fund flow
statement. The most common ones are
number one to monitor and control the
working capital because this statement
shows whether the organization has a
surplus or deficit of the working
capital and whether the existing bucket
capital that you have has been used
sufficiently efficiently or not. That is
the first purpose and then this
statement also gives you the causes
behind the changes in the working capital.
capital.
And all of this helps the management
understand the exact reasons for any
increase or decrease in the working
capital during that particular
period. Then it also helps you with uh
better financial planning and budgeting
because by knowing where the funds are
actually coming from and where they are
being used, companies can plan their
future finances and budgets more effectively.
effectively.
And banks often require projected fund
flow statements before they sanction
your loans along with other financial
documents. So that is why also these uh
fundflow state this funflow statement is
very very important for any organization
because it plays a vital role in loan
approvals. So all of these are the most
important reasons why fund flow
statement is actually generated. Why is
it actually created? Okay. Now let's
move on to another practical question
and this one is also very popular with
the interviewers. So pay attention. The
question is how would you know if a
particular transaction would have the
impact on fund flow statement or not?
Now see this one looks difficult but is
actually very very
simple. Funds refer to working capital.
So if a transaction causes a change in
the working capital, it means it has an
impact on the fund flow. Otherwise it
has no
impact. Now what I'm going to give you
next is a very simple tip to identify
this. Pay attention. When you make the
journal entry for any transaction and
you see that one account getting
impacted is from the current category
while the other one is from the
non-current category. There would be a
change in the working capital in this
case and hence there would be a flow of
fund. If both the accounts belong to the
same category when you make these
journal entries that is current or
non-current whatever it may be there
won't be a change in the working
capital. Okay. So this was in theory.
Let me show it to you
practically. Suppose I purchase some
machinery and the cost is 50,000 rupees
that I pay in cash. How would the
journal entry look like in this case?
The journal entry would look like this
in this case. Right? So do you see that
these are two different types of
accounts one is non-current assets and
the other one is current assets. So one
is from non-current category and the
other one is from current category. So
there is going to be a change in the
working capital. There's a flow of fund
that is happening here. Now if I buy the
same machinery on credit let's say how
would the entry look like in this case?
The entry would look like this. So do
you see these are again two different
category of accounts. One is
non-current, the other one is current.
It implies that there is a change in the
working capital. If there's a change in
the working capital, it means there's a
flow of
fund. Right? Easy. Now, now let's see a
case where both the accounts are of the
same category. So that you can get a
good grip of it. Suppose I finish off a
current liability by paying cash to a
creditor. What would the journal entry
look like in this case? The entry would
be like this. Do you see both the
accounts here are from the current
category, current liabilities, current
assets, right? They are similar
category. It means there is no change in
the working capital. There is no flow of
the funds happening here. This is
actually very very important question.
If need be, you can replay this much
part of the video, but make sure that
you have absolute clarity on this
because there is a very high chance of
interviewers asking this question. Okay,
with this let's move on to the last
question of this video which again test
your conceptual knowledge. The question
is what are the different elements
considered under source and application
of funds in a fund flow statement? Now
in a fund flow statement the sources of
funds and application of funds refer to
the movements that actually either
increase or decrease the working
capital. So the sources of funds can
include things like uh funds from
operations that is your main business.
Then issue of shares, debentures, sale
of fixed assets or investments,
long-term loans that you may have uh
taken from the bank or somewhere. Then
your non-trading receipts that come from
business activities like donations, your
insurance claim that you may have
received or government grants, all of
these come under sources of funds. Now
applications of funds means things that
actually lead to the decrease in working
capital. It can include things like loss
of funds from operations, repayment of
uh long-term loans that you may have
taken in the past, purchase of fixed
assets, redemption of preference shares,
debentures, then your non-trading
payments. For example, if you have
proposed dividend provision for taxation
that you may uh have all of these are
your applications of funds. So friends,
with this we come to the end of this
video and I sincerely hope that whatever
we have discussed today is going to be
useful to you in cracking your next
interview. If you're someone who's
preparing for your accounting interview,
make sure that you watch the videos that
I'm currently showing you on the screen.
Also, you'll find the links in the
description box below. If you found
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