Accounts payable: accounts payable a liability to a creditor
Accounts payable has got noting to do with purchase of goods and services, it's work is to pay the eligable invoices.
End to End Process of AP
- Process the vendor invoices into system
- Work and resolve the discripencies of the invoices (if any)
- Make the payments to the invoices as per the agreement
- Resolve the issues ( if any ) regarding the invoice payments
What is the meaning of TDS? How it is charged?
Answer
TDS Meaning :
TDS means TAX DEDUCTABULE AT SOURCE. It is charged on Base Amount.
TDS is tax charged by the customer who gets the services from Vendor or supplier. Here Customer is responsible to charge it and pay to the government.
Different types of TDS :
1) TDS on salary has to be deducted on salary paid to employee by employer if it crosses the tax limit. And pay to the government on or before due date.
2) In case of TDS on contractors or profession or others, there is slab that min tax, surcharge, education cess plus higher education cess, it is different and finance minister may change or keep same or remove in every year budget. Secondly you can deduct the TDS on bill amount while paying or if advance is paid.
What is STPI ? why STPI knowledge required in Accounts Payable?
Answer
Some of the software service providers will get exemption from Software Technology Parks of India (STPI) for their software exports. In accounts payable may be we need to define the vendor STPI location wise.
In India we have different STPI location. If one vendor supplying services or materials to all OR some of the STPI locations we need to maintain the same vendor STPI wise.
What is the full form of the trem WIRE in wire payment ? Explain the process for making and receiving the payment through WIRE?
Answer
There is no specific abbreviation for the term WIRE because when the payment is being made using this option, you will not see the physical movement of funds. It is all electronic. It is just li
What items would you verify when processing an expense report /invoice for payment?
Answer
Employee Travel and Expense Report (ETER ) / Direct Pay / Unencumbered Goods and Services
- The ETER is examined for compliance with Travel policy by the accounting clerk prior to submission to Accounts payable
- Accounts Payable enters ETER Information into Banner as a Direct pay, generates a Banner invoice number, and records invoice information
- Reimbursement checks for ETERs will be processed within five business days after a completed and correct ETER is received by Accounts payable and scheduled for payment in the payment cycle following.
- ETERs should be submitted within 60 calendar days of incurring the expenses. TEARs submitted for expenses older than two months will not be processed nor reimbursed.
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What are steps to define supplier?
Answer
Supplier should follow the check list.
1. He should create confidence in the client mind
2. Services to be done (fulfilled in time)
3. Services to be done according the specification of the client
4. He should be placed the another order by doing the above three steps
What entry is recorded when $75.00 worth of supplies are purchased on account?
Answer
Purchasing good two kinds of entry
Either Cash or Credit
If Cash
Purchase A/c ------ Dr xx To Cash A/c
(Being good purchase on cash)
If Credit
Purchase A/c ---- Dr To Supplier A/c
(Being goods purchase on Credit)
Which are the main MIS Reports of an accounts department & what the format of preparing the MIS ?
Answer
MIS report is known as Management Information System... regarding the Manpower status of a particular month, place and overall..
It helps the Management in decision making.. like what are the reasons of resignation.. in which area attrition is high.. and so many things to help in decision making.. with teh help of MIS you may prepare a lot of reports.. Like annual attrition.. region wise attrition.. region wise manpower.. graphical representation of regions manpower status.. and so on..
You may prepare the same at your end.As it will help you to prepare other such formats too.
I am describing you the contents with sheet wise..
First Sheet - Details of employee
a. E.Code
b. Name of employee
c. Date of birth
d. Designation
e. CTC
f. Address for communication
g.Permanent address
h. Contact number
i. Blood group
j. Maximum qualification
k. Extra qualification
l.Total Experience
Second Sheet- Salary structure
In this sheet write down the complete salary structure.. and make a column what is salary after any revision
Third Sheet - New Joinees
In this sheet write down the name of New joinees of that month with detail like CTC, Designation, DOB n etc.
Forth Sheet - Resigned employees
In this sheet write the name of employees who resigned during that particular month with details like name, designation, date of joining, Date of resignation, last working day.
Fifth sheet - Attrition rate
Based on this MIS report, you may find out the attrition report, Qualification analysis reports, team management reports and so on can prepare a number of reports..
what is another name for a real account in accounting? is it a permanent account or a temporary account? Also, what is another name for a nominal account? is it a permanent account or a temporary accounts
Answer
There are broadly 2 Type of accounts
1. Personnel Accounts
2. Impersonnel Accounts.
Personnel Accounts is an account maintained to record transactions with persons. Based on the classification of the persons personnel account can be of 1. Natural Personnel Account (Mr. Ram, Mr. Robert, Mr.Rahim) 2. Artificial Person (all entities like companies, banks, municipal corporations, all statutory or non statutory bodies) and 3. Representative person:- Representing group transactions for or towards groupd of persons like Salary Payable a/c. Taxes payable account.
Where as Impersonnel Account shall be of Two types.
A. Real Account B.Nominal Account.
Real Accounts are accounts to record transactions relating to Assets. Like Cash, Plant & Machinery etc., These type of accounts are permanent accounts.
Nominal Accounts are the accounts used to record the transactions relating to Income and Expenses. Like Salary, Power, Sales etc., At the end of the year all the nominal accounts are closed by transferring to Profit and loss account or Income and Expenditure account. The net differnce shall be carried forwarded to Balance Sheet.ke a current passes through Wire.
Therefore Electronic movement of funds is campared with WIRE.
What is the Debit Balance recovery? How we can recover if we wont have any future transactions from supplier?
Answer
The Debit balance recovery is usually made by raising a credit memo for the regular vendors. However if there are no future transactions from the supplier, we ask the vendor to send the check / make an EFT for the amount due from him.
When payment is made to the wrong vendor or payment made in excess, in that case overpayment has gone to the vendor, So for us it is vendor debit balance.
For debit balance recovery, we can either follow-up with the vendor to send us the excess amount / refund back, or we can adjust that extra amount in future invoices submitted by that vendor
In Case no future transactions, we have to follow-up with the vendor, falling whicch we have to write off this amount.
How does the payment mechanism work?
Answer
The open items of an account can only be cleared once you post an identical offsetting amount to the account. In other words, the balance of the items assigned to each other must equal zero.During clearing, the system enters a clearing document number and the clearing date in these items. In this way, invoices in a vendor account are indicated as paid, and items in a bank clearing account are indicated as cleared.
You generally use the payment program to clear invoices. Manual clearing of open items is therefore not usually necessary. However, you will sometimes have to clear items manually if, for example, you receive a refund from your vendor or you have set up a direct debit procedure.
Why does a company/business require an Accounts payables process?
Answer
Accounts payable process is required in a company because this will help and guide the accountant to manage their payables with in the normal course of the business.
This includes verifying and checking the invoice details including the credit terms, due date, mode of payment, payee and the items received. Only the items received will be paid. Incase theres a discrepancy against the actual receipts, a credit note will be raised by the supplier against the short-shipped invoice.
At the end of the month, AP reconcilition is required confirming both parties balances thru the statement of accounts (SOA). This you can identify which invoices or payment hasnt been booked yet by both parties and you will end up with the same balances, (equal balance from your company and with their company).
What do you mean by Mischarge Correction?
Answer
A mischarge correction is when the wrong account line was used or the wrong amount was entered. The account that was wrongly charged needs to be credited and the correct account needs to be debited. The information needs to be recorded and duly noted for your office and for the main office. A journal voucher, showing the correction, should be completed as soon as possible. The accountswill not balance at the end of the fiscal year if these corrections are not properly made.
What do you mean by invoice on hold?
Answer
Invoice holds are 2 types
1)Sytem Hold 2) User Defined Holds.
Sytem Holds: Sytem holds the invoice if the Invoice Amt total is not equal to Invoice Distribution Amt. To release the hold correct the amount and again validate the invoice.
User Defined Holds: These is defined by user. If we do want to make payments to the validated invoice. Go to particular invoice and apply hold going to Holds tab.
what is difference between account payable and bills payable?
Answer
Accounts payable refer to the current liability of a business or an organization. That is the unsettled payments in a business or an organization refers to Accounts payable. Bills payable refers to bills settled. In other words the paid and accepted recorded bills in a business or an organization refers to bills payable
What is diffrence between automatic Payments Batches and automatic payments?
Answer
Automatic payments batch means auto payment is done on the bases of the batch, which u created for the payment of particular pay group etc.
Automatic payments means auto payments is done on the bases of single transaction u selected base for the payments
What is a Non-PO Invoice?
Answer
A non-po is an invoice which does not have po(purchase order).However, these invoices requires approval for authorized person/persons to process for payment.
what type of account appear on a post closing trial balance?
Answer
The types of accounts that appear on the post-closing trial balance are the permanent accounts, Assets, Liability and Owner's capital. Permanent accounts is also called real accounts.
What is account payable? How we pass the entries in account payable and related all the question based on account payable?
Answer
Accounts Payable is a short term liability of an organization. It's a process by which a company buys goods and services on credit and is billed in the form of an invoice, which states the terms and conditions of the payment. Accounts Payable is recorded as a current liability in the balance sheet. All accounts paayble entries are to be coded under the right G/L accounts to have an accurate picture of the company's short term liability.
Explain What is the difference between debenture holders and creditors?
Answer
Debenture holder are those who provides long term loan at specific interest rate in term of cash and creditor provides only short term credit in term of cash for purchasing of goods.
What procedure for excess payment to supplier I would like know without adjusting invoice that means how supplier will send back excess amount how do in oracle apps?
Answer
Excess payment to supplier is treated as Advance paid to supplier. This will show as debit balance in supplier account.
Supplier can send the payment by way of cheque / demand draft without adjusting in his subsequent bills.
What is the difference between billable and non-billable expenses?
Answer
The terms Billable and Non-Billable expenses are normally associated with say a consultancy company where they bill consultants out to their clients. Therefore Billable expenses will be paid by the client whereas Non-billable will be paid by your employer. What's included in both is subject to the contract your company has with their client.
What is the types of assets?
Answer
There are three types of assets
1. Fixed assets :
Those assets which will be used by the company for a long period of time.
a) Tangible assets: those assets which we can see and touch and exp Land & Buildings, Plant & Machinery,Furniture, fixtures and fittings
b) Intangible assets: Those assets which we can't see and touch like Goodwill, Patents, Copyrights, Trade Mark etc
2. Current assets :
Those assets which can be easily converted into cash within one year like cash in hand, cash at bank, Bills receivable, stock etc
3. Fictitious assets:
its not the actual assets , its the expenditure occurred at the tine of commencement of firm ( capital expenditure )like preliminary expenses, discount on issue on debenture/shares, underwriting commission etc
Why does the Outstanding exp & Prepared Expenses treated as Personal Account?
Answer
Because these exps are paid/payable to persons. person includes Sole Proprietor, Partnership Firms, HUF, Co; etc.Personal accounts always appear in B/S until it is transfered to expenditure by debiting to P&L A/C.
What do you understand by Intercompany Settlement?
Answer
A key functional area of SAP for Utilities that supports cross-company exchange of settlement data based on international standards such as EDI, XML, and Microsoft Excel.
Intercompany data exchange manages data transfer between retailers, distributors, and independent service operators with special regard to the requirements in deregulated markets.
What is FBT (Fringe Benefit Tax)?
Answer
The tax payable on a non-salary benefit provided to an employee or an associate of the employee. The employer is liable to pay any FBT and may choose to recover the FBT amount from the employee.
What is accumulated loss?
Answer
A loss (or losses) from previous years carried forward in order to offset future earnings. This reduces the tax burden for the years with profit as the accumulated losses are deducted from the taxable profit.
What is the difference between EFT & Wire?
Answer
EFT-Electronic Funds Transfer is basically batch of payments are transferring from one bank to another bank with specified time lines. EFT payments are also called as BACS if it is UK, ACH in US for domestic payments. Foreign payments are called as SWIFT payments.
WIRE: Wire can be used to release payments for local or international, Different countries will be named in different ways viz., CHAPS for Local Payments made in UK, WIRE for all international payments made from UK and Local & foreign payments made in all other countries
What do you understand by Open Item Managed Account?
Answer
Open item management ensures that all items that have not yet been cleared are available in the system. Only after every open item in a document is cleared can a document be archived.
what is the difference between debenture and preference share
Answer
The difference between Debentures and Preferential Shares is as follows:
1) Person holding debentures has owed money to a company, while Preferential
Shareholder could be considered as a partial owner of the company.
2) A Preference shareholder has a right towards the profits of the company In
a way of Dividends.
3) A Preference shareholder earns dividends if the company is making profits,
however a Debenture holder needs to be paid irrespective of making profits or
losses.
4) A Debenture holder would be paid the capital invested at the end of a
stipulated term. A preference shareholder is not promised return of capital
invested; instead he earns dividends till the time the company exists and is
profitable.
5) A debenture holder earns interest on the capital invested till
the capital is not returned, while a preference shareholder is paid dividends
till the time the company exists.
What steps would you take before approving an invoice for payment?
Answer
Following steps should be taken
>Validate the invoice once it is matched for checking any holds..
>If workflow is implemented , Initiate approval for the invoice. Once the invoice is approved/Approrval not required(status in case WF is not implemented) you can go for payments.
>Create accounting after approval of invoice..
Finally for payments you need to format, build
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Before making payment
the following steps should be taken
1. invoice amt, date, qty, quy,
2. invoice duplication or not
3. rectification of any Errors in invoice
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Before hand over the invoice or dispatch the materials
1.we have to receive perchase order from the customer
2.Then PDC cheque, cash or current dated chq for dispatch the materials
3.have to take signature from the customer for the proof of goods recieve
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We must check the invoice thoroughly.
(1) Date of Invoice
(2)Qty,Rate,Tax Levid
What is 3 Way Matching?
Answer
3 way matching is to compare three documents i.e.,
1. Purchase order
2. Receipt of Items/Packing slip
3. Invoice.
For example, if we Order for 50 Items in purchase order and received 40 Items only instead of 50 items. But we received invoice for 50 items. After comparing the three documents we pay for only 40 Items..
What is the meaning of Per Diem?
Answer
It is the allowance paid to an employee who is working on a special assignment. This amount is completely exclusive of his Compensation plan. These are given in scenerio's like, when the employee went for On Job Training or an Employee sent for short term Deputation to survive his expenses in the new location.
What is the Debit Balance recovery? How we can recover if we wont have any future transactions from supplier?
Answer
The Debit balance recovery is usually made by raising a credit memo for the regular vendors. However if there are no future transactions from the supplier, we ask the vendor to send the check / make an EFT for the amount due from him.
What is the meaning of invoice?
Answer
An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms.
In the rental industry, an invoice must include a specific reference to the duration of the time being billed, so rather than quantity, price and discount the invoicing amount is based on quantity, price, discount and duration. Generally speaking each line of a rental invoice will refer to the actual hours, days, weeks, months etc being billed.
From the point of view of a seller, an invoice is a sales invoice. From the point of view of a buyer, an invoice is a purchase invoice. The document indicates the buyer and seller, but the term invoice indicates money is owed or owing. In English, the context of the term invoice is usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money) or "We received an invoice from them" (we owe them money).
Answer
Liabilities are what all u owe from the bank on notes payable or in other words it is:
Liability=Asset-Owners equity
what company owes that is liability. liability = Asset-capital
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