GES Promotion Interview Questions & Answers (Accounts & Audit) Part 2

QUESTION 1

WHAT CAN ACCOUNT FOR THE DIFFERENCE BETWEEN THE BALANCE ON A BANK STATEMENT AND THE BALANCE OF THE BANK COLUMN IN THE CASH BOOK?

The difference between the two balances can arise because of the following reasons:

1. Unpresented cheques,

2. Deposits not credited to account by the bank,

3. Bank charges not communicated to the account holder,

4. Credit/Direct transfers not communicated to account holder,

5. Direct debits like standing orders,

6. Dishonoured cheque (both paid out and deposited),

7. Addition mistake on the part of the bank

8. Interest on bank balance.

 

QUESTION 2

WHY MAY THE BANK FAIL TO PAY OR DISHONOUR A CHEQUE?

A cheque may be dishonoured for any one or more of the following reasons:

1. Lack of mandate-unsigned cheque or wrong signature on cheque,

2. Cancellations or alterations on the cheque not endorsed by signatories,

3. Amount in words and figures on the cheque being different,

4. Postdated /Stale Cheque

5. In the case of a cash cheque when not opened.

 

QUESTION 3

HOW WOULD YOU TREAT A DISHONOURED CHEQUE RECEIVED FOR THE PAYMENT OF SCHOOL FEES?

The receipt of the cheque and subsequent payment to the bank reduced the student’s total debt and increased the bank balance respectively. If the cheque has bounced then steps should be taken to reverse the above situations.

1. A payment voucher should be raised in the name of the student on whose behalf the cheque was received by attaching the relevant debit note and photocopy of cheque. The student would be requested to sign the payment voucher and the dishonoured cheque handed over to him.

2. In the cash book, bank would be credited and the students control account in the main ledger debited at the end of the month when the cash book is closed.

3. The students control account is a summary of the students debtors and creditors as they appear in their individual ledgers. A corresponding debit entry would have to be made in the affected student’s ledger to restore his indebtedness quoting the payment voucher number in the cash book as reference/folio.

 

QUESTION 4

HOW WOULD YOU TREAT A LOST CHEQUE ISSUED TO A SUPPLIER?

As soon as information gets to the cost centre that an issued cheque is missing the bank should be notified about the situation quoting the account number, amount on the cheque, its number, date and payee and asking it to stop payment and also requesting the bank to inform the office as to action taken. The letter should be signed by the appropriate signatories to the account.

When the bank notifies the office that payment of the cheque has been stopped then a new cheque can be issued to the supplier. One line of action suggests that entry in the cash book should remain intact except that the old cheque number would have to be cancelled and the new one inserted especially when the cash book has not been closed. Copies of the bank’s response and that of the letter written to the bank will have to be attached to the relevant payment voucher and also the cheque number changed on the payment voucher.

However, upon a lengthy deliberation on the issue among retired senior Accounting Officers and serving ones in the Service at the request of the author a consensus was reached as follows:

That in all cases whether the cash book has been closed or not the value of the cheque should be receipted as if the supplier was returning the cheque to the entity, bank debited and supplier credited to restore the situation as it was before the issuing of the cheque. This is after the notification to the bank and its subsequent response.

A new p.v. would have to be raised and another cheque issued to the supplier, quoting the old p.v. number as reference and also attaching the two letters from the office and the bank to the p.v. Upon entry in the cash book bank will be credited and supplier debited. The question of journal entry as alternative treatment was totally ruled out on the principle that cash transactions are not journalized.

 

QUESTION 5

WHAT IS A BANK RECONCILIATION STATEMENT OR WHY DO WE PREPARE A BANK RECONCILIATION STATEMENT?

A bank reconciliation statement is a statement prepared to identify and rectify the difference between the bank statement balance and the bank balance in the cash book at a point in time. There could be some entries on the bank statement which would not appear in the cash book and vice versa. To rectify the omissions on both sides the bank reconciliation statement is prepared.

What account for the difference include:

1. Unpresented cheques,

2. Deposits not credited to account,

3. Credit or direct transfers to bank account,

4. Dishonoured cheque,

5. Direct debits,

6. Bank interests

7. Bank charges.

 

QUESTION 6

DESCRIBE THE PROCEDURE FOR THE PREPARATION OF A BANK RECONCILIATION STATEMENT.

One needs a bank statement and recordings in the cash book to prepare a BRS. The bank reconciliation statement (BRS) can be prepared after all bank transactions from the angle of the bookkeeper have been entered in the cash book and totals cast. Using the cash book as the basis, entries in the cash book are checked/ticked against those in the bank statement.

At the end of this process, some items can be identified from the bank statement as not appearing in the cash book. These may include bank charges, credit transfers, bank interest, direct debits like standing orders and dishonoured cheques. The cash book will have to be adjusted with these omissions either by receipting or raising a payment voucher as the situation demands. After these entries have been made the cash book would be balanced off. Now using the bank statement balance as the basis the final stage of the BRS would have to be prepared taking into account entries in the cash book not recorded in the bank statement e.g. unpresented cheque, deposit not credited to account and any other wrong debit or credit entries appearing in the bank statement.

 

QUESTION 7

AFTER THE PREPARATION OF THE BANK RECONCILIATION STATEMENT WHICH BANK BALANCE IS PICKED FOR INCLUSION IN THE BALANCE SHEET?

The adjusted cash book balance.

 

QUESTION 8

WHAT IS THE DIFFERENCE BETWEEN INCOME AND EXPENDITURE ACCOUNT AND THE INCOME STATEMENT (INCOME & EXPENDITURE STATEMENT)?

Income and expenditure account is an accounting term used to describe the process of comparing the receipts and payments of a non-profit making institution. The income and expenditure account will produce surplus of income over expenditure or excess of expenditure over income and the balance is transferred to Accumulated Fund:

Income Statement (Income and Expenditure Statement) on the other hand is the comparison of revenue and expenses of a profit-oriented organization to know whether profit or loss was made. The net profit or loss of the income statement is transferred to capital account.

 

QUESTION 9

WHAT IS A STALE CHEQUE?

A stale cheque is a cheque not presented for clearance six months after the date of issue of the cheque. A stale cheque would not be honoured by a bank unless the date is changed and endorsed by the signatories.

 

QUESTION 10

AN UNPRESENTED CHEQUE HAS BEEN APPEARING IN YOUR BANK RECONCILIATION STATEMENT FOR THREE CONSECUTIVE MONTHS. WHAT ACTION WOULD YOU TAKE AS AN ACCOUNTANT?

It will be investigated to find out whether the payee is still holding on to the cheque or it is missing. If the cheque is still with the payee then he would have to be advised to present it for payment. If the advice is not taken six months after the date of issue of the cheque it will go stale and in which case the original entry in the cash book would have to be reversed by receipting the cheque back. If, however the cheque is missing then the bank would have to be notified to stop payment of the cheque. After receipt of notice from the bank on action taken a new cheque can be issued to the payee after receipting the original amount and raising a new PV.

 

QUESTION 11

WHAT IS THE DIFFERENCE BETWEEN A STALE CHEQUE AND A DISHONOURED CHEQUE?

A stale cheque is a cheque that has not been presented for payment six months after the date on the cheque and can be made payable only after alteration of the date and endorsement by the signatory/signatories.

A dishonoured cheque is one which has been presented to the bank and refused payment because of reasons like insufficient funds, lack of mandate, cancellations not endorsed, words and figures on the cheque being different or the cheque being stale. Once the anomaly on the cheque is regularized it can also be re-presented for payment. A dishonoured cheque would normally be returned to the payee.

 

QUESTION 12

WHAT DOCUMENTS DO YOU NEED TO RAISE A PAYMENT VOUCHER FOR THE PAYMENT FOR STORES OR WHAT DOCUMENTS DO WE EXPECT TO BE ATTACHED TO A P.V. FOR THE PAYMENT FOR STORES?

1. Award letter stating terms of the contract, quantities, specification and contract sum,

2. Acceptance letter from supplier,

3. Proforma Invoice,

4. A & El form,

5. Payment Order (PO) (authorized by the treasury if payment is by GOG fund),

6. Invoice,

7. Waybill

8. Stores Receipt Advice (SRA).

 

QUESTION 13

WHAT DOCUMENTS DO YOU NEED TO PROCESS PAYMENT OF TRANSFER GRANT TO AN OFFICER WHO HAS BEEN TRANSFERRED TO YOUR COST CENTRE?

1. Transfer letter indicating that the officer qualifies for such benefit.

2. Pay slip for the month in which officer was transferred.

3. A confirmation by the receiving head of department that the officer has assumed duty.

4. Application from beneficiary authorized by the cost centre manager.

5. Completed A & El form.

 

QUESTION 14

DESCRIBE THE MANUAL PAYMENT PROCEDURE FOR THE SUPPLY OF EXERCISE BOOKS TO YOUR INSTITUTION AFTER THE BIDDING PROCESS HAS BEEN COMPLETED (PAYMENT IS TO BE EFFECTED THROUGH THE TREASURY).

After the bidding process for the supply of exercise books has been completed the winner will be informed by issuing to him an award letter which will state the terms of the contract-specifications, contract sum, time of delivery and payment terms.

The supplier will communicate his acceptance of the contract to the cost centre manager. The Accountant will use a copy of the award letter, tender committee report and available proforma invoice to prepare the A&El as well as the purchase order (PO). The P.O. will be taken through the treasury system as the current practice requires for commitment of the expenditure.

After commitment of the expenditure the purchase order is distributed as follows: original for accounts office, duplicate to the supplier, triplicate to the storekeeper and quadruplicate retained for records.

After the receipt of the duplicate copy of the P.O. which is a firm assurance to pay for the goods, the supplier will prepare his invoice and waybill and supply the exercise books.

The storekeeper will check and take the items on charge. Checking of the items should be done in the presence of the supplier and a Stores Verifier/ an Internal Auditor since the latter will have to endorse the SRA which will be prepared by the storekeeper. After the preparation of the SRA and certification by the Internal Audit Unit it would be given to the Accountant for the raising of the relevant P.V. to which the SRA, invoices, award letter, tender committee report, A&El and commited original copy of P.O. would be attached and submitted to the Internal Audit Unit for pre-auditing. A cheque order form should also be prepared and attached to the P.V. Note should also be taken of entries which should be done in the Vote Service Ledger. After passing the Internal Audit checks the P.V. is entered in the P.V. register and submitted to the treasury for the payment process to continue.

On receipt of the cheque from the treasury it is entered in the cheque register and the cheque handed over to supplier after issuing his official receipt and signing the P.V.

 

QUESTION 15

WHAT DO YOU UNDERSTAND BY THE TERM COMMITMENT OF EXPENDITURE OR ACTIVITY BY THE TREASURY OFFICER?

It means funds under the vote of the spending officer have been set aside specifically for an expenditure or activity and that the amount cannot be used to pay for another activity.

 

QUESTION 16

WHY SHOULD A PAYMENT VOUCHER BE SENT TO THE INTERNAL AUDIT UNIT BEFORE PAYMENT IS EFFECTED?

The payment voucher is sent to the Internal Audit Unit so that it can be pre-audited to ensure that all the internal control procedures concerning the payment have been adhered to:

1. That funds are available to pay for the said activity,

2. Delivery of stores or services have been made,

3. Relevant withholding tax and VAT have been taken into account where necessary,

4. All the relevant documents concerning the payment for the activity have been attached to the P.V.,

5. All those who need to sign or endorse any document concerning the P.V. have done so

6. The P.V. is duly acquitted.

 

QUESTION 17

WHAT IS A CHEQUE PAYMENT ORDER UNDER THE TREASURY PROCESSING SYSTEM?

It is one of the treasury forms prepared and attached to a payment voucher instructing the Treasury Officer whom to release a cheque covering a payment to when it is ready for collection. It could be the Accountant or any designated person. The cheque payment order should be signed and stamped by the cost centre manager.

 

QUESTION 18

NAME 10 KEY FEATURES THAT CAN BE IDENTIFIED ON A PAYMENT VOUCHER BOTH LOCAL AND TREASURY FORM 6.

The key features that can be identified on a payment voucher (P.V.) include:

1. Item of expenditure,

2. Name of payee (Dr To),

3. P.V. number,

4. Date,

5. Detailed description of service or expenditure,

6. Amount (words & figures),

7. Cheque number,

8. Signature or thumbprint of payee,

9. Certified correct by

10. Authorized by.

 

QUESTION 19

WHY IS THERE THE NEED FOR A DEBIT AND CREDIT ENTRY FOR EACH ACCOUNT IN THE LEDGER?

It is to complete the double entry system of accounting.

 

QUESTION 20

IN EXTRACTING A TRIAL BALANCE THERE IS ONE PARTICULAR ITEM THAT CANNOT BE FOUND IN THE LEDGER. WHAT IS THAT ITEM AND WHERE CAN IT BE FOUND?

Cash/Bank Balance and this can be found in the Cash Book.

CHECK OUT:
GES Promotion Interview Questions & Answers (Accounts & Audit) Part 1
GES Promotion Interview Questions & Answers (Accounts & Audit) Part 2
GES Promotion Interview Questions & Answers (Accounts & Audit) Part 3
GES Promotion Interview Questions & Answers (Accounts & Audit) Part 4
GES Promotion Interview Questions & Answers (Accounts & Audit) Part 5