❓ What are the 3 main financial statements? Answer: Income Statement – shows profit/loss Balance Sheet – shows financial position Cash Flow Statement – shows cash movement ❓ Difference between cash basis and accrual basis? Answer: Cash basis → record when cash is received/paid Accrual basis → record when income/expense is earned/incurred (used in US GAAP) ❓ What is working capital? Answer: Working Capital = Current Assets – Current Liabilities It shows short-term liquidity of the company. 🔹 2. Accounts Receivable (AR) ❓ What is the journal entry for customer invoice? Answer: Dr Accounts Receivable Cr Revenue ❓ How do you handle overdue invoices? Answer: Aging analysis Send reminders Follow-up calls Escalation if needed ❓ What is DSO? Answer: Days Sales Outstanding → measures how quickly cash is collected. 🔹 3. Accounts Payable (AP) ❓ What is 3-way matching? Answer: Purchase Order Invoice Goods Receipt Ensures payment accuracy. ❓ Journal entry for vendor invoice? Answer: Dr Expense / Assets