Book keeping Jamb past questions and answers

Book keeping Jamb past questions and answers

Question: What is the purpose of the chart of accounts?

a) Record daily transactions

b) Organize financial statements

c) Calculate net income

d) Adjusting entries for errors

Answer: b) Organize financial statements

Question: How does an increase in accounts payable affect the accounting equation?

a) Assets decrease

b) Liabilities decrease

c) Equity decreases

d) Assets and liabilities both increase

Answer: d) Assets and liabilities both increase

Question: What is the role of the subsidiary ledger in bookkeeping?

a) Record daily transactions

b) Track specific accounts

c) Organize financial statements

d) Calculate net income

Answer: b) Track specific accounts

Question: In the context of financial statements, what does "EBITDA" stand for?

a) Earnings Before Interest, Taxes, Depreciation, and Amortization

b) Equity-Based Income Tracking and Data Analysis

c) Expenses Before Interest and Taxes, Deductions, and Amortization

d) Earnings Beyond Income Tracking and Depreciation Analysis

Answer: a) Earnings Before Interest, Taxes, Depreciation, and Amortization

Question: What is the significance of the going concern concept in accounting?

a) Assets should exceed liabilities

b) The business will continue to operate indefinitely

c) Revenue should match expenses

d) Assets should be valued at historical cost

Answer: b) The business will continue to operate indefinitely

Question: In double-entry bookkeeping, which accounts are affected when dividends are declared?

a) Asset and liability accounts

b) Only equity accounts

c) Only revenue accounts

d) Both expense and revenue accounts

Answer: b) Only equity accounts

Question: What is the purpose of the statement of retained earnings?

a) Display profitability over time

b) Report changes in equity

c) Show cash inflows and outflows

d) Summarize revenue and expenses

Answer: b) Report changes in equity

Question: How does an increase in prepaid expenses affect the accounting equation?

a) Assets decrease

b) Liabilities decrease

c) Equity decreases

d) Assets and liabilities both increase

Answer: a) Assets decrease

Question: What is the significance of the materiality principle in accounting?

a) Record all financial transactions, regardless of size

b) Only record transactions that significantly impact financial statements

c) Use conservative estimates for asset values

d) Match expenses to the period they are incurred

Answer: b) Only record transactions that significantly impact financial statements

Question: In the context of inventory accounting, what does "FIFO" stand for?

a) First In, First Out

b) Fast Inventory Financial Order

c) Full Inventory Flow Organization

d) Fiscal Investment and Financial Operations

Answer: a) First In, First Out

Question: How does a credit sale affect the accounting equation?

a) Assets increase

b) Liabilities increase

c) Equity increases

d) Expenses increase

Answer: c) Equity increases

Question: What is the purpose of the working capital ratio?

a) Measure a company's ability to pay short-term liabilities

b) Calculate long-term assets

c) Evaluate long-term debt

d) Assess profitability over time

Answer: a) Measure a company's ability to pay short-term liabilities

Question: What does the term "book value" represent in accounting?

a) The value of an asset on the balance sheet

b) The historical cost of an asset

c) The market value of an asset

d) The total equity of a company

Answer: a) The value of an asset on the balance sheet

Question: How does an increase in accrued expenses affect the income statement?

a) Decreases net income

b) Increases net income

c) No effect on net income

d) Converts expenses to revenue

Answer: b) Increases net income

Question: What is the purpose of the internal control system in accounting?

a) Finalize financial statements

b) Identify errors in the ledger

c) Safeguard assets and ensure accurate financial reporting

d) Calculate depreciation

Answer: c) Safeguard assets and ensure accurate financial reporting

Question: How does the acid-test ratio differ from the current ratio?

a) The acid-test ratio excludes inventory

b) The acid-test ratio includes long-term liabilities

c) The acid-test ratio measures profitability

d) The acid-test ratio is not a liquidity measure

Answer: a) The acid-test ratio excludes inventory

Question: What is the purpose of the Statement of Comprehensive Income?

a) Display profitability over time

b) Report changes in equity

c) Summarize revenue and expenses

d) Show changes in other comprehensive income

Answer: d) Show changes in other comprehensive income

Question: How does a decrease in accounts receivable affect the cash flow statement?

a) Increases cash flow from operating activities

b) Decreases cash flow from financing activities

c) No effect on cash flow

d) Increases cash flow from investing activities

Answer: a) Increases cash flow from operating activities

Question: What is the purpose of the perpetual inventory system?

a) Track inventory balances at the end of the accounting period

b) Record inventory transactions continuously throughout the accounting period

c) Calculate the cost of goods sold at the end of the accounting period

d) Finalize financial statements

Answer: b) Record inventory transactions continuously throughout the accounting period

Question: How does a decrease in the discount rate affect the present value of future cash flows?

a) Increases the present value

b) Decreases the present value

c) No effect on the present value

d) Converts the present value to future value

Answer: a) Increases the present value