Financial accounting Jamb past questions and answers

Financial accounting Jamb past questions and answers

Financial accounting questions with options and answers:

Question: What is the purpose of the statement of comprehensive income?

A) To show changes in equity over time

B) To disclose cash inflows and outflows

C) To report the company's profitability

D) To present all items of income and expense recognized during a period

Answer: D) To present all items of income and expense recognized during a period

Question: Which accounting principle requires that assets and liabilities should be initially recorded at their acquisition cost?

A) Revenue recognition principle

B) Historical cost principle

C) Matching principle

D) Full disclosure principle

Answer: B) Historical cost principle

Question: What is the formula for calculating the return on equity (ROE)?

A) Net Income / Total Assets

B) Net Income / Average Shareholders' Equity

C) Total Revenue / Net Income

D) Total Assets / Shareholders' Equity

Answer: B) Net Income / Average Shareholders' Equity

Question: How does a credit entry affect a liability account?

A) Increases the liability

B) Decreases the liability

C) Has no effect on the liability

D) Increases or decreases the liability depending on the specific transaction

Answer: A) Increases the liability

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

A) To record adjusting entries

B) To summarize financial transactions

C) To calculate financial ratios

D) To classify and organize financial transactions into categories

Answer: D) To classify and organize financial transactions into categories

Question: Which financial ratio measures a company's ability to generate profit from its operations?

A) Debt to Equity ratio

B) Gross Profit Margin

C) Return on Assets

D) Current ratio

Answer: B) Gross Profit Margin

Question: What is the purpose of the statement of changes in equity?

A) To report changes in cash flow

B) To explain the reasons for changes in equity accounts

C) To disclose changes in fixed assets

D) To calculate the net income

Answer: B) To explain the reasons for changes in equity accounts

Question: Which accounting concept assumes that a business will continue to operate indefinitely?

A) Consistency

B) Materiality

C) Going Concern

D) Conservatism

Answer: C) Going Concern

Question: What is the purpose of the financial leverage ratio?

A) To measure a company's ability to pay its short-term liabilities

B) To assess the efficiency of inventory management

C) To evaluate the impact of debt on a company's return on equity

D) To calculate the return on investment

Answer: C) To evaluate the impact of debt on a company's return on equity

Question: Under the perpetual inventory system, how are inventory costs tracked?

A) Periodically, at the end of the accounting period

B) Continuously, after each sale or purchase

C) Only when inventory is sold

D) At the beginning of the accounting period

Answer: B) Continuously, after each sale or purchase

Question: What is the purpose of the cash flow from investing activities section in the statement of cash flows?

A) To show the cash effects of a company's operating activities

B) To detail the company's financing activities

C) To disclose cash transactions with owners

D) To report the cash effects of a company's investing activities

Answer: D) To report the cash effects of a company's investing activities

Question: Which financial statement is prepared first during the accounting cycle?

A) Income statement

B) Statement of cash flows

C) Balance sheet

D) Unadjusted trial balance

Answer: D) Unadjusted trial balance

Question: What is the purpose of the allowance for doubtful accounts?

A) To record estimated future liabilities

B) To recognize potential losses from uncollectible accounts

C) To calculate the return on equity

D) To track changes in the fair value of assets

Answer: B) To recognize potential losses from uncollectible accounts

Question: Which accounting principle requires reporting information that could affect users' decisions?

A) Going Concern

B) Materiality

C) Conservatism

D) Full disclosure

Answer: D) Full disclosure

Question: What is the purpose of the budget in accounting?

A) To summarize financial transactions

B) To calculate financial ratios

C) To provide a plan for future operations

D) To record adjusting entries

Answer: C) To provide a plan for future operations

Question: What is the formula for calculating the earnings per share (EPS)?

A) Net Income / Total Assets

B) Net Income / Average Shareholders' Equity

C) Total Revenue / Net Income

D) Net Income / Weighted Average Number of Shares Outstanding

Answer: D) Net Income / Weighted Average Number of Shares Outstanding

Question: What is the purpose of the petty cash fund?

A) To record transactions with external parties

B) To provide a plan for future operations

C) To facilitate small, routine purchases without writing a check

D) To calculate financial ratios

Answer: C) To facilitate small, routine purchases without writing a check

Question: What is the role of the auditor in the financial reporting process?

A) To prepare financial statements

B) To verify the accuracy of the closing entries

C) To express an opinion on the fairness of the financial statements

D) To reconcile bank statements

Answer: C) To express an opinion on the fairness of the financial statements

Question: How does a debit entry affect an asset account?

A) Increases the asset

B) Decreases the asset

C) Has no effect on the asset

D) Increases or decreases the asset depending on the specific transaction

Answer: A) Increases the asset

Question: What is the purpose of the statement of tax position?

A) To calculate the company's tax liability

B) To report changes in equity over time

C) To provide details on fixed assets

D) To disclose the company's stance on taxation

Answer: D) To disclose the company's stance on taxation