SS1 second Term book keeping past questions and answers

SS1 second Term book keeping past questions and answers

Bookkeeping questions for SS1 with options and answers:

Question: What is the purpose of a journal in the accounting process?

A) To summarize financial transactions

B) To provide a detailed record of daily transactions

C) To calculate profit

D) To prepare financial statements

Answer: B) To provide a detailed record of daily transactions

Question: What is the difference between a credit and a debit in accounting?

A) Debit increases liabilities; credit increases assets

B) Debit decreases assets; credit decreases liabilities

C) Debit represents incoming money; credit represents outgoing money

D) Debit is on the right side; credit is on the left side

Answer: D) Debit is on the right side; credit is on the left side

Question: Which financial statement reports a company's cash inflows and outflows over a specific period?

A) Balance sheet

B) Income statement

C) Cash flow statement

D) Statement of changes in equity

Answer: C) Cash flow statement

Question: What does the term "accrual basis accounting" mean?

A) Recording transactions when cash is received or paid

B) Recognizing revenues and expenses when they are earned or incurred, regardless of cash flow

C) Recording transactions only at the end of the accounting period

D) Ignoring depreciation in financial statements

Answer: B) Recognizing revenues and expenses when they are earned or incurred, regardless of cash flow

Question: Which of the following is an example of a non-current liability?

A) Accounts payable

B) Bank loan due in 5 years

C) Rent expense

D) Salaries payable

Answer: B) Bank loan due in 5 years

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

A) To make large purchases

B) To handle small, routine expenses without writing a check

C) To pay long-term liabilities

D) To record investments

Answer: B) To handle small, routine expenses without writing a check

Question: What is the purpose of the trial balance?

A) To determine the financial position of a business

B) To ensure that debits equal credits in the ledger

C) To prepare financial statements

D) To record daily transactions

Answer: B) To ensure that debits equal credits in the ledger

Question: Which financial statement reflects the changes in equity over a specific period?

A) Balance sheet

B) Income statement

C) Statement of changes in equity

D) Cash flow statement

Answer: C) Statement of changes in equity

Question: What is the purpose of the Chart of Accounts?

A) To record daily transactions

B) To summarize financial transactions

C) To classify and organize all accounts

D) To calculate profit

Answer: C) To classify and organize all accounts

Question: What is the purpose of posting in the accounting process?

A) To record transactions in the journal

B) To transfer entries from the journal to the ledger

C) To prepare financial statements

D) To reconcile bank statements

Answer: B) To transfer entries from the journal to the ledger

Question: In accounting, what does the term "contra account" mean?

A) An account that increases assets

B) An account that decreases liabilities

C) An account that offsets another account

D) An account that records only expenses

Answer: C) An account that offsets another account

Question: When is the revenue recognized in the cash basis of accounting?

A) When it is earned

B) When it is received

C) When it is invoiced

D) When expenses are paid

Answer: B) When it is received

Question: What is the purpose of the income statement?

A) To show the financial position at a specific point in time

B) To calculate profit or loss over a specific period

C) To summarize all financial transactions

D) To reconcile bank statements

Answer: B) To calculate profit or loss over a specific period

Question: Which of the following is a current asset?

A) Buildings

B) Land

C) Accounts receivable

D) Long-term investments

Answer: C) Accounts receivable

Question: What is the purpose of the adjusting entries in the accounting cycle?

A) To correct errors in the ledger

B) To update accounts to reflect accrual accounting principles

C) To close revenue and expense accounts

D) To reconcile bank statements

Answer: B) To update accounts to reflect accrual accounting principles

Question: Which accounting principle emphasizes that expenses should be matched with revenues?

A) Going concern principle

B) Matching principle

C) Revenue recognition principle

D) Conservatism principle

Answer: B) Matching principle

Question: What is the purpose of the cash basis of accounting?

A) To match revenues and expenses

B) To recognize transactions when cash is received or paid

C) To prepare financial statements

D) To record only credit transactions

Answer: B) To recognize transactions when cash is received or paid

Question: How is net profit calculated in the income statement?

A) Revenue - Expenses

B) Assets - Liabilities

C) Cash inflows - Cash outflows

D) Equity + Liabilities

Answer: A) Revenue - Expenses

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

A) To record inventory only at the end of the accounting period

B) To keep a continuous record of inventory levels

C) To calculate depreciation

D) To reconcile bank statements

Answer: B) To keep a continuous record of inventory levels

Question: Which financial statement reflects the profitability of a company over time?

A) Balance sheet

B) Income statement

C) Cash flow statement

D) Statement of changes in equity

Answer: B) Income statement