SS1 second Term financial accounting past Questions and Answers

SS1 second Term financial accounting past Questions and Answers

Financial account questions with options and answers:

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

A) To prepare financial statements

B) To record daily transactions in chronological order

C) To reconcile bank statements

D) To calculate depreciation

Answer: B) To record daily transactions in chronological order

Question: Which accounting principle states that expenses should be recorded in the period in which they are incurred, not when they are paid?

A) Matching principle

B) Revenue recognition principle

C) Accrual principle

D) Conservatism principle

Answer: C) Accrual principle

Question: What is the purpose of a general ledger in accounting?

A) To record daily transactions

B) To track fixed assets

C) To summarize revenues and expenses

D) To maintain all accounts in one place

Answer: D) To maintain all accounts in one place

Question: Which financial statement shows the profitability of a company over a specific period?

A) Income statement

B) Balance sheet

C) Cash flow statement

D) Statement of changes in equity

Answer: A) Income statement

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

A) To record daily transactions

B) To prepare financial statements

C) To categorize and organize all accounts

D) To reconcile bank statements

Answer: C) To categorize and organize all accounts

Question: If total assets are $50,000, and total liabilities are $20,000, what is the equity?

A) $30,000

B) $50,000

C) $20,000

D) $70,000

Answer: A) $30,000

Question: What is the purpose of a voucher in accounting?

A) To reconcile bank statements

B) To record routine transactions

C) To authorize and document expenditures

D) To calculate depreciation

Answer: C) To authorize and document expenditures

Question: Which financial statement reports the cash inflows and outflows from operating, investing, and financing activities?

A) Income statement

B) Balance sheet

C) Cash flow statement

D) Statement of changes in equity

Answer: C) Cash flow statement

Question: What is the formula for calculating return on investment (ROI)?

A) Net Profit / Total Revenue

B) Net Income / Average Total Assets

C) Total Assets - Total Liabilities

D) Gross Profit - Operating Expenses

Answer: B) Net Income / Average Total Assets

Question: What is the purpose of the International Financial Reporting Standards (IFRS)?

A) To standardize accounting practices globally

B) To regulate financial markets

C) To calculate depreciation

D) To reconcile bank statements

Answer: A) To standardize accounting practices globally

Question: Which of the following is an example of an intangible asset?

A) Buildings

B) Land

C) Patents

D) Inventory

Answer: C) Patents

Question: What is the accounting equation if liabilities are $25,000 and equity is $40,000?

A) Assets = Liabilities - Equity

B) Assets = Liabilities + Equity

C) Assets + Liabilities = Equity

D) Assets - Liabilities = Equity

Answer: B) Assets = Liabilities + Equity

Question: Which accounting principle requires businesses to choose the accounting methods and follow them consistently?

A) Materiality principle

B) Consistency principle

C) Conservatism principle

D) Revenue recognition principle

Answer: B) Consistency principle

Question: What is the purpose of a cash flow statement?

A) To calculate depreciation

B) To reconcile bank statements

C) To report cash inflows and outflows

D) To record routine transactions

Answer: C) To report cash inflows and outflows

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

A) Income statement

B) Balance sheet

C) Cash flow statement

D) Trial balance

Answer: D) Trial balance

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

A) To record major transactions

B) To manage small, routine expenditures

C) To calculate depreciation

D) To reconcile bank statements

Answer: B) To manage small, routine expenditures

Question: What does the term "debt-to-equity ratio" measure?

A) A company's liquidity

B) A company's profitability

C) The proportion of debt to equity in a company's capital structure

D) The efficiency of inventory management

Answer: C) The proportion of debt to equity in a company's capital structure

Question: In the context of financial accounting, what is goodwill?

A) The positive reputation of a company

B) The market value of a company's common stock

C) The excess of the purchase price over the fair value of net assets acquired

D) The total revenue generated by a company

Answer: C) The excess of the purchase price over the fair value of net assets acquired

Question: What is the purpose of the income summary account in the closing process?

A) To record routine transactions

B) To calculate depreciation

C) To summarize revenues and expenses before transferring to retained earnings

D) To reconcile bank statements

Answer: C) To summarize revenues and expenses before transferring to retained earnings

Question: What is the primary purpose of the Sarbanes-Oxley Act in the field of accounting?

A) To regulate financial markets

B) To establish ethical standards for accountants

C) To standardize accounting practices globally

D) To calculate depreciation

Answer: B) To establish ethical standards for accountants