SS1 third Term book keeping past questions and answers

SS1 third Term book keeping past questions and answers

questions for SS1 with options and answers:

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

A) To record only cash transactions

B) To record only credit transactions

C) To provide a summary of all transactions in the accounts

D) To record transactions chronologically

Answer: D) To record transactions chronologically

Question: In the accounting equation, if liabilities increase, what happens to equity?

A) Equity increases

B) Equity decreases

C) Equity remains unchanged

D) Equity is not related to liabilities

Answer: B) Equity decreases

Question: What is the purpose of a contra-asset account?

A) To increase assets

B) To decrease assets

C) To offset an asset account

D) To record revenue

Answer: C) To offset an asset account

Question: Which financial statement provides information about a company's revenues and expenses for a specific period?

A) Balance sheet

B) Income statement

C) Cash flow statement

D) Statement of changes in equity

Answer: B) Income statement

Question: When is a liability classified as a long-term liability?

A) When it is due within one year

B) When it is due in more than one year

C) When it is due immediately

D) When it is related to expenses

Answer: B) When it is due in more than one year

Question: What is the purpose of the Bank Reconciliation Statement?

A) To calculate net profit

B) To reconcile cash and credit transactions

C) To reconcile the company's records with the bank statement

D) To record investments

Answer: C) To reconcile the company's records with the bank statement

Question: Which financial statement is also known as the statement of financial position?

A) Income statement

B) Balance sheet

C) Statement of changes in equity

D) Cash flow statement

Answer: B) Balance sheet

Question: What is the purpose of the Cash Book in bookkeeping?

A) To record only credit transactions

B) To record both cash and credit transactions

C) To calculate depreciation

D) To prepare financial statements

Answer: B) To record both cash and credit transactions

Question: If a company receives payment from a customer, which accounts are affected?

A) Cash and Expenses

B) Cash and Revenue

C) Accounts Receivable and Liabilities

D) Revenue and Equity

Answer: B) Cash and Revenue

Question: What is the purpose of the Income Summary account in the closing process?

A) To record daily transactions

B) To calculate net profit or loss

C) To reconcile bank statements

D) To close revenue and expense accounts

Answer: D) To close revenue and expense accounts

Question: In which section of the Cash Flow Statement would the purchase of equipment be classified?

A) Operating activities

B) Investing activities

C) Financing activities

D) Cash flow from operating activities

Answer: B) Investing activities

Question: What is the purpose of the Allowance for Doubtful Accounts?

A) To decrease assets

B) To offset liabilities

C) To estimate and account for uncollectible accounts

D) To record daily transactions

Answer: C) To estimate and account for uncollectible accounts

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: How does the accounting equation change when a company pays off a loan?

A) Assets decrease; liabilities decrease

B) Assets increase; liabilities decrease

C) Assets decrease; equity increases

D) Assets increase; equity decreases

Answer: A) Assets decrease; liabilities decrease

Question: What is the purpose of the Trial Balance?

A) To determine the financial position of a business

B) To prepare financial statements

C) To ensure that debits equal credits in the ledger

D) To reconcile bank statements

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

Question: When a company borrows money from a bank, how does it affect the accounting equation?

A) Assets increase; liabilities increase

B) Assets decrease; liabilities decrease

C) Assets increase; equity increases

D) Assets decrease; equity decreases

Answer: A) Assets increase; liabilities increase

Question: What is the purpose of the cash discount in accounting?

A) To encourage early payment from customers

B) To record cash transactions only

C) To calculate net profit

D) To offset liabilities

Answer: A) To encourage early payment from customers

Question: In which financial statement would you find dividends declared by a company?

A) Income statement

B) Balance sheet

C) Cash flow statement

D) Statement of changes in equity

Answer: D) Statement of changes in equity

Question: What is the purpose of the Sales Journal in the accounting process?

A) To record only cash sales

B) To record only credit sales

C) To provide a summary of all transactions in the accounts

D) To calculate profit

Answer: B) To record only credit sales

Question: How is the owner's equity affected when additional capital is invested in the business?

A) Equity decreases

B) Equity remains unchanged

C) Equity increases

D) Equity is not related to capital

Answer: C) Equity increases

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