SS1 third Term financial accounting past Questions and Answers

SS1 third Term financial accounting past Questions and Answers

SS1 financial account questions with options and answers:

Question: What is the purpose of the statement of cash flows?

A) To calculate depreciation

B) To reconcile bank statements

C) To report the cash inflows and outflows from operating, investing, and financing activities

D) To record routine transactions

Answer: C) To report the cash inflows and outflows from operating, investing, and financing activities

Question: Which accounting concept assumes that a business will continue operating for an indefinite period?

A) Materiality

B) Going concern

C) Conservatism

D) Consistency

Answer: B) Going concern

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

A) To reconcile bank statements

B) To report the changes in equity over a period

C) To record routine transactions

D) To calculate depreciation

Answer: B) To report the changes in equity over a period

Question: Which of the following is considered an external user of financial statements?

A) Management

B) Investors

C) Employees

D) Creditors

Answer: B) Investors

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

A) To prepare financial statements

B) To reconcile bank statements

C) To safeguard assets and ensure accurate financial reporting

D) To record daily transactions

Answer: C) To safeguard assets and ensure accurate financial reporting

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

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 International Accounting Standards Board (IASB)?

A) To standardize accounting practices globally

B) To regulate financial markets

C) To reconcile bank statements

D) To calculate depreciation

Answer: A) To standardize accounting practices globally

Question: If a company has a high debt-to-equity ratio, what does it indicate?

A) High profitability

B) Low financial leverage

C) High financial risk

D) Efficient inventory management

Answer: C) High financial risk

Question: What is the purpose of the FASB (Financial Accounting Standards Board) in the United States?

A) To regulate financial markets

B) To establish ethical standards for accountants

C) To reconcile bank statements

D) To set accounting standards and principles

Answer: D) To set accounting standards and principles

Question: What is the main purpose of the accounting cycle?

A) To calculate depreciation

B) To prepare financial statements

C) To reconcile bank statements

D) To record and process financial transactions

Answer: D) To record and process financial transactions

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

A) To prepare financial statements

B) To reconcile bank statements

C) To provide an independent assessment of a company's financial statements

D) To calculate depreciation

Answer: C) To provide an independent assessment of a company's financial statements

Question: How does the straight-line method calculate depreciation?

A) Equal depreciation expense each period

B) Higher depreciation in the early years

C) Based on the number of units produced

D) No depreciation is calculated

Answer: A) Equal depreciation expense each period

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

A) To reconcile bank statements

B) To report the financial performance of a company over a period

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

D) To calculate depreciation

Answer: C) To show the financial position at a specific point in time

Question: If total assets are $100,000 and total equity is $60,000, what are the total liabilities?

A) $40,000

B) $100,000

C) $60,000

D) $160,000

Answer: A) $40,000

Question: What is the purpose of a cost of goods sold (COGS) statement?

A) To calculate depreciation

B) To reconcile bank statements

C) To report the direct costs of producing goods

D) To record routine transactions

Answer: C) To report the direct costs of producing goods

Question: In accounting, what does the term "liquidity" refer to?

A) Ability to meet short-term obligations

B) Long-term profitability

C) Total assets of a company

D) Shareholder equity

Answer: A) Ability to meet short-term obligations

Question: What is the purpose of the accounting equation?

A) To reconcile bank statements

B) To record daily transactions

C) To show the relationship between assets, liabilities, and equity

D) To calculate depreciation

Answer: C) To show the relationship between assets, liabilities, and equity

Question: What is the purpose of the cost accounting system?

A) To reconcile bank statements

B) To allocate costs to products and services

C) To calculate depreciation

D) To record routine transactions

Answer: B) To allocate costs to products and services

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

A) To reconcile bank statements

B) To report the overall financial performance of a company

C) To calculate depreciation

D) To record routine transactions

Answer: B) To report the overall financial performance of a company

Question: What is the role of the Securities and Exchange Commission (SEC) in financial reporting?

A) To prepare financial statements

B) To regulate financial markets

C) To reconcile bank statements

D) To calculate depreciation

Answer: B) To regulate financial markets