SS2 second Term financial accounting past Questions and Answers

SS2 second Term financial accounting past Questions and Answers

Financial accounting questions with options and answers:

Question: What is the formula for calculating the current ratio?

A) Current Assets / Current Liabilities

B) Current Liabilities / Current Assets

C) Total Assets / Total Liabilities

D) Total Liabilities / Total Assets

Answer: A) Current Assets / Current Liabilities

Question: Which of the following is classified as an intangible asset?

A) Buildings

B) Inventory

C) Goodwill

D) Land

Answer: C) Goodwill

Question: What is the purpose of the Sarbanes-Oxley Act in the context of financial accounting?

A) To regulate the reporting and auditing of public companies

B) To establish accounting standards for private companies

C) To reduce tax liabilities for corporations

D) To control inflation in financial markets

Answer: A) To regulate the reporting and auditing of public companies

Question: Which financial statement reports the changes in cash resulting from operating, investing, and financing activities?

A) Income Statement

B) Balance Sheet

C) Statement of Cash Flows

D) Statement of Retained Earnings

Answer: C) Statement of Cash Flows

Question: What is the purpose of the debt-to-equity ratio?

A) To measure a company's ability to generate profit

B) To assess a company's financial leverage

C) To determine the return on investment

D) To evaluate liquidity

Answer: B) To assess a company's financial leverage

Question: In accounting, what does FIFO stand for?

A) First In, First Out

B) First In, Last Out

C) Last In, First Out

D) Last In, Last Out

Answer: A) First In, First Out

Question: What is the purpose of the Statement of Retained Earnings?

A) To provide details of cash transactions

B) To show changes in equity over a period

C) To summarize revenue and expenses

D) To disclose changes in market value of assets

Answer: B) To show changes in equity over a period

Question: What is the significance of the matching principle in accounting?

A) It ensures that revenues are recorded when cash is received

B) It requires expenses to be recognized in the period in which they are incurred

C) It determines the value of intangible assets

D) It governs the recognition of dividends

Answer: B) It requires expenses to be recognized in the period in which they are incurred

Question: Which financial statement is used to determine a company's profitability over a specific period?

A) Balance Sheet

B) Income Statement

C) Statement of Cash Flows

D) Statement of Retained Earnings

Answer: B) Income Statement

Question: What does EBITDA stand for in financial accounting?

A) Earnings Before Interest, Taxes, Depreciation, and Amortization

B) Earnings Before Income and Taxes, Deductions, and Amortization

C) Expenses Before Interest, Taxes, Depreciation, and Amortization

D) Earnings Beyond Income, Taxes, Depreciation, and Amortization

Answer: A) Earnings Before Interest, Taxes, Depreciation, and Amortization

Question: How is the quick ratio calculated?

A) (Current Assets - Inventory) / Current Liabilities

B) Current Assets / (Current Liabilities - Inventory)

C) Current Assets / Quick Liabilities

D) (Current Assets + Inventory) / Current Liabilities

Answer: A) (Current Assets - Inventory) / Current Liabilities

Question: What is the purpose of the Statement of Comprehensive Income?

A) To report changes in equity

B) To disclose the overall financial performance of a company

C) To detail cash inflows and outflows

D) To provide information about retained earnings

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

Question: What is the role of a journal entry in accounting?

A) To summarize financial transactions in a chronological order

B) To calculate the total assets of a company

C) To prepare financial statements

D) To reconcile bank statements

Answer: A) To summarize financial transactions in a chronological order

Question: In accounting, what does GAAP stand for?

A) Generally Accepted Accounting Principles

B) Generally Acknowledged Accounting Procedures

C) General Accounting and Auditing Practices

D) Global Accounting and Auditing Principles

Answer: A) Generally Accepted Accounting Principles

Question: What is the purpose of the post-closing trial balance?

A) To ensure that all temporary accounts are closed

B) To report the final financial position of a company

C) To calculate depreciation expenses

D) To reconcile bank statements

Answer: A) To ensure that all temporary accounts are closed

Question: What is the difference between a liability and an expense?

A) Liabilities represent future obligations, while expenses represent past costs

B) Liabilities decrease equity, while expenses increase equity

C) Liabilities are recorded on the income statement, while expenses are on the balance sheet

D) Liabilities are incurred to generate revenue, while expenses are incurred to reduce revenue

Answer: A) Liabilities represent future obligations, while expenses represent past costs

Question: How is the earnings per share (EPS) calculated?

A) Net Income / Average Total Assets

B) Net Income / Average Number of Common Shares Outstanding

C) Total Revenue / Average Number of Common Shares Outstanding

D) Total Revenue / Average Total Assets

Answer: B) Net Income / Average Number of Common Shares Outstanding

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

A) To set accounting standards for public companies

B) To regulate the reporting and disclosure of public companies

C) To prepare financial statements for private companies

D) To enforce tax regulations for corporations

Answer: B) To regulate the reporting and disclosure of public companies

Question: What is the purpose of the Statement of Changes in Equity?

A) To summarize cash transactions

B) To report changes in assets and liabilities

C) To disclose changes in equity accounts

D) To calculate the return on investment

Answer: C) To disclose changes in equity accounts