SS2 third Term book keeping past questions and answers

SS2 third Term book keeping past questions and answers

SS2 Bookkeeping questions with options and answers:

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

A) Encourage early payment from customers

B) Discourage early payment from customers

C) Reduce expenses

D) Increase liabilities

Answer: A) Encourage early payment from customers

Question: In the context of financial statements, what does the term "accrual" mean?

A) Cash received

B) Cash paid

C) Recognition of revenue or expenses before the cash is received or paid

D) Recognition of revenue or expenses only after the cash is received or paid

Answer: C) Recognition of revenue or expenses before the cash is received or paid

Question: Which financial statement provides information about a company's cash and cash equivalents?

A) Balance sheet

B) Income statement

C) Statement of changes in equity

D) Cash flow statement

Answer: D) Cash flow statement

Question: What is the purpose of a contra liability account?

A) Increase the value of liabilities

B) Decrease the value of liabilities

C) Offset the balance of a related liability account

D) Have no impact on financial statements

Answer: C) Offset the balance of a related liability account

Question: When a business receives interest income, which type of account is affected?

A) Revenue

B) Expenses

C) Liabilities

D) Assets

Answer: A) Revenue

Question: What does FIFO stand for in the context of inventory accounting?

A) First In, Last Out

B) First In, First Out

C) Fast Inventory Order

D) Financial Inventory Overview

Answer: B) First In, First Out

Question: What is the accounting treatment for a decrease in assets?

A) Debit

B) Credit

C) No effect

D) Depends on the transaction

Answer: B) Credit

Question: In the double-entry system, if an expense is debited, what happens to the corresponding account?

A) It is debited

B) It is credited

C) No effect

D) It becomes an asset account

Answer: B) It is credited

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

A) Verify the arithmetical accuracy of accounts

B) Summarize financial position

C) Record day-to-day transactions

D) Ensure all temporary accounts are closed

Answer: D) Ensure all temporary accounts are closed

Question: When a business issues new shares, which account is affected?

A) Revenue

B) Expenses

C) Liabilities

D) Owner's Equity

Answer: D) Owner's Equity

Question: What is the purpose of a contra revenue account?

A) Increase revenue

B) Decrease revenue

C) Offset the balance of a related revenue account

D) Have no impact on financial statements

Answer: C) Offset the balance of a related revenue account

Question: When a business makes a loan payment, which accounts are affected?

A) Assets and Liabilities

B) Liabilities and Expenses

C) Revenue and Expenses

D) Assets and Owner's Equity

Answer: B) Liabilities and Expenses

Question: What is the purpose of a contra expense account?

A) Increase expenses

B) Decrease expenses

C) Offset the balance of a related expense account

D) Have no impact on financial statements

Answer: C) Offset the balance of a related expense account

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

A) Equal depreciation expense each period

B) Increasing depreciation expense each period

C) No depreciation expense

D) Depreciation expense based on the remaining book value

Answer: A) Equal depreciation expense each period

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

A) Summarize financial position

B) Show changes in owner's equity over a period

C) Record daily transactions

D) Prepare income statement

Answer: B) Show changes in owner's equity over a period

Question: When a business records a purchase on credit, which accounts are affected?

A) Cash and Revenue

B) Accounts Payable and Expenses

C) Liabilities and Owner's Equity

D) Assets and Revenue

Answer: B) Accounts Payable and Expenses

Question: What is the purpose of the accounting cycle?

A) Record daily transactions

B) Summarize financial position

C) Provide a systematic process for recording and reporting financial information

D) Prepare income statement

Answer: C) Provide a systematic process for recording and reporting financial information

Question: In the context of financial statements, what does the term "EBIT" stand for?

A) Earnings Before Interest and Taxes

B) Every Business Includes Taxes

C) Expense Before Interest and Taxes

D) Earnings Before Income and Taxes

Answer: A) Earnings Before Interest and Taxes

Question: What is the purpose of a prepaid expense account?

A) Recognize expenses before they are incurred

B) Recognize expenses only after they are incurred

C) Record daily transactions

D) Have no impact on financial statements

Answer: B) Recognize expenses only after they are incurred

Question: When a business receives a utility bill but has not yet paid it, which accounts are affected?

A) Revenue and Expenses

B) Cash and Liabilities

C) Liabilities and Expenses

D) Assets and Owner's Equity

Answer: C) Liabilities and Expenses