SS3 third Term book keeping past questions and answers

SS3 third Term book keeping past questions and answers

SS3 Bookkeeping questions with options and answers:

Question: What is the primary purpose of a subsidiary ledger?

A) Summarize financial transactions

B) Record transactions in a chronological order

C) Provide details for individual accounts

D) Prepare the income statement

Answer: C) Provide details for individual accounts

Question: The formula for calculating working capital is:

A) Current assets - Current liabilities

B) Total assets - Total liabilities

C) Current liabilities - Current assets

D) Total liabilities - Total assets

Answer: A) Current assets - Current liabilities

Question: Which accounting principle states that assets should be recorded at their original cost?

A) Matching principle

B) Historical cost principle

C) Revenue recognition principle

D) Conservatism principle

Answer: B) Historical cost principle

Question: What does the term "accrual basis of accounting" mean?

A) Record transactions when cash is received or paid

B) Recognize revenue and expenses when incurred

C) Focus on cash inflows and outflows only

D) Ignore non-cash transactions

Answer: B) Recognize revenue and expenses when incurred

Question: Which financial statement provides an overview of a company's cash position at a specific point in time?

A) Balance sheet

B) Income statement

C) Cash flow statement

D) Statement of retained earnings

Answer: A) Balance sheet

Question: The formula for calculating the quick ratio is:

A) (Current assets - Inventory) / Current liabilities

B) Current assets / Current liabilities

C) (Current assets + Inventory) / Current liabilities

D) Current liabilities / Current assets

Answer: A) (Current assets - Inventory) / Current liabilities

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

A) Record large transactions

B) Track long-term investments

C) Handle small, routine expenses

D) Prepare financial statements

Answer: C) Handle small, routine expenses

Question: Which accounting concept states that the economic activity of a business can be kept separate from its owners and other businesses?

A) Objectivity concept

B) Entity concept

C) Consistency principle

D) Going concern concept

Answer: B) Entity concept

Question: The formula for calculating the debt ratio is:

A) Total debt / Total assets

B) Total assets / Total debt

C) Net income / Total assets

D) Total debt / Net income

Answer: A) Total debt / Total assets

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

A) Identify errors in the accounts

B) Summarize financial transactions

C) Prepare financial statements

D) Verify the equality of debits and credits after closing entries

Answer: D) Verify the equality of debits and credits after closing entries

Question: The principle of consistency in accounting suggests:

A) Recognizing revenue when received

B) Applying the same accounting methods over time

C) Recognizing expenses when incurred

D) Delaying the recognition of revenue and expenses

Answer: B) Applying the same accounting methods over time

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

A) Record net income for the period

B) Summarize revenue and expenses

C) Close temporary accounts

D) Prepare the balance sheet

Answer: C) Close temporary accounts

Question: The accounting concept that requires information to be supported by evidence and free from bias is known as:

A) Materiality concept

B) Objectivity concept

C) Consistency principle

D) Conservatism principle

Answer: B) Objectivity concept

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

A) Show the financial position at a point in time

B) Detail the cash inflows and outflows over a period

C) Summarize revenue and expenses

D) Record transactions in chronological order

Answer: B) Detail the cash inflows and outflows over a period

Question: Which of the following is an example of an operating activity in the statement of cash flows?

A) Issuing common stock

B) Purchasing equipment

C) Paying interest on a loan

D) Selling goods or services

Answer: D) Selling goods or services

Question: The term "depreciation expense" is associated with which type of asset?

A) Intangible asset

B) Current asset

C) Long-term asset

D) Marketable security

Answer: C) Long-term asset

Question: What is the purpose of the aging of accounts receivable?

A) Record sales transactions

B) Calculate bad debt expense

C) Determine the net profit

D) Summarize financial transactions

Answer: B) Calculate bad debt expense

Question: The formula for calculating the earnings per share (EPS) is:

A) Net income / Total assets

B) Net income / Common shares outstanding

C) Total assets / Net income

D) Common shares outstanding / Net income

Answer: B) Net income / Common shares outstanding

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

A) Summarize financial transactions

B) Record transactions in chronological order

C) Provide a list of all accounts used by a company

D) Calculate total revenue

Answer: C) Provide a list of all accounts used by a company

Question: The formula for calculating the net present value (NPV) is commonly used in:

A) Managerial accounting

B) Financial accounting

C) Cost accounting

D) Capital budgeting

Answer: D) Capital budgeting