SS2 Second Term Book Keeping Past Questions And Answers

SS2 Bookkeeping questions with options and answers:

 

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

 

a) To show the financial position of a company

b) To report changes in equity over a period

c) To analyze cash inflows and outflows

d) To calculate return on assets

 

Answer: c) To analyze cash inflows and outflows

 

Question: Which financial statement reports the company’s revenues and expenses over a specific period?

 

a) Balance Sheet

b) Income Statement

c) Cash Flow Statement

d) Statement of Retained Earnings

 

Answer: b) Income Statement

 

Question: What does the term “depreciation” refer to in accounting?

 

a) Increase in asset value

b) Allocation of an asset’s cost over its useful life

c) Decrease in liabilities

d) Increase in equity

 

Answer: b) Allocation of an asset’s cost over its useful life

 

Question: In double-entry bookkeeping, what happens when an expense is recorded?

 

a) Assets increase

b) Liabilities increase

c) Equity increases

d) Another expense account decreases

 

Answer: c) Equity increases

 

Question: What is the formula for calculating total equity?

 

a) Assets – Liabilities

b) Assets + Liabilities

c) Revenue – Expenses

d) Liabilities – Assets

 

Answer: b) Assets + Liabilities

 

Question: Which accounting concept assumes that a business will continue its operations indefinitely?

 

a) Going Concern Principle

b) Matching Principle

c) Revenue Recognition Principle

d) Conservatism Principle

 

Answer: a) Going Concern Principle

 

Question: How does a credit entry affect a liability account?

 

a) Increases the liability

b) Decreases the liability

c) Has no effect on the liability

d) Decreases the asset

 

Answer: a) Increases the liability

 

Question: What is the purpose of the general journal in bookkeeping?

 

a) To record daily transactions

b) To prepare financial statements

c) To analyze business trends

d) To calculate tax liabilities

 

Answer: a) To record daily transactions

 

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

 

a) Equity increases

b) Equity decreases

c) No effect on equity

d) Equity becomes negative

 

Answer: a) Equity increases

 

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

 

a) To show the financial position of a company

b) To report changes in equity over a period

c) To analyze cash inflows and outflows

d) To calculate return on assets

 

Answer: b) To report changes in equity over a period

 

Question: Which financial statement reflects the company’s financial position at a specific point in time?

 

a) Income Statement

b) Balance Sheet

c) Cash Flow Statement

d) Statement of Retained Earnings

 

Answer: b) Balance Sheet

 

Question: What is the purpose of the trial balance?

 

a) To prepare financial statements

b) To ensure the equality of debits and credits

c) To analyze business transactions

d) To calculate tax liabilities

 

Answer: b) To ensure the equality of debits and credits

 

Question: In the context of accounting, what does ROI stand for?

 

a) Return on Investment

b) Revenue of Income

c) Ratio of Income

d) Rate of Interest

 

Answer: a) Return on Investment

 

Question: Which financial statement includes the operating, investing, and financing activities of a company?

 

a) Income Statement

b) Balance Sheet

c) Cash Flow Statement

d) Statement of Retained Earnings

 

Answer: c) Cash Flow Statement

 

Question: What is the purpose of the income statement?

 

a) To show the financial position of a company

b) To report changes in equity over a period

c) To analyze cash inflows and outflows

d) To report revenues and expenses over a period

 

Answer: d) To report revenues and expenses over a period

 

Question: How does a credit entry affect an asset account?

 

a) Increases the asset

b) Decreases the asset

c) Has no effect on the asset

d) Increases the liability

 

Answer: b) Decreases the asset

 

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

 

a) To record daily transactions

b) To prepare financial statements

c) To organize and classify accounts

d) To calculate tax liabilities

 

Answer: c) To organize and classify accounts

 

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

 

a) To identify and correct errors in the ledger

b) To prepare financial statements

c) To record closing entries

d) To calculate tax liabilities

 

Answer: a) To identify and correct errors in the ledger

 

Question: How are revenues recognized in accounting?

 

a) When cash is received

b) When goods or services are delivered

c) When an invoice is issued

d) When expenses are incurred

 

Answer: b) When goods or services are delivered

 

Question: What is the purpose of the adjusting entries in the accounting cycle?

 

a) To record closing entries

b) To update account balances for accruals and deferrals

c) To prepare financial statements

d) To calculate tax liabilities

 

Answer: b) To update account balances for accruals and deferrals