SS3 First Term Financial Account Past Questions And Answers

Here are 20 SS3 Financial Account questions with options and answers:

Question: What is the primary purpose of financial accounting?

 

A) Profit maximization

B) Decision-making

C) Record keeping

D) Resource allocation

Answer: C) Record keeping

 

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

 

A) Income statement

B) Cash flow statement

C) Balance sheet

D) Statement of retained earnings

Answer: C) Balance sheet

 

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

 

A) Increase in asset value

B) Allocation of the cost of an asset over its useful life

C) Decrease in liability

D) Operating income

Answer: B) Allocation of the cost of an asset over its useful life

 

Question: Which accounting principle states that expenses should be recorded in the same period as the revenue they help to generate?

 

A) Matching principle

B) Revenue recognition principle

C) Historical cost principle

D) Going concern principle

Answer: A) Matching principle

 

Question: What is the formula for calculating net income?

 

A) Revenue – Expenses

B) Assets – Liabilities

C) Income – Taxes

D) Equity + Liabilities

Answer: A) Revenue – Expenses

 

Question: Which financial statement reflects the profitability of a company 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 is the purpose of a trial balance in financial accounting?

 

A) To calculate net income

B) To ensure the accounting equation is balanced

C) To prepare financial statements

D) To record transactions

Answer: B) To ensure the accounting equation is balanced

 

Question: Under which accounting method are revenues and expenses recognized when they are earned or incurred, regardless of when cash is received or paid?

 

A) Cash basis accounting

B) Accrual basis accounting

C) Double-entry accounting

D) Single-entry accounting

Answer: B) Accrual basis accounting

 

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

 

A) To show the company’s financial position

B) To report changes in equity

C) To disclose the sources and uses of cash during a specific period

D) To summarize revenue and expenses

Answer: C) To disclose the sources and uses of cash during a specific period

 

Question: In financial accounting, what is the formula for calculating return on equity (ROE)?

 

A) Net Income / Total Assets

B) Net Income / Average Shareholders’ Equity

C) Total Revenue / Total Expenses

D) Operating Income / Total Liabilities

Answer: B) Net Income / Average Shareholders’ Equity

 

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

A) To close temporary accounts

B) To correct errors in previous entries

C) To update account balances for accruals and deferrals

D) To record day-to-day transactions

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

 

Question: Under which category on the balance sheet would you find long-term debt?

A) Current liabilities

B) Long-term assets

C) Equity

D) Non-current liabilities

Answer: D) Non-current liabilities