JAMB Financial Account Past Questions and Answers

 

Financial Accounting questions:

 

Question: What is the accounting equation?

 

A. Assets = Liabilities + Equity

B. Revenue = Expenses

C. Debits = Credits

D. Profit = Loss

Answer: A. Assets = Liabilities + Equity

 

Question: In double-entry accounting, what does a credit entry indicate?

 

A. Increase in assets

B. Decrease in liabilities

C. Increase in equity

D. Decrease in assets

Answer: C. Increase in equity

 

Question: What financial statement provides a snapshot of a company’s financial position at a specific point in time?

 

A. Income statement

B. Statement of cash flows

C. Balance sheet

D. Retained earnings statement

Answer: C. Balance sheet

 

Question: What is the purpose of the income statement?

 

A. Show the company’s financial position

B. Summarize changes in equity over a period

C. Report revenues and expenses for a specific period

D. Detail cash inflows and outflows

Answer: C. Report revenues and expenses for a specific period

 

Question: What is the accounting term for the gross profit divided by net sales?

 

A. Return on Assets (ROA)

B. Earnings per Share (EPS)

C. Gross Profit Margin

D. Return on Equity (ROE)

Answer: C. Gross Profit Margin

 

Question: In financial accounting, what is depreciation?

 

A. Increase in the value of an asset

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

C. Reduction of liabilities

D. Gain from the sale of an asset

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

 

Question: What is the purpose of a trial balance in accounting?

 

A. Summarize financial transactions

B. Identify errors in the ledger

C. Prepare financial statements

D. Record adjusting entries

Answer: B. Identify errors in the ledger

 

Question: Which financial statement represents the equation: Revenue – Expenses = Net Income (or Net Loss)?

 

A. Balance sheet

B. Income statement

C. Statement of cash flows

D. Retained earnings statement

Answer: B. Income statement

 

Question: What is the accounting term for the total earnings of a company before deducting expenses?

 

A. Net income

B. Gross profit

C. Operating income

D. Earnings per share

Answer: B. Gross profit

 

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

 

A. Show the company’s financial position

B. Report changes in equity over a period

C. Summarize cash inflows and outflows

D. Provide details of long-term investments

Answer: C. Summarize cash inflows and outflows

 

Question: What is the accounting term for the difference between total revenue and total expenses?

 

A. Net income

B. Gross profit

C. Operating income

D. Net loss

Answer: A. Net income

 

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

 

A. Summarize cash transactions

B. Report changes in equity over a period

C. Detail long-term investments

D. Provide information on cash flows

Answer: B. Report changes in equity over a period

 

Question: In accounting, what is the term for a decrease in the value of an asset over time due to wear and tear?

 

A. Amortization

B. Impairment

C. Depletion

D. Depreciation

Answer: D. Depreciation

 

Question: What is the purpose of the general ledger in accounting?

 

A. Record daily transactions

B. Prepare financial statements

C. Identify errors in the trial balance

D. Summarize cash flows

Answer: A. Record daily transactions

 

Question: What is the accounting term for the cost of goods sold minus gross profit?

 

A. Net income

B. Operating income

C. Operating expenses

D. Net loss

Answer: C. Operating expenses

 

Question: In accounting, what does the term “liquidity” refer to?

 

A. Ability to meet short-term obligations

B. Ability to generate profit

C. Ability to attract investors

D. Ability to maintain low expenses

Answer: A. Ability to meet short-term obligations.