SS3 Second Term Financial Account Past Questions And Answers

SS3 Financial Account questions with options and answers:

 

Question: Which financial ratio measures a company’s efficiency in managing its inventory?

 

A) Current ratio

B) Inventory turnover ratio

C) Debt-to-equity ratio

D) Return on investment (ROI)

Answer: B) Inventory turnover ratio

 

Question: What is the purpose of the cash conversion cycle in financial management?

 

A) To measure how quickly a company can convert inventory into cash

B) To calculate net income

C) To assess long-term solvency

D) To determine the return on equity

Answer: A) To measure how quickly a company can convert inventory into cash

 

Question: Under which financial statement category would you find dividends paid to shareholders?

 

A) Operating activities

B) Investing activities

C) Financing activities

D) Non-operating activities

Answer: C) Financing activities

 

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

 

A) Ability to meet long-term obligations

B) Ability to convert assets into cash quickly

C) Allocation of expenses

D) Calculation of net income

Answer: B) Ability to convert assets into cash quickly

 

Question: In financial accounting, what is the formula for calculating the debt-to-equity ratio?

 

A) Total Debt / Total Assets

B) Total Equity / Total Assets

C) Total Debt / Total Equity

D) Total Assets / Total Equity

Answer: C) Total Debt / Total Equity

 

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

 

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: B) To report changes in equity

 

Question: Which accounting method records revenues and expenses when cash is exchanged?

 

A) Cash basis accounting

B) Accrual basis accounting

C) Double-entry accounting

D) Single-entry accounting

Answer: A) Cash basis accounting

 

Question: What is the purpose of the Financial Accounting Standards Board (FASB)?

 

A) Enforce tax regulations

B) Regulate international trade

C) Set accounting standards in the United States

D) Monitor stock market activities

Answer: C) Set accounting standards in the United States

 

Question: Under which financial statement category would you find the cost of goods sold (COGS)?

 

A) Operating activities

B) Investing activities

C) Financing activities

D) Non-operating activities

Answer: A) Operating activities

 

Question: What is the purpose of the accounting equation (Assets = Liabilities + Equity)?

 

A) To calculate net income

B) To ensure the balance of financial statements

C) To record transactions

D) T

o determine the return on investment

Answer: B) To ensure