UTME Bookkeeping Questions and Answers

UTME Bookkeeping Questions and Answers

Here are 20 UTME Bookkeeping questions with options and the correct answers:

What is the purpose of bookkeeping?

a) To record financial transactions

b) To prepare financial statements

c) To analyze business performance

d) To forecast future cash flows

Answer: a) To record financial transactions

Which of the following is an example of an external source document?

a) Sales invoice

b) Employee time sheet

c) Bank statement

d) Petty cash voucher

Answer: c) Bank statement

Which account represents the owner's investment in the business?

a) Cash account

b) Accounts payable

c) Capital account

d) Accounts receivable

Answer: c) Capital account

Which type of account increases with a debit entry?

a) Liabilities

b) Revenue

c) Equity

d) Expenses

Answer: d) Expenses

A purchase of office supplies on credit will result in which of the following journal entries?

a) Debit: Office Supplies; Credit: Accounts Payable

b) Debit: Accounts Payable; Credit: Office Supplies

c) Debit: Office Supplies; Credit: Cash

d) Debit: Accounts Payable; Credit: Cash

Answer: a) Debit: Office Supplies; Credit: Accounts Payable

Which financial statement shows the financial position of a business at a specific point in time?

a) Income statement

b) Statement of cash flows

c) Balance sheet

d) Statement of retained earnings

Answer: c) Balance sheet

What is the formula to calculate net profit?

a) Net Profit = Revenue - Expenses

b) Net Profit = Assets - Liabilities

c) Net Profit = Equity - Liabilities

d) Net Profit = Revenue - Equity

Answer: a) Net Profit = Revenue - Expenses

Which of the following is an example of a contra account?

a) Accounts payable

b) Accumulated depreciation

c) Prepaid expenses

d) Accounts receivable

Answer: b) Accumulated depreciation

What is the purpose of the trial balance?

a) To calculate net profit

b) To identify errors in the bookkeeping system

c) To record adjusting entries

d) To prepare financial statements

Answer: b) To identify errors in the bookkeeping system

What is the normal balance of an expense account?

a) Debit

b) Credit

c) It depends on the account

d) None of the above

Answer: a) Debit

Which of the following is an example of an intangible asset?

a) Inventory

b) Land

c) Patents

d) Accounts receivable

Answer: c) Patents

Which accounting principle states that expenses should be recognized in the same period as the revenue they helped generate?

a) Matching principle

b) Revenue recognition principle

c) Consistency principle

d) Materiality principle

Answer: a) Matching principle

A debit entry to which account will increase its balance?

a) Revenue

b) Accounts payable

c) Liability

d) Accounts receivable

Answer: c) Liability

What is the formula to calculate the current ratio?

a) Current Ratio = Current Assets / Current Liabilities

b) Current Ratio = Total Assets / Total Liabilities

c) Current Ratio = Net Profit / Total Equity

d) Current Ratio = Gross Profit / Revenue

Answer: a) Current Ratio = Current Assets / Current Liabilities

Which of the following is a characteristic of a nominal (temporary) account?

a) It has a normal debit balance

b) It is closed at the end of the accounting period

c) It represents long-term assets

d) It is reported on the balance sheet

Answer: b) It is closed at the end of the accounting period

What is the purpose of the cash flow statement?

a) To show the profitability of a business

b) To disclose changes in equity during a period

c) To report the cash inflows and outflows of a business

d) To provide information about the financial position of a business

Answer: c) To report the cash inflows and outflows of a business

How would a purchase of inventory on credit affect the accounting equation?

a) Increase assets and increase liabilities

b) Decrease assets and decrease liabilities

c) Increase assets and decrease equity

d) Decrease assets and increase equity

Answer: a) Increase assets and increase liabilities

What is the purpose of the general journal?

a) To record routine transactions

b) To record adjusting entries

c) To summarize financial transactions

d) To post to the general ledger

Answer: b) To record adjusting entries

What is the formula to calculate gross profit?

a) Gross Profit = Revenue - Expenses

b) Gross Profit = Net Profit + Expenses

c) Gross Profit = Net Profit - Expenses

d) Gross Profit = Revenue - Net Profit

Answer: a) Gross Profit = Revenue - Expenses

Which financial statement shows the revenues and expenses of a business for a specific period of time?

a) Balance sheet

b) Statement of cash flows

c) Income statement

d) Statement of retained earnings

Answer: c) Income statement