Financial accounting WAEC past questions and answers

Financial accounting WAEC past questions and answers

uestion: What is the primary purpose of financial accounting?

A) Budgeting

B) Decision-making

C) External reporting

D) Employee payroll

Answer: C) External reporting

Question: Which accounting principle states that expenses should be recognized in the period in which they are incurred, regardless of when the cash is paid?

A) Matching principle

B) Revenue recognition principle

C) Historical cost principle

D) Materiality principle

Answer: A) Matching principle

Question: What type of account is "Accumulated Depreciation"?

A) Revenue account

B) Contra asset account

C) Liability account

D) Expense account

Answer: B) Contra asset account

Question: Which financial statement represents 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: Under the double-entry accounting system, if an asset account increases, which other type of account must also increase?

A) Liability

B) Equity

C) Revenue

D) Another asset

Answer: D) Another asset

Question: What is the accounting equation?

A) Assets = Liabilities - Equity

B) Assets = Liabilities + Equity

C) Assets = Equity - Liabilities

D) Assets = Liabilities * Equity

Answer: B) Assets = Liabilities + Equity

Question: Which accounting method records revenues and expenses when they are earned or incurred, regardless of when the cash is received or paid?

A) Cash basis accounting

B) Accrual basis accounting

C) Double-entry accounting

D) Contra accounting

Answer: B) Accrual basis accounting

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

A) To show the company's profitability

B) To report the changes in equity over time

C) To disclose the company's cash inflows and outflows

D) To provide details on fixed assets

Answer: C) To disclose the company's cash inflows and outflows

Question: Which financial statement is also known as the "statement of profit and loss"?

A) Balance sheet

B) Income statement

C) Statement of cash flows

D) Statement of retained earnings

Answer: B) Income statement

Question: What is the purpose of the trial balance?

A) To identify errors in the accounting records

B) To summarize the company's financial position

C) To calculate the company's tax liability

D) To record adjusting entries

Answer: A) To identify errors in the accounting records

Question: How is the net income calculated on the income statement?

A) Revenues - Expenses

B) Revenues + Expenses

C) Assets - Liabilities

D) Liabilities - Assets

Answer: A) Revenues - Expenses

Question: Which financial ratio measures a company's ability to meet short-term obligations with its most liquid assets?

A) Debt to Equity ratio

B) Current ratio

C) Return on Investment ratio

D) Gross Profit Margin

Answer: B) Current ratio

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

A) To record transactions with external parties

B) To correct errors in the financial statements

C) To allocate revenues and expenses to the appropriate accounting period

D) To reconcile bank statements

Answer: C) To allocate revenues and expenses to the appropriate accounting period

Question: Which of the following is a long-term liability?

A) Accounts payable

B) Short-term loans

C) Bonds payable

D) Accrued expenses

Answer: C) Bonds payable

Question: What is depreciation?

A) An increase in the value of an asset

B) The process of allocating the cost of an asset over its useful life

C) A decrease in the value of an asset

D) The amount of money a company owes to its creditors

Answer: B) The process of allocating the cost of an asset over its useful life

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

A) To prepare financial statements

B) To identify errors in the adjusting entries

C) To verify the accuracy of the closing entries

D) To record adjusting entries

Answer: C) To verify the accuracy of the closing entries

Question: Which of the following is considered an intangible asset?

A) Land

B) Buildings

C) Patents

D) Inventory

Answer: C) Patents

Question: What is the purpose of the Sarbanes-Oxley Act in the United States?

A) To regulate international trade

B) To protect investors and improve the accuracy of financial reporting

C) To set accounting standards for non-profit organizations

D) To establish rules for fair competition

Answer: B) To protect investors and improve the accuracy of financial reporting