SS2 second Term book keeping past questions and answers

SS2 second Term book keeping past questions and answers

SS2 Bookkeeping questions with options and answers:

Question: What is the purpose of a depreciation expense in financial statements?

A) Increase profits

B) Decrease assets

C) Spread the cost of an asset over its useful life

D) Ignore asset values

Answer: C) Spread the cost of an asset over its useful life

Question: In double-entry accounting, if you debit an asset account, what happens to the corresponding liability account?

A) It is debited

B) It is credited

C) No effect

D) It becomes a revenue account

Answer: B) It is credited

Question: What does the term "accounts payable" represent in bookkeeping?

A) Money owed to the business

B) Money the business owes to others

C) Business assets

D) Owner's equity

Answer: B) Money the business owes to others

Question: What is the purpose of the income statement?

A) Summarize assets and liabilities

B) Record day-to-day transactions

C) Show revenues, expenses, and profits over a period

D) List all accounts and their balances

Answer: C) Show revenues, expenses, and profits over a period

Question: What is the accounting treatment for a decrease in owner's equity?

A) Debit

B) Credit

C) No effect

D) Depends on the transaction

Answer: B) Credit

Question: Which financial statement provides a snapshot of a company's cash position?

A) Income statement

B) Cash flow statement

C) Balance sheet

D) Trial balance

Answer: B) Cash flow statement

Question: What is the purpose of a general ledger?

A) Record daily transactions

B) Summarize financial position

C) Record all business transactions in accounts

D) Prepare income statement

Answer: C) Record all business transactions in accounts

Question: What is the accounting equation when a business pays off a loan?

A) Assets = Liabilities - Owner's Equity

B) Assets = Liabilities + Owner's Equity - Loan Payment

C) Assets = Liabilities + Owner's Equity

D) Assets = Liabilities + Owner's Equity + Loan Payment

Answer: C) Assets = Liabilities + Owner's Equity

Question: How is the net profit calculated in the income statement?

A) Net Profit = Revenue - Expenses

B) Net Profit = Revenue + Expenses

C) Net Profit = Revenue / Expenses

D) Net Profit = Revenue x Expenses

Answer: A) Net Profit = Revenue - Expenses

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

A) Summarize financial position

B) Verify the arithmetical accuracy of accounts

C) Record daily transactions

D) Prepare income statement

Answer: B) Verify the arithmetical accuracy of accounts

Question: When a business receives cash in advance for services to be provided in the future, which account is credited?

A) Revenue

B) Cash

C) Accounts Receivable

D) Liabilities

Answer: D) Liabilities

Question: What is the purpose of the statement of changes in equity?

A) Summarize financial position

B) Show changes in owner's equity over a period

C) Record daily transactions

D) Prepare income statement

Answer: B) Show changes in owner's equity over a period

Question: In bookkeeping, what does the term "contra account" refer to?

A) An account with no transactions

B) An account with an opposite balance to its related account

C) An account used only for credit transactions

D) An account with a zero balance

Answer: B) An account with an opposite balance to its related account

Question: What is the purpose of the cash flow statement's operating activities section?

A) Show changes in cash from investing activities

B) Display cash received from financing activities

C) Summarize cash transactions related to the core business operations

D) List all cash inflows and outflows

Answer: C) Summarize cash transactions related to the core business operations

Question: When a business purchases inventory on credit, which accounts are affected?

A) Cash and Expenses

B) Inventory and Liabilities

C) Revenue and Expenses

D) Assets and Owner's Equity

Answer: B) Inventory and Liabilities

Question: What is the accounting treatment for an increase in owner's equity?

A) Debit

B) Credit

C) No effect

D) Depends on the transaction

Answer: A) Debit

Question: What is the purpose of a contra asset account?

A) Increase the value of assets

B) Decrease the value of assets

C) Offset the balance of a related asset account

D) Have no impact on financial statements

Answer: C) Offset the balance of a related asset account

Question: In the context of financial statements, what does the term "EBITDA" stand for?

A) Earnings Before Interest, Taxes, Depreciation, and Amortization

B) Every Business Incorporates Taxes, Depreciation, and Amortization

C) Expense Before Interest, Taxes, Depreciation, and Amortization

D) Earnings Before Income Taxes, Depreciation, and Assets

Answer: A) Earnings Before Interest, Taxes, Depreciation, and Amortization

Question: When a business records a sale on credit, which accounts are affected?

A) Cash and Revenue

B) Accounts Receivable and Revenue

C) Liabilities and Expenses

D) Assets and Owner's Equity

Answer: B) Accounts Receivable and Revenue

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

A) Record daily transactions

B) Correct errors in previous entries

C) Summarize financial position

D) Prepare income statement

Answer: B) Correct errors in previous entries