SS3 third Term financial accounting past Questions and Answers

SS3 third Term financial accounting past Questions and Answers

Questions for SS3 with options and answers:

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

A. To report the financial position of a company at a specific point in time

B. To show the sources and uses of cash during a specific period

C. To disclose changes in equity over a period

D. To summarize revenues and expenses over a specific period

Answer: B. To show the sources and uses of cash during a specific period

Question: Which financial statement is also known as the statement of financial position?

A. Income statement

B. Cash flow statement

C. Balance sheet

D. Statement of retained earnings

Answer: C. Balance sheet

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

A. To record day-to-day transactions

B. To prepare financial statements

C. To calculate depreciation

D. To summarize revenues and expenses

Answer: A. To record day-to-day transactions

Question: How is the debt-to-equity ratio calculated?

A. Total Debt / Total Equity

B. Total Equity / Total Debt

C. Net Income / Total Equity

D. Current Liabilities / Shareholders' Equity

Answer: A. Total Debt / Total Equity

Question: What is the role of the Financial Accounting Standards Board (FASB) in accounting standards?

A. Enforcing tax regulations

B. Regulating the issuance and trading of securities

C. Setting accounting standards for public companies in the United States

D. Auditing financial statements

Answer: C. Setting accounting standards for public companies in the United States

Question: What is the accounting equation after a purchase of equipment on credit?

A. Assets = Liabilities - Equity

B. Assets = Liabilities + Equity

C. Assets + Liabilities = Equity

D. Assets - Liabilities = Equity

Answer: B. Assets = Liabilities + Equity

Question: How is the gross profit margin calculated?

A. Gross Profit / Net Sales

B. Net Income / Average Total Assets

C. Net Income / Net Sales

D. Gross Profit / Operating Expenses

Answer: A. Gross Profit / Net Sales

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

A. To prepare financial statements

B. To ensure that debits equal credits

C. To record adjusting entries

D. To calculate depreciation

Answer: B. To ensure that debits equal credits

Question: Which accounting concept assumes that a business will remain in operation for the foreseeable future?

A. Matching principle

B. Going concern principle

C. Conservatism principle

D. Revenue recognition principle

Answer: B. Going concern principle

Question: What is the formula for calculating the acid-test (quick) ratio?

A. (Current Assets - Inventory) / Current Liabilities

B. Current Assets / Current Liabilities

C. (Current Assets + Inventory) / Current Liabilities

D. Total Assets / Total Liabilities

Answer: A. (Current Assets - Inventory) / Current Liabilities

Question: How does the straight-line method calculate depreciation?

A. (Cost - Salvage Value) / Useful Life

B. Cost / Useful Life

C. (Cost + Salvage Value) / Useful Life

D. (Cost * Salvage Value) / Useful Life

Answer: B. Cost / Useful Life

Question: Which financial statement is prepared first during the accounting cycle?

A. Income statement

B. Cash flow statement

C. Balance sheet

D. Trial balance

Answer: D. Trial balance

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

A. To report the financial position of a company at a specific point in time

B. To show the sources and uses of cash during a specific period

C. To disclose changes in equity over a period

D. To summarize revenues and expenses over a specific period

Answer: C. To disclose changes in equity over a period

Question: How does the FIFO method calculate the cost of goods sold?

A. Using the cost of the oldest inventory first

B. Using the cost of the most recently acquired inventory first

C. Averaging the cost of all inventory items

D. Using the cost of the inventory with the highest value first

Answer: A. Using the cost of the oldest inventory first

Question: What is the purpose of the statement of comprehensive income?

A. To report the financial position of a company at a specific point in time

B. To disclose changes in equity over a period

C. To show the sources and uses of cash during a specific period

D. To summarize revenues and expenses over a specific period

Answer: B. To disclose changes in equity over a period

Question: Which financial statement is divided into operating, investing, and financing activities?

A. Income statement

B. Cash flow statement

C. Balance sheet

D. Statement of retained earnings

Answer: B. Cash flow statement

Question: What is the purpose of the International Financial Reporting Standards (IFRS)?

A. Setting accounting standards for small businesses

B. Regulating the issuance and trading of securities

C. Harmonizing accounting standards globally

D. Enforcing tax regulations

Answer: C. Harmonizing accounting standards globally

Question: How is the average collection period calculated?

A. 365 / Accounts Receivable Turnover

B. Accounts Receivable / Net Sales

C. Net Income / Average Total Assets

D. Gross Profit / Operating Expenses

Answer: A. 365 / Accounts Receivable Turnover

Question: What does the term "amortization" refer to in financial accounting?

A. Allocation of the cost of an intangible asset over its useful life

B. Allocation of the cost of a tangible asset over its useful life

C. Recognition of revenue when it is earned

D. Recording the sale of an asset

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

Question: Which financial statement reports the changes in retained earnings over a specific period?

A. Income statement

B. Cash flow statement

C. Statement of retained earnings