SS2 Second Term Financial Account Past Questions And Answers

 

SS2 second term financial account questions:

 

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

 

A) To show the company’s financial position at a specific point in time

B) To detail the cash flow activities during a period

C) To explain the changes in equity components over a specific period

D) To calculate the company’s return on investment

Question: How does the straight-line method differ from the declining balance method in depreciation?

 

A) Straight-line method allocates equal depreciation each year; declining balance method allocates more in early years.

B) Straight-line method allocates more in early years; declining balance method allocates equal depreciation each year.

C) Both methods allocate depreciation equally each year.

D) Both methods allocate more depreciation in later years.

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) Increase in the value of assets

C) Distribution of profits to shareholders

D) Allocation of the cost of a tangible asset over its useful life

Question: In double-entry accounting, what is the purpose of the trial balance?

 

A) To identify errors in the accounting records

B) To determine net income

C) To record adjusting entries

D) To calculate cash flow

Question: How does a debit transaction affect the accounting equation?

 

A) Increases assets and increases equity

B) Increases assets and decreases liabilities

C) Decreases assets and decreases equity

D) Decreases assets and increases liabilities

Question: What is the significance of the going concern principle in financial accounting?

 

A) Transactions are recorded at their historical cost

B) The business is assumed to continue operating for the foreseeable future

C) Only cash transactions are recorded

D) Expenses should be recognized when they are incurred

Question: What is the purpose of the cash flow statement in financial reporting?

 

A) To show the company’s financial position at a specific point in time

B) To provide information about cash receipts and payments during a specific period

C) To detail changes in equity components

D) To calculate the return on investment

Question: Which financial statement reports the cash transactions of a business for a specific period?

 

A) Income statement

B) Balance sheet

C) Cash flow statement

D) Statement of changes in equity

Question: According to the matching principle, when should expenses be recognized?

 

A) When cash is received

B) When goods are delivered or services are rendered

C) When expenses are incurred

D) When products are purchased

Question: How does a prepaid expense affect the accounting equation when it is initially recorded?

 

A) Increases assets and increases liabilities

B) Increases assets and decreases equity

C) Decreases assets and decreases liabilities

D) Decreases assets and increases equity.