WAEC Bookkeeping Past Questions And Answers (Objective and Theory)
Section A: Bookkeeping Questions
Question: What is the purpose of double-entry bookkeeping?
A) To track income only
B) To record transactions in two accounts
C) To calculate profits at year-end
D) To manage payroll expenses
Answer: B) To record transactions in two accounts
Question: Which financial statement summarizes a company’s assets, liabilities, and equity at a specific point in time?
A) Income statement
B) Cash flow statement
C) Balance sheet
D) Statement of retained earnings
Answer: C) Balance sheet
Question: What is the accounting equation?
A) Assets = Liabilities – Equity
B) Assets = Liabilities + Equity
C) Assets – Liabilities = Equity
D) Assets + Liabilities = Equity
Answer: B) Assets = Liabilities + Equity
Question: What type of account is “Accumulated Depreciation”?
A) Asset
B) Liability
C) Equity
D) Revenue
Answer: A) Asset
Question: In which book of accounts are day-to-day transactions initially recorded?
A) Ledger
B) Journal
C) Trial balance
D) Income statement
Answer: B) Journal
Question: What is the purpose of the trial balance?
A) To prepare financial statements
B) To ensure the accounting equation is balanced
C) To track daily transactions
D) To calculate depreciation
Answer: B) To ensure the accounting equation is balanced
Question: Which financial statement shows the revenues and expenses over a specific period?
A) Balance sheet
B) Income statement
C) Statement of cash flows
D) Statement of retained earnings
Answer: B) Income statement
Question: What is the formula for calculating net income?
A) Revenue – Expenses
B) Assets – Liabilities
C) Equity – Revenue
D) Liabilities – Expenses
Answer: A) Revenue – Expenses
Question: What does the term “depreciation” refer to in accounting?
A) Increase in asset value
B) Decrease in asset value
C) Increase in liability
D) Decrease in liability
Answer: B) Decrease in asset value
Question: Which account is credited when a company collects cash from a customer?
A) Accounts Receivable
B) Cash
C) Revenue
D) Accounts Payable
Answer: A) Accounts Receivable
Question: What is the purpose of the general ledger?
A) To record daily transactions
B) To create financial statements
C) To organize accounts alphabetically
D) To manage employee salaries
Answer: B) To create financial statements
Question: What is the accounting term for an increase in an owner’s equity resulting from the operation of a business?
A) Investment
B) Revenue
C) Liability
D) Expense
Answer: B) Revenue
Question: How are liabilities affected when a company borrows money from a bank?
A) Increase
B) Decrease
C) Stay the same
D) Convert to equity
Answer: A) Increase
Question: Which financial statement reports the changes in equity over a period?
A) Balance sheet
B) Income statement
C) Cash flow statement
D) Statement of retained earnings
Answer: D) Statement of retained earnings
Question: What is the purpose of the cash flow statement?
A) To show the company’s financial position at a specific point
B) To track changes in equity over time
C) To disclose how cash is generated and used
D) To calculate net income
Answer: C) To disclose how cash is generated and used
Question: How are dividends classified in the financial statements?
A) Revenue
B) Expense
C) Asset
D) Distribution of earnings
Answer: D) Distribution of earnings
Question: What is the purpose of the income statement?
A) To show the company’s financial position
B) To calculate net income
C) To disclose cash transactions
D) To list assets and liabilities
Answer: B) To calculate net income
Question: Which accounting principle states that expenses should be recognized in the period in which they are incurred, not when they are paid?
A) Matching principle
B) Revenue recognition principle
C) Historical cost principle
D) Conservatism principle
Answer: A) Matching principle
Question: What is the purpose of the adjusting entries in accounting?
A) To correct errors in the financial statements
B) To record day-to-day transactions
C) To update accounts for unrecorded transactions
D) To close temporary accounts
Answer: C) To update accounts for unrecorded transactions
Question: How does a credit transaction affect the accounts?
A) Increases assets and decreases liabilities
B) Increases liabilities and decreases assets
C) Increases both assets and liabilities
D) Decreases both assets and liabilities
Answer: B) Increases liabilities and decreases assets
Section B: Theory Questions
Question: Explain the difference between cash accounting and accrual accounting.
Answer: Cash accounting records transactions when cash is exchanged, while accrual accounting recognizes transactions when they occur, regardless of cash flow.
Question: Define the term “trial balance” and explain its significance in the accounting process.
Answer: A trial balance is a list of all accounts and their balances. It helps ensure that debits equal credits, providing a preliminary check for accuracy before creating financial statements.
Question: What is the purpose of the general ledger, and how does it differ from the general journal?
Answer: The general ledger organizes accounts and their balances, while the general journal records day-to-day transactions. The ledger provides a consolidated view of accounts.
Question: Discuss the concept of depreciation and its importance in financial reporting.
Answer: Depreciation allocates the cost of assets over their useful life. It’s vital for accurately reflecting an asset’s value on the balance sheet and matching expenses with revenues on the income statement.
Question: Explain the role of adjusting entries in the accounting cycle.
Answer: Adjusting entries update accounts to reflect unrecorded transactions or to correct errors. They are crucial for ensuring accurate financial statements at the end of an accounting.
