Financial Accounting_5

#1. Bookkeeping is primarily concerned with

a) Analysis of financial statements

b) Recording financial transactions

c) Decision-making

d) Interpretation of financial reports

#2. Accounting includes which of the following functions?

a) Summarizing financial data

b) Interpreting financial statements

c) Communicating financial information

d) All of the above

#3. The main purpose of accountancy is to

a) Ensure legal compliance

b) Record and classify transactions

c) Provide financial information for decision-making

d) Compute income tax

#4. Which of the following is NOT a part of bookkeeping?

a) Recording transactions

b) Classifying transactions

c) Analyzing financial statements

d) Posting journal entries

#5. The term “double-entry system” means

a) Every transaction affects two accounts

b) Transactions are recorded twice

c) Each transaction is recorded only once

d) It applies only to banking transactions

#6. The term “ledger” in accounting refers to

a) A book for recording transactions

b) A book for storing vouchers

c) A book for recording trial balances

d) A book for recording cash transactions only

#7. Which of the following is NOT an objective of bookkeeping?

a) Keeping systematic records

b) Analyzing financial statements

c) Ensuring accuracy in transactions

d) Maintaining financial control

#8. Which branch of accounting focuses on providing financial information for external users?

a) Financial Accounting

b) Cost Accounting

c) Management Accounting

d) Tax Accounting

#9. The difference between book-keeping and accounting is that accounting involves

a) Recording transactions

b) Preparing financial reports

c) Posting entries in the ledger

d) Writing cash books

#10. Which document summarizes all ledger accounts?

a) Journal

b) Trial Balance

c) Income Statement

d) Cash Book

#11. Bookkeeping is mainly concerned with

a) Recording and classifying financial transactions

b) Analyzing business trends

c) Decision-making for investment

d) Forecasting business performance

#12. Which is the primary book in bookkeeping?

a) Ledger

b) Cash book

c) Journal

d) Balance Sheet

#13. Which statement best differentiates bookkeeping from accounting?

a) Bookkeeping involves interpretation, while accounting is recording transactions

b) Bookkeeping is about recording, while accounting includes interpretation and analysis

c) Both are the same

d) Bookkeeping is only used for taxation

#14. Which of the following is NOT a type of accounting?

a) Financial Accounting

b) Cost Accounting

c) Management Accounting

d) Economic Accounting

#15. What is the purpose of the trial balance?

a) To analyze profit

b) To verify the accuracy of ledger balances

c) To prepare financial statements

d) To check bank balances

#16. Which book contains classified and summarized information?

a) Cash Book

b) Journal

c) Ledger

d) Trial Balance

#17. What is the purpose of the cash book?

a) To record credit transactions

b) To record all cash transactions

c) To prepare the balance sheet

d) To record personal transactions

#18. Which of the following is NOT a component of financial accounting?

a) Income Statement

b) Budgeting

c) Balance Sheet

d) Trial Balance

#19. Which document is used to record transactions before they are posted in the ledger?

a) Trial Balance

b) Journal

c) Ledger

d) Cash Flow Statement

#20. Accountancy refers to

a) Only recording business transactions

b) A systematic body of knowledge regarding accounting principles

c) Only preparing financial statements

d) Writing bank statements

#21. Which of the following best describes a “nominal account”?

a) Represents expenses, losses, incomes, and gains

b) Represents real assets

c) Represents liabilities

d) Represents capital

#22. A trial balance ensures that

a) The business is profitable

b) Debits and credits are equal

c) Financial statements are accurate

d) Only cash transactions are recorded

#23. Which is NOT an example of a real account?

a) Machinery Account

b) Cash Account

c) Bank Account

d) Interest Account

#24. Which of the following books records transactions in chronological order?