SSS 1 OBJECTIVE

TYPE A
1. Which of the following best describes financial accounting?
(A) Recording financial transactions
(B) Reporting financial information to external users
(C) Analyzing financial statements
(D) Budgeting and forecasting

2. What is the primary purpose of financial accounting?

A) To aid management decision-making
B) To communicate financial information to internal users
C) To provide financial information to external users
D) To prepare tax returns

3. Which statement is true about financial accounting?

A) It focuses on the future financial performance of a company.
B) It reports financial information to investors and creditors.
C) It is used primarily for internal decision-making.
D) It is not governed by any standards or regulations.

4. Which financial statement reports a company's revenues and expenses over a period of time?
A) Balance sheet
B) Income statement
C) Statement of cash flows
D) Statement of retained earnings

5. What is the primary objective of financial accounting?

A) Maximizing shareholder wealth
B) Providing information for decision-making
C) Controlling day-to-day operation
D) Analyzing market trends

6. Which accounting principle requires that expenses be recognized when they are incurred to
generate revenue?
A) Conservatism principle
B) Materiality principle
C) Revenue recognition principle
D) Matching principle

7. Which of the following is an example of an external user of financial information?

A) Management
B) Shareholders
C) Employees
D) Regulatory authorities

8. What is the primary objective of financial reporting?

A) To assess the creditworthiness of the company
 B) To provide information useful for making investment decisions
C) To evaluate management performance
D) To ensure compliance with tax regulations

9. Which of the following statements is true regarding financial accounting standards?

A) They are developed by individual companies based on their preferences.
B) They are uniform across all countries.
C) They are primarily based on principles rather than specific rules.
D) They are set by regulatory bodies to ensure consistency and comparability

10. What is bookkeeping?

A) Analysis of financial statements
B) Preparation of tax returns
C) Recording financial transactions
D) Budgeting and forecasting

11. Which of the following is a primary function of bookkeeping?

A) Analyzing market trends
B) Managing human resources
C) Recording financial transactions
D) Developing marketing strategies

12. In bookkeeping, what is the ledger?

A) A summary of all financial transactions
B) The original source document
C) A record of accounts and their balances
D) A statement of cash flows

13. Financial accounting is primarily concerned with:

A) Recording financial transactions
B) Reporting financial information to external users
C) Analyzing financial statements
D) Budgeting and forecasting

14. Which of the following statements is true about financial accounting?

A) It is used for internal decision-making only.
B) It focuses on the past financial performance of a company.
C) It does not require adherence to any standards or regulations.
D) It is not useful for investors and creditors.

15. What is the main objective of financial accounting?

A) To maximize profits
B) To provide relevant financial information to external users
C) To control and manage company operations
D) To minimize tax liabilities

16. Which of the following is a fundamental accounting equation?

A) Assets = Liabilities
 B) Assets = Equity
C) Assets = Liabilities + Equity
D) Liabilities = Equity

17. Which accounting principle requires assets to be recorded at their original cost?
A) Revenue recognition principle
B) Matching principle
C) Cost principle
D) Conservatism principle

18. Which statement best describes bookkeeping?

A) Bookkeeping is a subset of financial accounting.
B) Bookkeeping and financial accounting are interchangeable terms.
C) Bookkeeping is used exclusively for internal decision-making.
D) Bookkeeping involves the preparation of financial statements.

19. Which of the following tasks is typically associated with bookkeeping rather than financial
accounting?
A) Preparation of financial statements
B) Recording financial transactions
C) Analysis of financial ratios
D) Interpretation of financial data

20. What is the primary focus of financial accounting?

A) Managing day-to-day financial transactions
B) Providing information for internal decision-making
C) Reporting financial information to external users
D) Analyzing market trends

21. Bookkeeping involves:

A) Analysis of financial statements
B) Budgeting and forecasting
C) Recording financial transactions
D) Developing marketing strategies

22. Accounting helps in:

A) Controlling production processes
B) Identifying opportunities for cost reduction
C) Managing employee relations
D) Reporting financial performance

23. Which of the following is a key benefit of accounting?

A) Increasing shareholder wealth
B) Enhancing brand image
C) Improving customer satisfaction
D) Expanding market share

24. What is the significance of accounting in assessing business performance?

 A) It helps in preparing marketing strategies.
B) It ensures compliance with legal regulations.
C) It provides information about profitability and financial health.
D) It focuses on maximizing shareholder wealth

25. The double-entry bookkeeping system is attributed to:

A) Luca Pacioli
B) Aristotle
C) Leonardo da Vinci
D) Euclid

26. The publication of which book is considered the birth of modern accounting?
A) "Summa de Arithmetica"
B) "The Wealth of Nations"
C) "De Computis et Scripturis"
D) "The Interpretation of Financial Statements"

27. The first professional accounting body in Nigeria is:

A) Association of National Accountants of Nigeria (ANAN)
B) Institute of Chartered Accountants of Nigeria (ICAN)
C) Chartered Institute of Taxation of Nigeria (CITN)
D) Society of Corporate Secretaries of Nigeria (SCSN)

28. Which organization is responsible for regulating the accounting profession in Nigeria?
A) Institute of Chartered Accountants of Nigeria (ICAN)
B) Association of National Accountants of Nigeria (ANAN)
C) Chartered Institute of Taxation of Nigeria (CITN)
D) Nigerian Accounting Standards Board (NASB)

29. Which of the following is NOT considered a primary user of financial statements?
A) Shareholders
B) Creditors
C) Government regulatory agencies
D) Customers

30. Investors use financial statements primarily to:

A) Assess the liquidity of a company
B) Evaluate the company's ability to generate profit
C) Determine the company's tax liability
D) Monitor employee performance

31. Which of the following statements is true regarding creditors as users of financial statements?
A) Creditors are concerned with the company's ability to generate profits.
B) Creditors use financial statements to assess the company's ability to repay loans.
C) Creditors have limited access to financial information.
D) Creditors are not interested in the company's financial health.

32. Government agencies use financial statements primarily for:

 A) Tax assessment purposes
B) Marketing analysis
C) Employee evaluations
D) Strategic planning

33. The balance sheet reports:

A) Revenues and expenses
B) Assets, liabilities, and equity
C) Cash flows from operating, investing, and financing activities
D) Changes in retained earnings

34. Which financial statement provides information about a company's cash receipts and
payments?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings

35. The income statement shows:

A) The company's financial position at a specific point in time
B) Changes in the company's equity over a period of time
C) The company's revenues, expenses, and net income or loss
D) Cash inflows and outflows from operating, investing, and financing activities

36. The balance sheet equation is represented as:

A) Assets = Liabilities + Equity
B) Assets + Liabilities = Equity
C) Liabilities = Assets - Equity
D) Equity = Assets – Liabilities

37. External auditors are primarily concerned with:

A) Preparing financial statements
B) Providing investment advice
C) Ensuring the accuracy of financial statements
D) Monitoring day-to-day operations

38. A company issues a cheque of $500 for rent payment. Which subsidiary book will record this
transaction?
A) Cash Book
B) Sales Book
C) Purchase Book
D) Journal Proper

39. What type of source document is used when cash is received from a customer?
A) Purchase order
B) Sales invoice
C) Receipt voucher
D) Credit note
 40. When goods are sold on credit, what document is issued to the customer?
A) Purchase order
B) Sales invoice
C) Debit note
D) Goods received note

SECTION B: THEORY
(Answer all questions)
1. Explain the purpose of preparing each of the following;
(a) Trading account (b) Profit and loss account (c) Balance Sheet {2 marks each}

2. a) What are accounting concepts? {2 marks}

b) Explain the following accounting concepts: {3 marks each}
(i) Business entity (ii) Accrual concept (iii) Going concern concept (iv) Consistency

3. S.Momoh commenced business on 1st April, 2005 with #800,000 paid into the bank. During the
month, he made the following transactions:
April 2 Bought goods by cheque #360,000
April 3 Withdrew cash of #200,000 for office use
April 6 Received cash loan of #40,000 from S.Fowe
April 10 Bought goods on credit for #80,000 from L.Maw
April 13 Rent 0f #100,000 for business premise was paid by cheque
April 16 Bought goods on credit from Lawrenco Ltd for #60,000
April 18 Insurance premium of #30,000 was paid by cheque
April 21 Sold goods for #120,000 receiving cheque in payment
April 25 Paid Lawrenco Ltd a cheque for #60,000
April 26 Bought an equipment for #40,000 from Nwoke & Co. on credit
April 27 Paid L.Maw a cheque of #80,000
April 28 Paid Nwoke & Co. a cheque of #40,000
April 29 Sold goods for #47,000 receiving a cheque in payment
April 30 Wages and salaries of #90,000 was paid in cash
You are required to enter the above transactions in ledger accounts, balance the accounts, and extract a
trial balance as at 30th April, 2005 {20 marks}