SS1 Financial Accounting Questions and Answers: Complete Guide

SS1 Financial Accounting exam questions with detailed answers covering book-keeping, accounting principles, source documents, users of financial information, and accounting equations. Perfect study guide for secondary school students preparing for financial accounting examinations.

SS1 Financial Accounting Questions and Answers: Complete Guide for Students

Multiple Choice Questions (1-20)

1. What is the systematic act of recording and classifying financial transactions?

Question: ________ is the act of recording and classifying financial transactions in a systematic way, entering them into the appropriate books as they occur so that the financial position of a business can be readily ascertain at any time.

A. Book-keeping
B. Accounting
C. Cash book
D. Current account

Answer: A. Book-keeping

2. Which term defines recording, classifying, and communicating financial information?

Question: _________ is defined as being concerned with the recording, classifying, creating, summarizing and communicating of financial information to interested parties and interpreting to make specific decision.

A. Book-keeping
B. Accounting
C. Cash account
D. Decision making

Answer: B. Accounting

3. What type of staff is a book-keeper classified as?

Question: A book-keeper is a/an _________.

A. accountant
B. tourist
C. clerical staff
D. home maker

Answer: C. clerical staff

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4. Who records, classifies, and interprets financial statements?

Question: A __________ records, classify, create, summarize, analyze and interpret final statement.

A. clerk
B. receptionist
C. computer
D. accountant

Answer: D. accountant

5. What is a key importance of book-keeping and accounting?

Question: One of the following is an importance of book-keeping and accounting

A. police evidence
B. decision making
C. court case
D. medical report

Answer: B. decision making

6. Which option is NOT an importance of book-keeping?

Question: Pick the odd one out of the importance of book-keeping and accounting

A. for profit purpose
B. decision making
C. police evidence
D. ascertainment of financial position

Answer: C. police evidence

7. Who is the Doyen of accounting profession in Nigeria?

Question: The Doyen of accounting profession in Nigeria is _________.

A. Late Kayode Williams
B. Late Rotimi Williams
C. Late Akintola Williams
D. Late Funsho Williams

Answer: C. Late Akintola Williams

8. Which is NOT a user of accounting information?

Question: Users of accounting information or financial statements are the following EXCEPT

A. Owner of business
B. Medical report
C. Employee
D. Share holder

Answer: B. Medical report

9. What was the organized system of trade in ancient times?

Question: In the olden days the organized system of trade was _____.

A. cash system
B. barter system
C. home trade
D. entreport system

Answer: B. barter system

10. Which is NOT a characteristic of accounting information?

Question: Characteristics of accounting information are the following EXCEPT

A. Timeliness
B. Dishonesty
C. Reliable
D. Relevance

Answer: B. Dishonesty

11. What term defines properties or resources of a business?

Question: _________ can be define as the properties or resources of a business organization.

A. Capital
B. Liability
C. Asset
D. Ratio

Answer: C. Asset

12. What are obligations to pay money in the future called?

Question: ________ are the obligation to pay out money at the same time in the future.

A. Asset
B. Capital
C. Investment
D. Liability

Answer: D. Liability

13. How can the accounting equation be expressed?

Question: Accounting equations can be expressed as

A. Asset = Capital + Liabilities
B. Capital = Liability – Profit
C. Asset = Sales – Cost price
D. Profit = Sales + Cost price

Answer: A. Asset = Capital + Liabilities

14. What is the total money invested by the owner to start a business?

Question: The total money provided or invested by the owner to start a business is called ______.

A. gain
B. loss
C. capital
D. asset

Answer: C. capital

15. What is a customer who owes money for goods sold on credit called?

Question: An entity or a person who owes another entity or person or a customer for good sold on credit is called ________.

A. personal
B. liability
C. trade
D. debtor

Answer: D. debtor

16. What is a supplier of goods bought on credit known as?

Question: The supplier of goods bought on credit is known as _________.

A. debtor
B. sole trader
C. creditor
D. all of the above

Answer: C. creditor

17. Which is NOT an essential quality of a book-keeper?

Question: One of this is not an essential qualities of a book-keeper

A. embezzlement
B. accuracy
C. integrity
D. truthfulness

Answer: A. embezzlement

18. Who is responsible for preparation and interpretation of financial statements?

Question: _______ is a person that is responsible for preparation, analysis, and interpretation of financial statement.

A. Public relation officer
B. Book-record
C. Personal
D. Accountant

Answer: D. Accountant

19. In what capacity will a book-keeper act?

Question: A book-keeper will act at this capacity.

A. Accountant
B. Shop-keeper
C. Director
D. Executive director

Answer: A. Accountant

20. Which is NOT an accounting professional body in Nigeria?

Question: Pick the odd one ‘out’ of accounting professional bodies in Nigeria

A. London School of Economics (LSE)
B. Institute of Chartered Accountant of Nigeria (ICAN)
C. Chartered Institute of Bankers of Nigeria (CIBN)
D. Chartered Institute of Insurance of Nigeria (CLIN)

Answer: A. London School of Economics (LSE)

Theory Questions and Answers

List 5 Importance of Accounting and Book-keeping

Answer:

1. Decision Making – Accounting provides financial information that helps business owners and managers make informed decisions about operations, investments, and future planning.
2. Ascertainment of Financial Position – Through systematic recording, businesses can determine their financial standing, including assets, liabilities, and capital at any given time.
3. Profit or Loss Determination – Accounting helps calculate whether a business is making profit or incurring losses during a specific period.
4. Legal Compliance – Proper accounting records ensure businesses meet tax obligations and comply with financial regulations and reporting requirements.
5. Performance Evaluation – Accounting information allows businesses to assess their performance over time, compare against budgets, and identify areas for improvement.

State Five Differences Between Book-keeping and Accounting

Answer:

Book-keeping	Accounting
1. Involves recording and classifying financial transactions	1. Involves analyzing, interpreting, and summarizing financial data
2. Performed by clerical staff (book-keepers)	2. Performed by professionally qualified accountants
3. Does not require advanced knowledge or qualifications	3. Requires professional training and certification
4. Focuses on maintaining accurate records of daily transactions	4. Focuses on preparing financial statements and providing strategic advice
5. Provides the foundation for accounting work	5. Uses book-keeping data to create meaningful financial reports and insights

List and Explain 6 Users of Accounting Information

Answer:

1. Business Owners – They use accounting information to assess profitability, make strategic decisions, and monitor the overall financial health of their business.
2. Managers – Management uses financial data for planning, controlling operations, budgeting, and making day-to-day operational decisions.
3. Employees – Workers may use accounting information to understand the company’s stability, assess job security, and evaluate profit-sharing or bonus opportunities.
4. Shareholders/Investors – They review financial statements to determine the company’s performance, profitability, and whether their investment is worthwhile.
5. Creditors and Lenders – Banks and suppliers use accounting information to assess creditworthiness and determine whether to extend loans or credit facilities to the business.
6. Government and Tax Authorities – They use accounting records to ensure businesses comply with tax laws, calculate tax liabilities, and verify reported income.

What is a Source Document?

Answer:

A source document is an original record or written evidence that provides proof of a business transaction. It serves as the foundation for recording entries in accounting books and contains essential details such as date, amount, parties involved, and the nature of the transaction. Source documents provide authentication and support for all financial entries made in the accounting system.

List and Explain Five Types of Source Documents

Answer:

1. Invoice – A document issued by a seller to a buyer showing the details of goods or services sold, quantities, prices, and payment terms. It serves as proof of a sale transaction.
2. Receipt – A written acknowledgment issued when payment is received. It confirms that money has been paid and provides evidence of the transaction for both parties.
3. Voucher – An internal document that authorizes payment or records a transaction. It typically contains details of the transaction and may require approval signatures before processing.
4. Cheque – A written order directing a bank to pay a specific amount from the drawer’s account to the payee. It serves as evidence of payment transactions.
5. Credit Note – A document issued by a seller to a buyer, indicating a reduction in the amount owed. It’s typically issued when goods are returned, or an overcharge has occurred, and adjusts the buyer’s account accordingly.