Kerala PSC Statistical Assistant Part 2
Kerala PSC Statistical Assistant Part 2, Financial accounting is the process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over some time.
These transactions are summarized in the preparation of financial statements, including the balance sheet, income statement, and cash flow statement, that record the company’s operating performance over a specific period.
Kerala PSC Statistical Assistant-Financial Accounting
Financial accounting is one of the branches of Accounting. As per our syllabus, we need to focus on financial accounting.
Accounting is a means of communicating the results of business operations to various parties interested in or connected with the business viz., the owners, creditors, banks, finance institutions, Government, and other agencies. It is rightly called as a language of business.
Father of financial accounting:-Luca Pacioli (1447-1517), Italian mathematician and Franciscan friar.
Objectives of Accounting
- To maintain accounting records
- To calculate the result of operations
- To ascertain the financial position
- To communicate the information to users
Functions
- Identifying the business transactions
- Recording the business transactions in an orderly manner
- Classifying the business transactions
- Summarising the business transactions
- Analyzing the items of the profit and loss account
- Interpreting
- Communicating
- Financial accounting is often called:- the language of business
- Father of financial accounting:- Luca Pacioli
- According to the American Institute of Certified Public Accounts, accounting Involves:- Recording, Classifying, summarizing, and interpreting the financial data
- Not an objective of accounting:- To determine market share
- The first step in the accounting process:- is identifying the business transaction
- Interpretation of accounting information helps users to:- Make informed decisions
- Who is the internal user of accounting information:- Owners, Management, Employees & Trade unions
- External users of accounting information include:- Banks & Creditors
- Why do potential investors need accounting information:- To decide whether to invest in the business
- Which is not part of the accounting process:- Marketing
- Which user group evaluates business operations under regulatory legislation:- Regulatory agencies
- Which is not in the step of the accounting process:- Manufacturing
- Why does government use accounting information:- To assess the tax liabilities and ensure compliance
- The relationship between profit and loss items is established during which process:- Analyzing
1.Which of the following is not a financial statement?
- A) Balance Sheet
- B) Income Statement
- C) Cash Flow Statement
- D) Budget Report
- Answer: D) Budget Report
2.The primary objective of financial accounting is to:
- A) Provide information to internal users
- B) Provide information to external users
- C) Prepare budgets
- D) Control costs
- Answer: B) Provide information to external users
3.Which accounting principle requires that expenses be matched with revenues?
- A) Revenue Recognition Principle
- B) Matching Principle
- C) Cost Principle
- D) Full Disclosure Principle
- Answer: B) Matching Principle
4.Which of the following is an example of a current asset?
- A) Land
- B) Building
- C) Accounts Receivable
- D) Equipment
- Answer: C) Accounts Receivable
5.Which financial statement shows the financial position of a company at a specific point in time?
- A) Income Statement
- B) Statement of Retained Earnings
- C) Balance Sheet
- D) Cash Flow Statement
- Answer: C) Balance Sheet
6.Which of the following is not a characteristic of financial accounting information?
- A) Relevance
- B) Reliability
- C) Timeliness
- D) Subjectivity
- Answer: D) Subjectivity
7.Which principle states that revenue should be recognized when it is earned and realizable?
- A) Matching Principle
- B) Revenue Recognition Principle
- C) Cost Principle
- D) Consistency Principle
- Answer: B) Revenue Recognition Principle
8.Which of the following is considered a liability?
- A) Cash
- B) Inventory
- C) Accounts Payable
- D) Prepaid Expenses
- Answer: C) Accounts Payable
9.Which of the following is a non-current liability?
- A) Accounts Payable
- B) Short-term Loans
- C) Bonds Payable
- D) Inventory
- Answer: C) Bonds Payable
10.Which financial statement provides information about a company’s cash receipts and cash payments during an accounting period?
- A) Balance Sheet
- B) Income Statement
- C) Cash Flow Statement
- D) Statement of Retained Earnings
- Answer: C) Cash Flow Statement
11.Which of the following is an example of an intangible asset?
- A) Machinery
- B) Patents
- C) Inventory
- D) Land
- Answer: B) Patents
12.The principle that requires financial statements to be prepared with caution and to avoid overstatement of assets or income is known as:
- A) Consistency Principle
- B) Prudence Principle
- C) Matching Principle
- D) Revenue Recognition Principle
- Answer: B) Prudence Principle
13.Which of the following is not a component of the balance sheet?
- A) Assets
- B) Liabilities
- C) Equity
- D) Revenue
- Answer: D) Revenue
14.Which accounting concept states that a business will continue to operate indefinitely?
- A) Going Concern Concept
- B) Accrual Concept
- C) Consistency Concept
- D) Materiality Concept
- Answer: A) Going Concern Concept
15.Which of the following is an example of a financing activity in the cash flow statement?
- A) Purchase of Inventory
- B) Sale of Equipment
- C) Issuance of Shares
- D) Payment of Salaries
- Answer: C) Issuance of Shares
16.Which principle requires that financial information be complete, neutral, and free from error?
- A) Relevance Principle
- B) Reliability Principle
- C) Comparability Principle
- D) Faithful Representation Principle
- Answer: D) Faithful Representation Principle
17.Which of the following is an example of a current liability?
- A) Long-term Debt
- B) Accounts Payable
- C) Equipment
- D) Patents
- Answer: B) Accounts Payable
18.Which accounting principle requires that financial statements be prepared using the same methods and procedures from period to period?
- A) Consistency Principle
- B) Matching Principle
- C) Cost Principle
- D) Revenue Recognition Principle
- Answer: A) Consistency Principle
19.Which of the following is considered an operating activity in the cash flow statement?
- A) Issuance of Shares
- B) Purchase of Equipment
- C) Payment of Salaries
- D) Repayment of Loans
- Answer: C) Payment of Salaries
20.Which financial statement shows the profitability of a company over a specific period of time?
- A) Balance Sheet
- B) Income Statement
- C) Cash Flow Statement
- D) Statement of Retained Earnings
- Answer: B) Income Statement
21.Which of the following is not a qualitative characteristic of financial information?
- A) Relevance
- B) Reliability
- C) Comparability
- D) Materiality
- Answer: D) Materiality
22.Which principle requires that expenses be recognized in the same period as the revenues they help to generate?
- A) Revenue Recognition Principle
- B) Matching Principle
- C) Cost Principle
- D) Consistency Principle
- Answer: B) Matching Principle
23.Which of the following is an example of a financing activity?
- A) Payment of Dividends
- B) Purchase of Inventory
- C) Sale of Goods
- D) Payment of Rent
- Answer: A) Payment of Dividends
24.Which of the following is considered an asset?
- A) Accounts Payable
- B) Notes Payable
- C) Cash
- D) Accrued Expenses
- Answer: C) Cash
25.Which of the following is an example of a non-current asset?
- A) Cash
- B) Accounts Receivable
- C) Inventory
- D) Land
- Answer: D) Land
26.Which accounting principle requires that financial information be presented in a way that allows users to compare it with previous periods?
- A) Consistency Principle
- B) Comparability Principle
- C) Materiality Principle
- D) Prudence Principle
- Answer: B) Comparability Principle
27.Which of the following is considered an investing activity in the cash flow statement?
- A) Issuance of Shares
- B) Purchase of Equipment
- C) Payment of Dividends
- D) Payment of Salaries
- Answer: B) Purchase of Equipment
28.Which financial statement shows the changes in a company’s equity during an accounting period?
- A) Balance Sheet
- B) Income Statement
- C) Cash Flow Statement
- D) Statement of Retained Earnings
- Answer: D) Statement of Retained Earnings
29.Which of the following is not a component of the income statement?
- A) Revenue
- B) Expenses
- C) Assets
- D) Net Income
- Answer: C) Assets
30.Which principle requires that financial information be reported honestly and without bias?
- A) Relevance Principle
- B) Reliability Principle
- C) Faithful Representation Principle
- D) Consistency Principle
- Answer: C) Faithful Representation Principle
31.Which of the following is an example of a financing activity?
- A) Payment of Rent
- B) Sale of Goods
- C) Issuance of Bonds
- D) Purchase of Inventory
- Answer: C) Issuance of Bonds
32.Which of the following is considered a liability?
- A) Cash
- B) Inventory
- C) Notes Payable
- D) Prepaid Expenses
- Answer: C) Notes Payable
33.Which of the following is an example of a current asset?
- A) Land
- B) Building
- C) Inventory
- D) Equipment
- Answer: C) Inventory
34.Which accounting principle requires that financial statements be prepared with the assumption that the business will continue to operate indefinitely?
- A) Going Concern Principle
- B) Matching Principle
- C) Cost Principle
- D) Revenue Recognition Principle
- Answer: A) Going Concern Principle
35.Which of the following is considered an operating activity in the cash flow statement?
- A) Issuance of Bonds
- B) Purchase of Equipment
- C) Payment of Dividends
- D) Sale of Goods
- Answer: D) Sale of Goods
36.Which financial statement shows the financial performance of a company over a specific period of time?
- A) Balance Sheet
- B) Income Statement
- C) Cash Flow Statement
- D) Statement of Retained Earnings
- Answer: B) Income Statement
Which of the following is not a component of the cash flow statement?
- A) Operating Activities
- B) Investing Activities
- C) Financing Activities
- D) Equity Activities
- Answer: D) Equity Activities
36.Which principle requires that financial information be reported in a way that allows users to compare it with previous periods?
- A) Relevance Principle
- B) Comparability Principle
- C) Materiality Principle
- D) Prudence Principle
- Answer: B) Comparability Principle
37.Which of the following is an example of a financing activity?
- A) Payment of Rent
- B) Sale of Goods
- C) Issuance of Shares
- D) Purchase of Inventory
- Answer: C) Issuance of Shares
38.Which of the following is considered an asset?
- A) Accounts Payable
- B) Notes Payable
- C) Cash
- D) Accrued Expenses
- Answer: C) Cash
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