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Exam Paper for Financial Accounting in BBA
PAPER # 1
**Instructions:**
* Answer all questions
...

* Write your answers in the space provided
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**Question 2:**
What are the three main financial statements?
**Answer:**

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The three main financial statements are the balance sheet, income
statement, and statement of cash flows
...

* The income statement shows the revenues, expenses, and profits or losses
of an entity for a specific period of time
...

**Question 3:**
What are the two main types of assets?
**Answer:**
The two main types of assets are current assets and non-current assets
...
Examples of current assets include cash, accounts
receivable, inventory, and prepaid expenses
...
Examples of non-current assets include
property, plant, and equipment, investments, and intangible assets
...

* Current liabilities are liabilities that are due to be paid within one year
...

* Non-current liabilities are liabilities that are due to be paid over a period of
more than one year
...

**Question 5:**
What is the accounting equation?
**Answer:**
The accounting equation is Assets = Liabilities + Equity
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**Question 6:**

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What are the four main types of transactions?
**Answer:**
The four main types of transactions are asset transactions, liability
transactions, equity transactions, and revenue transactions
...

Examples of asset transactions include purchases, sales, and depreciation
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Examples of liability transactions include borrowing money and paying off
debts
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Examples of equity transactions include issuing shares of stock and declaring
dividends
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Examples of revenue transactions include selling goods and services
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The debit side of a transaction represents an increase in an asset or a
decrease in a liability or equity
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**Question 8:**
What is the trial balance?
**Answer:**
The trial balance is a list of all the accounts in a ledger, with their debit and
credit balances
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**Question 9:**
What is an adjusting journal entry?
**Answer:**
An adjusting journal entry is an entry made at the end of an accounting
period to record transactions that have not yet been recorded in the general
ledger
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**Question 10:**
What is the closing journal entry?
**Answer:**
A closing journal entry is an entry made at the end of an accounting period
to transfer the balances of the temporary accounts to the permanent
accounts
...
Permanent accounts are accounts that are used
to record the assets, liabilities, and equity of the entity
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What are the main objectives of financial accounting? Explain with
examples
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The main objectives of financial accounting are:

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- To record the financial transactions of a business in a systematic and
accurate manner
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- To facilitate decision making, planning and control by providing relevant,
reliable, comparable and timely information
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For example, financial accounting helps a business to:
- Prepare financial statements such as income statement, balance sheet and
cash flow statement that show the results of operations, financial position
and cash flows of a business for a given period
...

- Communicate the financial information to external users such as
shareholders, lenders, customers, suppliers, government agencies, etc
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- Evaluate the performance of different segments, products, divisions, etc
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- Fulfill the obligations of taxation, auditing, corporate governance, social
responsibility, etc
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Q2
...
The differences between accrual basis and cash basis of accounting are:
- Accrual basis of accounting recognizes revenues when they are earned and
expenses when they are incurred, regardless of when cash is received or
paid
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- Accrual basis of accounting matches revenues and expenses with the
period in which they relate and reflects the true income and expenses of a
business for a given period
...

- Accrual basis of accounting follows the generally accepted accounting
principles (GAAP) and is required for financial accounting by most
businesses
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Accrual basis of accounting is more suitable for financial accounting
because:
- It provides a more accurate and complete picture of the financial
performance and position of a business for a given period
...

- It complies with the expectations and requirements of the external users of
financial information such as investors, creditors, regulators, etc
...
What are the main components of an income statement? Explain their
meaning and calculation with examples
...
The main components of an income statement are:
- Revenues: The inflows of economic benefits from the ordinary activities of
a business such as sales of goods or services,
interest income, dividend income, etc
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- Gross profit: The difference between revenues
and cost
of goods sold
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- Operating profit: The difference between gross profit
and operating expenses
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- Net profit: The difference between operating profit
and non-operating items such as interest expense,
interest income,

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tax expense,
etc
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For example,
| Revenues | Expenses | Gross Profit | Operating Profit | Net Profit |
|----------|----------|--------------|------------------|------------|
| 1000

| 600

| 400

| 300

| 250

|

This means that:
- The business earned 1000 units from selling goods or services,
received interest income
of 50 units
and paid interest expense
of 100 units
in a given period
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- The business made 400 units
of gross profit,
300 units
of operating profit
and 250 units
of net profit
in a given period
...
What are the main components of a balance sheet? Explain their
meaning and calculation with examples
...
The main components of a balance sheet are:
- Assets: The resources controlled by a business that have future economic
benefits such as cash, inventory, accounts receivable, property, plant and
equipment, intangible assets, etc
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- Equity: The residual interest of the owners in the assets of a business after
deducting the liabilities such as share capital, retained earnings, reserves,
etc
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- The business has 800 units
of liabilities
such as 300 units
of accounts payable,

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|

200 units
of bank loans,
100 units
of bonds payable,
and 200 units
of deferred tax liabilities
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Q5
...
(10 marks)
A5
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- Cash flows from investing activities: The cash inflows and outflows from
the acquisition and disposal of long-term assets such as property, plant and
equipment, intangible assets, investments, etc
...

The cash flow statement shows the changes in the cash balance of a
business for a given period and follows the equation:
Change in cash = Cash flows from operating activities + Cash flows from
investing activities + Cash flows from financing activities
For example,
| Cash flows from operating activities | Cash flows from investing activities |
Cash flows from financing activities | Change in cash |
|-------------------------------------|-------------------------------------|------------------------------------|----------------|
| 300
150

| -100
|

This means that:
- The business generated 300 units
of cash
from its operating activities
such as receiving 1000 units
from customers,
paying 600 units

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| -50

|

to suppliers,
paying 100 units
in salaries,
and paying 50 units
in taxes
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- The business used 50 units
of cash
for its financing activities
such as issuing 100 units
of shares,
repaying 100 units
of loans,
and paying 50 units
of dividends
...


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KEYWORDS:
1
...
BBA Exam Paper
3
...
Financial Accounting Questions
5
...
BBA Accounting
7
...
Financial Accounting Assessment
9
...
BBA Coursework
11
...
Financial Statements Test
13
...
BBA Degree
15
...
Accounting Study Guide
17
...
Financial Accounting Concepts
19
...
BBA Program

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* Financial accounting
* Accounting principles
* Debit and credit
* Journal entries
* Ledger
* Trial balance
* Balance sheet
* Income statement
* Statement of cash flows
* Accruals and deferrals
* Depreciation
* Ratio analysis
* Auditing
* Business law
* Taxation
* Cost accounting
* Managerial accounting
* Corporate finance
* Investment analysis

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