ACCOUNTING PRINCIPLES EXAM PAPER 2: 40 QUESTIONS
WITH FULL ANSWERS AND DETAILED RATIONALES
(INTERMEDIATE LEVEL REVISION & PRACTICE PACK)
Introduction
This Accounting Principles Exam Paper 2 is designed to build on foundational
knowledge and develop students’ understanding of more applied accounting
concepts. It focuses on financial statement preparation, adjustments, accruals,
prepayments, depreciation, and interpretation of financial data. The paper
strengthens analytical and problem-solving skills required in accounting
examinations.
Instructions
• Answer ALL questions in all sections
• Show all working for calculations
• Choose the correct option for multiple-choice questions
• Use correct accounting terminology
• All workings must be clearly shown
• Time allowed: As per examination conditions
• Total marks: 100
SECTION A: MULTIPLE CHOICE QUESTIONS (15 MARKS)
1. Accounting is best defined as:
A. Recording only cash transactions
B. Measuring and communicating financial information
C. Managing business operations
D. Selling goods and services
Answer B
Rationale: Accounting involves recording, classifying, and communicating
financial information for decision-making.
, 2. The accounting equation is:
A. Assets = Revenue – Expenses
B. Assets = Liabilities + Equity
C. Assets = Cash + Profit
D. Liabilities = Assets + Equity
Answer B
Rationale: The accounting equation shows that assets are financed by
liabilities and equity.
3. Double-entry accounting means:
A. One entry per transaction
B. Two accounts are affected
C. Cash only transactions
D. No balancing required
Answer B
Rationale: Every transaction affects at least two accounts to maintain
balance.
4. An asset is:
A. A future obligation
B. A resource controlled by a business
C. Owner withdrawal
D. Business expense
Answer B
Rationale: Assets provide future economic benefits to the business.
5. Liabilities are:
A. Owner investments
B. Business debts
C. Business income
D. Expenses
Answer B
Rationale: Liabilities are amounts owed by the business to outsiders.
WITH FULL ANSWERS AND DETAILED RATIONALES
(INTERMEDIATE LEVEL REVISION & PRACTICE PACK)
Introduction
This Accounting Principles Exam Paper 2 is designed to build on foundational
knowledge and develop students’ understanding of more applied accounting
concepts. It focuses on financial statement preparation, adjustments, accruals,
prepayments, depreciation, and interpretation of financial data. The paper
strengthens analytical and problem-solving skills required in accounting
examinations.
Instructions
• Answer ALL questions in all sections
• Show all working for calculations
• Choose the correct option for multiple-choice questions
• Use correct accounting terminology
• All workings must be clearly shown
• Time allowed: As per examination conditions
• Total marks: 100
SECTION A: MULTIPLE CHOICE QUESTIONS (15 MARKS)
1. Accounting is best defined as:
A. Recording only cash transactions
B. Measuring and communicating financial information
C. Managing business operations
D. Selling goods and services
Answer B
Rationale: Accounting involves recording, classifying, and communicating
financial information for decision-making.
, 2. The accounting equation is:
A. Assets = Revenue – Expenses
B. Assets = Liabilities + Equity
C. Assets = Cash + Profit
D. Liabilities = Assets + Equity
Answer B
Rationale: The accounting equation shows that assets are financed by
liabilities and equity.
3. Double-entry accounting means:
A. One entry per transaction
B. Two accounts are affected
C. Cash only transactions
D. No balancing required
Answer B
Rationale: Every transaction affects at least two accounts to maintain
balance.
4. An asset is:
A. A future obligation
B. A resource controlled by a business
C. Owner withdrawal
D. Business expense
Answer B
Rationale: Assets provide future economic benefits to the business.
5. Liabilities are:
A. Owner investments
B. Business debts
C. Business income
D. Expenses
Answer B
Rationale: Liabilities are amounts owed by the business to outsiders.
