Practice ICAN financial accounting 2021 Past Questions

Question 1 View Details

Which of the following is NOT correct about the definition of assets?

A. Resources which an entity must control

Correct B. Resources which an entity must own

C. Resources which are expected to bring future benefits to an entity

D. Resources that their costs can be reliably measured

E. Resources for which liabilities arise from past events

Correct Answer: B

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Question 2 View Details

Inventories are recognised at the net realisable value when this is lower than the cost price in other to satisfy the ……….. principle

A. Matching

Correct B. Prudence

C. Accrual

D. Periodicity

E. Realisation

Correct Answer: B

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Question 3 View Details

Which of the following is checked against a waybill to ensure that the goods ordered are the ones supplied?

A. Good received note

B. Purchase invoice

C. Purchase order

D. Store Issue voucher

Correct E. Delivery note

Correct Answer: E

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Question 4 View Details

Which of the following is CORRECT in respect of cash discount?

A. Discount allowed is a deduction from trade payables

B. Discount received is a deduction from sales

Correct C. Discount columns in cash book form part of the double entry

D. The total amount of discount on the debit side of cash book is an income

E. The total amount of discount on the credit side of cash book is discount received

Correct Answer: C

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Question 5 View Details

A credit sale of N257,000 was recorded in the day book as ₦275,000. The effect is that

A. Assets, liabilities and equity are understated

B. Assets, liabilities and equity are overstated

C. Assets and liabilities are overstated; no effect on equity

Correct D. Assets and equity are overstated; no effect on liabilities

E. Equity and liabilities are understated; no effect on assets

Correct Answer: D

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Question 6 View Details

Which of the following is the effect of a reduction in allowances for doubtful receivables?

A. A reduction in gross profit

B. A reduction in profit for the period

C. A reduction in cash balance

Correct D. Increase in profit for the period

E. Increase in cash balance

Correct Answer: D

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Question 7 View Details

The bank balance in the books of Super on 1 April 2018 was ₦5,000,000 overdraft. The entity made a total payment of ₦13,116,300, the balance at 31 March 2019 was ₦8,145,600. How much cash was received by the entity during the year ended 31 March 2019?

Correct A. ₦ 9,970,700

B. ₦16,261,900

C. ₦18,116,300

D. ₦21,261,900

E. ₦26,261,900

Correct Answer: A

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Question 8 View Details

An entity purchased an equipment for ₦20,000. The equipment was transported at N86, installation cost was N125, abnormal waste of materials was N15,000 and training cost of staff on the use of the machine was N255. How much should be recorded as the initial cost of the equipment?

A. N20,000

B. ₦20,086

C. ₦20,125

Correct D. ₦20,211

E. ₦20,466

Correct Answer: D

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Question 9 View Details

Daoda purchased a piece of equipment for ₦930,000 on 1 September 2014. Depreciation was charged at 12.5% per annum on a straight-line basis from the date of purchase to 1 September 2018. The remaining useful life of the equipment was reviewed to 5 years at this date. The estimated residual value of the equipment was zero. Calculate the amount of depreciation charged to statement of profit or loss in respect of the equipment for the year ended 31 August 2019.

A. ₦ 23,250

B. ₦ 93,000

Correct C. ₦103,333

D. ₦104,625

E. ₦114,000

Correct Answer: C

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Question 10 View Details

A business proprietor failed to maintain proper records, but you managed to ascertain that his opening capital, closing capital and drawings during the year were N225,000, N260,000 and N10,000 respectively. How much will be the profit during the period?

Correct A. N45,000

B. N50,000

C. N270,000

D. N485,000

E. N495,000

Correct Answer: A

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Question 11 View Details

Ajani, Bala and Okon are in partnership sharing profit in ratio 5:4:2. During the period, the partnership made a profit of ₦18,200,000 after deducting partners’ salary and interests on capital. Ajani and Bala guaranteed Okon minimum share of profit of ₦3,800,000. How much is Ajani’s share of the profit?

A. N4,472,727

B. N6,400,000

Correct C. N6,618,181

D. N7,781,818

E. N8,000,000

Correct Answer: C

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Question 12 View Details

In which of the following situations is partners’ current accounts NOT required?

Correct A. First year of the partnership business

B. Dissolution of partnership

C. Change in partners’ profit sharing ratio

D. Admission of a partner

E. Retirement of a partner

Correct Answer: A

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Question 13 View Details

Which of the following is correct about the treatment of a partner with deficiency at the end of partnership dissolution? i. The partner may have to pay the whole deficiency ii. Insolvent partners’ deficiency is borne by the solvent partners in the last agreed capital iii. Insolvent partners’ deficiency is borne by the solvent partners in the profit or loss sharing ratio

A. I and II

B. II and III

C. I and III

Correct D. I, II and III

E. II

Correct Answer: D

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Question 14 View Details

The following information relates to Owuro Enterprises \( \begin{array}{lr} & \text{₦} \\ \text{Opening inventory} & 124,000 \\ \text{Closing inventory} & 96,000 \\ \text{Purchases} & 2,972,100 \\ \text{Profit margin is 5%} & \end{array} \) What is the gross profit for the period?

A. ₦119,555

Correct B. ₦127,400

C. ₦150,005

D. ₦154,847

E. ₦157,900

Correct Answer: B

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Question 15 View Details

In accordance with IASS, IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, which of the following is considered changes in accounting estimates? i. Changing the useful life of an asset ii. Changing from cost model to revaluation model iii. Change in the allowances for doubtful receivables iv. Change from FIFO to weighted average for valuation of inventory

Correct A. I and II

B. I and III

C. II and III

D. II and IV

E. III and IV

Correct Answer: A

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Question 16 View Details

Which of the following is NOT required to be disclosed under IAS 2, Inventory?

A. Accounting policies adopted for measurement of inventory

Correct B. Physical count of inventory at the end of the period

C. Amount of inventories recognised as expense during the period

D. Carrying amount of inventories pledged as security for liabilities

E. Carrying amount of inventories carried at fair value less cost of sale

Correct Answer: B

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Question 17 View Details

When the statement of comprehensive income is prepared using nature of expenses method, the following information is disclosed, EXCEPT

Correct A. Gross profit

B. Changes in inventories of finished goods

C. Employee benefit expenses

D. Depreciation and amortisation expenses

E. Raw materials and consumables used

Correct Answer: A

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Question 18 View Details

The following information relates to a limited liability company. --------------------------------------------------------- Authorised share capital of ₦650,000 of ₦0.50 each. Issued and paid up capital of N376,000 Share premium of N234,000 The company paid dividends of 16 kobo per share --------------------------------------------------------- Calculate the total dividends paid

A. N 30,000

B. ₦ 52,000

Correct C. ₦104,000

D. ₦120,320

E. ₦208,000

Correct Answer: C

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Question 19 View Details

In preparing the profit or loss account of a sole trader, which of the following is deducted from goods available for sale to arrive at cost of sales? i. Inventory sold ii. Closing inventory iii. Lost inventory iv. Inventory withdrawn by owner

A. I and II

B. II and III

C. II and IV

Correct D. I, II and III

E. II, III and IV

Correct Answer: D

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Question 20 View Details

Rent received in advance is i. Credit balance in rent account ii. Current asset in the statement of financial position iii. Liability in the statement of financial position iv. Debit balance in the rent account

Correct A. I and II

B. I and III

C. II and II

D. II and IV

E. III and IV

Correct Answer: A

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Question 1 View Details

Requirements

(a)

Briefly explain the following fundamental accounting concepts used in the preparation of financial statements in accordance with IAS 1 – Presentation of financial statement i. Going concern (2 Marks) ii. Consistency of presentation (2 Marks) iii. Accrual (2 Marks) iv. Fair presentation (2 Marks) v. Substance over form (2 Marks) vi. Prudence (2 Marks) vii. Materiality (2 Marks)

(b)

i. What is accounting standards? (2 Marks) ii. Explain the purpose of accounting standards (4 Marks)

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Question 2 View Details

The following is a summary of the cash book of Babagana Limited for the month of March 2019. \(\begin{array}{lrlr} & \text{₦'000} & & \text{₦'000} \\ \text{Receipts} & 22,035 & \text{Balance b/f} & 18,415 \\ \text{Balance c/d} & \underline{8,310} & \text{Payments} & \underline{11,930} \\ & \underline{\mathbf{30,345}} & & \underline{\mathbf{30,345}} \end{array}\) All receipts are banked and payments made by cheque. On investigation, you discovered that: (i) Bank charges of N2,040,000 entered on the bank statement had not been entered in the cash book. (ii) Cheques drawn amounting to N4,005,000 had not been presented to the bank for payment. (iii) Cheques received amounting to N11,430,000 had been entered in the cash book and paid into the bank, but had not been credited by the bank until April, 2019. (iv) A cheque for N330,000 had been wrongly entered as a receipt in the cash book. (v) A cheque drawn had been overstated by N375,000. (vi) A cheque of N1,200,000 received had been returned by the bank. No adjustment had been made in the cash book. (vii) All dividends receivable are credited directly to the bank account. During March 2019, amounts totalling N930,000 were credited by the bank and no entries were made in the cash book. (viii) A cheque drawn for N90,000 had been incorrectly entered in the cash book as N990,000.\n(ix) The bank statement as at 31 March 2019 showed an overdraft of N17,430,000. \(Required:\)

Requirements

(i)

The adjustments required in the cash book (5 Marks) ii. Starting with balance as per bank statement, prepare a bank reconciliation statement as at March 31, 2019. (5 Marks)

(b)

b. A book keeper extracted a trial balance and found that the credit side total exceeded the debit side by N5,500,000 and this amount was posted to a suspense account. It was subsequently discovered that the difference was caused by the following errors: (a) Sale of goods valued at N4,000,000 to F. Lola was posted to Felix Chukwu’s account (b) A purchase valued at N1,000,000 from Bada was posted to the debit of his account (c) Sales returns book was undercast by N5,000,000 (d) Petty cash balance of N500,000 was omitted from the trial balance (e) Cost of repairing plant N2,250,000 was charged to plant account as N200,000 You are required to prepare journal entries to rectify the errors. (10 Marks)

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Question 3 View Details

The following information was extracted from the books of Super Limited as at 1 July 2018 \( \begin{array}{lr} & \text{₦} \\ \text{Cost:} & \\ \quad \text{Property cost} & 6,000,000 \\ \quad \text{Plant and machinery} & 2,419,000 \\ \quad \text{Motor vehicles} & 585,000 \\ \text{Accumulated depreciation:} & \\ \quad \text{Property} & 1,200,000 \\ \quad \text{Plant and machinery} & 687,000 \\ \quad \text{Motor vehicles} & 210,000 \end{array} \) During the year ended 30 June 2019, the following transactions took place: (i) Additions to plant amounted to ₦231,000 (ii) Plant which cost ₦415,500 with accumulated depreciation of ₦293,000 was sold for ₦129,000. (iii) The company bought a new car costing ₦61,500 and was given in a part- exchange allowance against an old car at a value of ₦15,871. The car that was being part exchanged originally cost ₦55,548 and had accumulated depreciation of ₦39,536. (iv) Depreciation is charged on PPE at the following rates: Property 2% per annum straight line Plant 20% per annum straight line Motor vehicles 25% per annum reducing balance \(Required:\)

Requirements

(a)

Calculate the gain or loss on disposal of plant and the old car.(5 Marks)

(b)

Show the disclosure (Schedule of movement) under IAS 16 -Property, Plant and Equipment in relation to the non-current assets for the year ended 30 June 2019. (15 Marks)

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Question 4 View Details

Wakanda is an African-focused company in the sales of super-tech wrist watches with corporate logos. The wrist watches are purchased and sold in bulk on credit. The accountant is currently carrying out a reconciliation of the payables and receivables ledger control account balances which are N218,320,000 and N172,120,000 respectively to the total of the balances on the individual accounts in the payables and receivables ledgers, which are N197,660,000 and N156,134,000 respectively for the month of March 2019. The following has been detected: (i) Cash received of N1,070,000 has been debited to the individual customer's account in the accounts receivable ledger. (ii) The total of discount received for the month, amounting to ₦17,150,000 has not been entered in the control account but has been entered in the individual ledger accounts. (iii) On listing-out, a supplier credit balance of ₦2,050,000 has been incorrectly treated as a debit. (iv) A cheque for ₦2,555,000 from a customer has been dishonoured. The correct double entry has been posted but the individual accounts have not been updated. (v) A petty cash payment to a supplier amounting to ₦630,000 has been correctly treated in the control account, but no entry has been made in the supplier's individual ledger account. (vi) A payment of ₦322,000 from a customer has been incorrectly entered in the accounts receivable ledger as ₦233,000. (vii) The purchases day book total for March has been undercast (understated) by ₦20,000,000. (viii) Total credit sales of ₦4,500,000 to an accountancy firm, TQ and Associates have been posted correctly to the ledger account but not recorded in the control account. (ix) Contras (set-offs) with the receivables ledger, amounting in the total to ₦20,040,000, have been correctly treated in the individual ledger accounts but no entry has been made in the control account. (x) Discounts allowed totalling N120,000 has not been entered in the control account. \(Required:\)

Requirements

(a)

Prepare the Trade payable ledger control account and reconcile this to the sum total of the individual accounts in the trade payable ledger. (10 Marks)

(b)

Prepare the Trade receivable ledger control account and reconcile this to the sum total of the individual accounts in the trade receivable ledger. (10 Marks)

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Question 5 View Details

Requirements

(a)

The nature and structure of business entities determine largely their accounting systems and processes. On the basis of the above, you are required to explain seven advantages of a limited liability company over a sole proprietorship business. (14 Marks)

(b)

Outline FOUR uses of source documents in the process of producing financial information. (6 Marks)

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ICAN 2021 Financial Accounting | Mixed

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

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