Practice ICAN financial accounting 2022 Past Questions

Question 1 View Details

The document that accompanies goods returned by a customer to a supplier is called

Correct A. Credit note

B. Debit note

C. Invoice

D. Payment voucher

E. Receipt

Correct Answer: A

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Question 2 View Details

When a proprietor of a business withdraws cash from the organisation for private use, the proper postings are

A. Cash account (DR) Drawings account (CR)

B. Drawings account (DR) Capital account (CR)

C. Bank account (DR) Drawings account (CR)

Correct D. Drawings account (DR) Cash account (CR)

E. Bank account (DR) Cash account (CR)

Correct Answer: D

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Question 3 View Details

Use the following information to answer questions 3 and 4
An item of plant was purchased for N300,000 on January 1, 2017, its expected useful life
was estimated to be ten years with nil residual value. The asset was depreciated on a
straight-line basis. However, a review on December 31, 2018 showed that arising from
technological changes, the useful life of the plant is only five years in total and therefore,
the plant has a remaining useful life of three years.

The of adjustment, under IAS 8 as described in the scenario above is a

Correct A. Change in accounting estimate

B. Change in accounting policy

C. Correction of error

D. Retrospective adjustment

E. Reclassification of non-current asset

Correct Answer: A

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Question 4 View Details

What is the amount of depreciation charged in 2018?

A. ₦30,000

B. ₦52,500

Correct C. ₦60,000

D. ₦67,500

E. ₦80,000

Correct Answer: C

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Question 5 View Details

If the opening and closing inventories of an entity are ₦34,565 and ₦41,222 respectively, and the cost of sales is ₦160,545. How much is purchases?

A. ₦119,323

B. ₦153,888

Correct C. ₦167,202

D. ₦201,767

E. ₦236,332

Correct Answer: C

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Question 6 View Details

Which of the following accounting records serves as both a book of original entry and a ledger?

A. Sales day book

B. Purchases sales book

C. Returns inwards book

D. General ledger

Correct E. Cash book

Correct Answer: E

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Question 7 View Details

Habib Limited decided to treat ten stapling machines it acquired for ₦15,000 as expenses in its books. What principle of accounting did Habib rely on in this treatment?

A. Aggregation

Correct B. Materiality

C. Going concern

D. Offsetting

E. Substance over form

Correct Answer: B

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Question 8 View Details

Owen PLC issued 140,000 shares of ₦20 each at a price of ₦120 per share and the issue cost was ₦2,000,000. What is the balance in the share premium account at the end of this transaction?

A. ₦12,000,000

B. ₦12,800,000

Correct C. ₦14,000,000

D. ₦16,000,000

E. ₦16,800,000

Correct Answer: C

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Question 9 View Details

If an entity paid ₦1,750,000 to its employees, how is the amount classified in the statement of cashflows?

A. Cash inflows from operating activities

B. Cash inflows from investing activities

C. Cash outflows from financing activities

Correct D. Cash outflows from operating activities

E. Cash outflows from investing activities

Correct Answer: D

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Question 10 View Details

An equipment was paid for on January 16, 2015, delivered on January 16, 2016, kept in store till January 16, 2017, commissioned January 16, 2018 and was put into use on January 16, 2019. The entity’s accounting date is December 31. Which date should depreciation commence on this equipment?

A. January 16, 2015

B. January 16, 2016

C. January 16, 2017

Correct D. January 16, 2018

E. January 16, 2019

Correct Answer: D

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Question 11 View Details

As part of the initial investment, a partner contributed office equipment that originally cost N20,000,000 and on which accumulated depreciation of N12,500,000 had been recorded. If the partners agree on a valuation of N9,000,000 for the equipment, what amount should be debited to the office equipment account?

A. N7,500,000

Correct B. N9,000,000

C. N9,500,000

D. N12,500,000

E. N20,000,000

Correct Answer: B

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Question 12 View Details

One of the basic roles of accounting is to

A. Detect fraud

B. Audit financial statements

Correct C. Measure performance

D. Protect shareholders

E. Protect stakeholders

Correct Answer: C

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Question 13 View Details

Which of the following transactions result in an increase in cash of the business?

A. Drawings from the business

B. Payment for a new asset

Correct C. Proceeds from disposal of non-current asset

D. Payment to a supplier

E. Goods sold on credit to customers

Correct Answer: C

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Question 14 View Details

Which of the following can be regarded as an error in book-keeping?

A. Intentional correct posting in the ledger

B. Intentional failure to record transactions completely

C. A deliberate manipulation of records

Correct D. Incorrect records and oversights that are not intended

E. Double entry posting in the ledger

Correct Answer: D

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Question 15 View Details

Which of the following bank reconciliation items should NOT be added or subtracted from the cash book balance to determine the adjusted bank balance?

A. Bank service charges

Correct B. Unpresented cheques

C. Direct transfers

D. Cash book errors

E. Value added tax charges

Correct Answer: B

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Question 16 View Details

Use the following information to answer questions 16 and 17. 

\(\begin{array}{lr} & \text{₦}'\text{000} \\ \text{Sales} & 1,378,650 \\ \text{Opening inventory} & 98,800 \\ \text{Purchases} & 706,000 \\ \text{Carriage inwards} & 17,500 \\ \text{Cost of goods sold} & 740,700 \\ \text{Operating expenses} & 526,000 \\ \text{Discount received} & 9,650 \end{array}\)

Calculate the gross profit for the period

A. N535,650,000

B. N543,450,000

Correct C. N637,950,000

D. N647,600,000

E. N699,000,000

Correct Answer: C

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Question 17 View Details

What is the closing inventory for the period?

A. N69,300,000

Correct B. N81,200,000

C. N81,600,000

D. N104,400,000

E. N108,000,000

Correct Answer: B

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Question 18 View Details

A company bought an equipment worth N200,000 and the equipment is to be depreciated at 5%, using the reducing balance method. What would be the value of the asset after 3 years?

A. N170,000

Correct B. N171,475

C. N180,505

D. N190,000

E. N200,000

Correct Answer: B

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Question 19 View Details

The principal function of a sales ledger control account is to

A. Serve as external check and provide quick information for the preparation of interim financial statements

Correct B. Serve as internal check and provide quick information for the preparation of interim financial statements

C. Check sales fraud

D. Provide quick information for the control of salesmen’s activities

E. Provide quick information for the preparation of customer’s statements

Correct Answer: B

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Question 20 View Details

A credit balance on a receipts and payments account of a not-for-profit organisation indicates that the entity

A. Has excess cash in the bank

Correct B. Received more cash than it paid out during the period

C. Made more cash payments than received during the period

D. Had more revenue than expenses during the period

E. Did not owe much liabilities during the period

Correct Answer: B

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Question 1 View Details

Requirements

(a)

a) In accordance with IAS 1 – Presentation of Financial Statements, state the components of financial statements

(b)

The following trial balance has been extracted from the books of Wazobia PLC as at December 31, 2020. \(\begin{array}{l r r} & \begin{array}{r}\text{Dr} \\ \text{₦000}\end{array} & \begin{array}{r}\text{Cr} \\ \text{₦000}\end{array} \\ \text{Accruals} & & 4,002 \\ \text{Administrative expenses} & 65,990 & \\ \text{24\% bank loan repayable 2023} & & 50,000 \\ \text{Cash at bank} & 4,207 & \\ \text{Distribution costs} & 84,235 & \\ \text{Interest} & 6,000 & \\ \text{Inventories at January 1, 2020} & 73,735 & \\ \text{Property, plant and equipment (PPE) at cost} & 603,950 & \\ \text{Accumulated depreciation on PPE} & & 238,932 \\ \text{Purchases} & 279,168 & \\ \text{Retained earnings} & & 207,410 \\ \text{Revenue} & & 531,611 \\ \text{Share capital} & & 100,000 \\ \text{Share premium} & & 46,875 \\ \text{Trade payables} & & 23,253 \\ \text{Trade receivables} & \underline{84,798} & \\ & \underline{\mathbf{1,202,083}} & \underline{\mathbf{1,202,083}} \end{array}\) Additional information (i) The share capital of the company consists of ordinary shares with nominal value of ₦1 each. (ii) The revenue figure in the trial balance includes sales of N29,502,000 made on credit on January 1, 2021. (iii) The inventories at the close of business on December 31, 2020 cost ₦78,815,000. Included in the figure were inventories that cost ₦4,500,000 but which could be sold for only ₦1,688,000. (iv) Electricity bills of ₦1,472,000 relating to December 2020 were not included in the trial balance as the invoice was received after the year end. (v) Interest on the bank loan for the last six months of the year was not included in the trial balance. (vi) The company income tax charge for the year were calculated as ₦12,702,000. You are required to prepare: (i) Statement of profit or loss and other comprehensive income of Wazobia PLC for the year ended December 31, 2020 (6 Marks) (ii)Statement of financial position at December 31, 2020 (8 Marks)

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Question 2 View Details

Requirements

(a)

List FOUR general requirements of IAS 16 – Property, Plant and Equipment, as regards depreciation.

(b)

The following cost items are extracted from the books of Ore Limited regarding a machine acquired on June 1, 2020: \(\begin{array}{l r} & \textbf{₦} \\ \text{Clearing cost} & 6,000 \\ ~~~~\text{Installation and testing charge} & 24,000 \\ \text{Purchase price} & 600,000 \\ ~~~~\text{Purchase of spare parts inclusive of VAT at 7.5%} & 6,400 \\ \text{Additional information:} & \\ \text{Rebate is provided at 5% of maintenance cost of ₦44,600} & \end{array}\) Required: Compute the initial cost of the machine.

(c)

(c) On January 1, 2017, Jos Limited acquired a motor vehicle for ₦4,500,000. The estimated useful life of the motor vehicle is four years and its residual value at the end of the useful life is ₦300,000. Required: Calculate the depreciation charged for the first two years using: (i) The straight-line method (4 Marks) (ii) Reducing balance method (4 Marks)

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Question 3 View Details

Amaka runs a pharmaceutical shop. She does not keep complete accounting records. The following summary were extracted from her bank account for the year ended December 31, 2020. \(\begin{array}{lrlr} & \text{₦} & & \text{₦} \\ \text{Balance b/d} & 907,500 & \text{Payment to trade suppliers} & 10,316,375 \\ \quad \text{Cheques from customers} & 17,817,250 & \text{Electricity} & 408,750 \\ \text{Cash sales} & 1,470,375 & \text{Telephone} & 135,000 \\ & & \text{Rent} & 810,000 \\ & & & \\ & & \text{Advertising} & 536,250 \\ & & \text{Furniture and fittings} & 1,956,250 \\ & & \text{Insurance} & 354,750 \\ & & \text{Motor vehicle expenses} & 793,500 \\ & & \text{Drawings} & 2,278,625 \\ & & \text{Balance b/d} & \underline{2,605,625} \\ & \overline{20,195,125} & & \underline{\mathbf{20,195,125}} \end{array}\) All cash and cheques were paid into the bank immediately after each transaction. The following information on the business activities were made available by the proprietor. \(\begin{array}{lrr} & \text{January 1, 2020} & \text{December 31, 2020} \\ & \text{₦} & \text{₦} \\ \text{Inventory of Drugs} & 1,200,000 & 1,523,625 \\ \text{Trade receivables} & 991,125 & 1,504,500 \\ \text{Trade payables} & 599,250 & 916,875 \\ \text{Motor vehicles} & 2,912,500 & \\ \text{Shop fittings} & 1,575,000 & \\ \text{Motor vehicle expenses owing} & 162,000 & 109,125 \\ \text{Insurance paid in advance} & & 66,375 \text{ } \end{array}\) Depreciation of motor vehicles is at 20% per annum and the furniture and fittings is at 10% per annum. Depreciation is calculated using the reducing balance method. \(Required:\)

Requirements

(a)

Calculate sales and purchases for the year ended December 31, 2020

(b)

Prepare the statement of profit or loss for the year to December 31, 2020

(c)

Prepare the statement of financial position as at December 31, 2020.

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Question 4 View Details

Requirements

(a)

Rivers Limited has trade receivables of ₦1,922,000 on April 1, 2020. At the end of its accounting year on March 31, 2021, sales on credit were ₦6,247,000, receipts from customers were ₦6,297,000 and bad debts written off were ₦172,000. In addition, Rivers Limited has a policy of providing 2% allowances on its trade receivables. You are required to prepare: (i) Receivables control account (ii) Allowances for doubtful debt

(b)

The following are the business transactions of Alhaji Aberuagba for the month of June 2020. June 1 Balances brought forward: Cash N9,700, Bank N218,600 June 2 The amount due from customers were R. Hausa N100,000, C. KolaN28,000, P. Peters N18,000, R. Chinwe N60,000. June 3 Cash sales paid directly into the bank N13,400 June 5 Paid rent by cash N8,800 June 6 The gross amounts, due to the following suppliers, were paid by cheque after deducting 2½% discount: J. Charles N40,000, H. Salam N64,000, D. Craig N20,000. Cheques were issued to pay these amounts less 2½% discount. June 8 Withdrew cash from the bank for business use N25,000 June 10 Cash sales N20,600 June 12 D. Kehinde paid his account of N8,900 by cheque less N200 cash discount June 14 Paid wages by cash N254,000. June 16 Paid the following accounts by cheque: L Lucas N11,700 less cash discount N6,000, D. Fisher N20,600 less cash discount N800. June 20 Bought fixtures by cheque N800,000 June 24 Bought motor van and paid by cheque N716,600 June 29 Received N16,900 cheque from D. Sanni June 30 Cash sales N116,000 Required: Record the above transactions in a three-column cashbook

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Question 5 View Details

Jaja is a sole trader. The trial balance extracted from the balances below, as at March 31, 2021 failed to agree. \( \begin{array}{lr} & \text{₦}'\text{000} \\ \text{Sales} & 71,130 \\ \text{Sales returns} & 2,100 \\ \text{Purchases} & 22,150 \\ \text{Expenses} & 10,710 \\ \text{Non-current assets} & 22,750 \\ \text{Discounts allowed} & 740 \\ \text{VAT liability} & 6,320 \\ \text{Payables} & 14,840 \\ \text{Receivables} & 52,850 \\ \text{Bank overdraft} & 3,140 \\ \text{Capital as at April 1, 2020} & 12,500 \end{array} \) A detailed examination of the books was undertaken, and the following errors were discovered: (i) The total in the purchases day book was N42,150,000 while the figure used when posting to the purchases account was N22,150,000. (ii) An invoice from a supplier for goods to the value of N8,500,000 was omitted from the books. (iii) During the bank reconciliation process, it was revealed that N105,140,000 earned as interest during the year was not accounted for. (iv) Sales returns of N1,560,000 was treated correctly in the customer’s account but credited to the sales returns account as N560,000. (v) A review of the ledgers revealed that receivables were overcast by N29,830,000 (vi) Cash drawings by Jaja of N2,170,000 was credited as cash sales in error. \(\text{You are required to prepare: }\)

Requirements

(a)

Trial balance of Jaja as at March 31, 2021 and derive the balance in the suspense account as at that date.

(b)

Journal entries, with the appropriate narration, necessary to correct the above errors.

(c)

Suspense account

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ICAN 2022 Financial Accounting | Mixed

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Detailed Essay Solution & Marking Scheme Available

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Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

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Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

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