Practice ICAN financial accounting 2023 Past Questions

Question 1 View Details

Which of the following is the sequence of the accounting processes?

Correct A. Identifying, recording, summarising and communicating financial information

B. Identifying, summarising, recording and communicating financial information.

C. Communicating, identifying, summarising and recording financial information

D. Communicating, recording and identifying financial information

E. Summarisng, identifying, recording and communicating financial information

Correct Answer: A

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Question 2 View Details

Which of the following is a measurement basis for the elements of financial statement when a company is NOT a going concern?

A. Historical cost

B. Current cost

Correct C. Realisable value

D. Present value

E. Value in use

Correct Answer: C

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Question 3 View Details

Which of the following is NOT a component of financial statements under IFRS?

A. Statement of financial position

B. Statement of profit or loss and other comprehensive income

C. Statement of changes in equity

D. Statement of cashflow

Correct E. Statement of affairs

Correct Answer: E

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Question 4 View Details

Double entry rule is expressed as

Correct A. Debit the receiver, credit the giver

B. Debit the giver, credit the receiver

C. Debit the receiver, credit the bank/cash account

D. Debit the bank/cash account, credit the giver

E. Debit the amount paid, credit the amount received

Correct Answer: A

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Question 5 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. Determine the profit for the period

A. N25,000

Correct B. N45,000

C. N55,000

D. N65,000

E. N75,000

Correct Answer: B

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Question 6 View Details

Shade Olu Enterprise had N182,000 allowances for receivables at the beginning of the period. At the end of the year the receivables balance was N2,956,000 and an estimate of doubtful receivables allowance of 5% was made on this amount. What adjustment should be made in the statement of profit or loss?

A. Increase in profit by N34,200

Correct B. A charge of N34,200 to profit or loss

C. A charge of N147,800 to profit or loss

D. Increase in profit by N182,000

E. A charge of N216,200 to profit or loss

Correct Answer: B

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Question 7 View Details

The bank statement of a trader shows a debit balance before reconciliation with the cash book balance. Which of the following transactions will reduce the balance when necessary adjustments are completed?

A. Dividends received directly by the bank on behalf of the trader

B. Outstanding deposits

C. Unpresented cheques

D. Error committed in the cash book of the trader

Correct E. Dishonoured cheques

Correct Answer: E

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Question 8 View Details

When is depreciation on property, plant and equipment required to start in accordance with IAS 16?

A. At the date the asset was purchased

B. When payment to the vendor are completed

C. When the assets are put to use by the management

Correct D. When the assets are available for use

E. After employees are trained on the use of the assets

Correct Answer: D

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Question 9 View Details

Which of the following is NOT considered in the determination of the useful life of a non-current asset?

A. Wear and tear due to erosion and rust

B. Change in technology

C. Time factor

Correct D. Inflation

E. Usage

Correct Answer: D

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Question 10 View Details

Shark and Co. purchased a piece of equipment for N960,000 on September 1, 2016. Depreciation was charged at 12.5% per annum on a straight-line with zero residual value. Depreciation is charged from acquisition date to disposal date. The equipment was sold for N315,000 on June 30, 2022. Calculate the profit or loss on disposal.

A. N45,000 Gain

B. N45,000 Loss

C. N50,000 Gain

Correct D. N55,000 Gain

E. N55,000 Loss

Correct Answer: D

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Question 11 View Details

Saka, Bako and Sule are in partnership sharing profits or losses in ratio 3:2:1 During the year the partnership divisible profit was N17,730,000. Saka but not Bako guaranteed Sule a minimum share of profit of N3,800,000. Calculate the share of profit of Saka.

A. N5,850,900

B. N6,965,000

C. N8,000,000

Correct D. N8,020,000

E. N8,865,000

Correct Answer: D

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Question 12 View Details

Which of the following adjustments is required to remove goodwill from the books of partnership business, when a new partner is admitted?

A. Debit capital accounts of all partners in new profit sharing ratio, credit goodwill account

Correct B. Debit capital accounts of old partners in old profit sharing ratio, credit goodwill account

C. Debit capital accounts of old partners in old profit sharing ratio, credit capital accounts of all partners in new profit sharing ratio.

D. Debit capital accounts of all partners in new profit sharing ratio, credit old partners‟ capital accounts in old profit sharing ratio.

E. Credit capital accounts of all partners in new profit sharing ratio, credit cash

Correct Answer: B

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Question 13 View Details

In a partnership that maintains fixed capital accounts, which of the following transactions will increase partners‟ capital account balance? I. Profit on revaluation II. Partners‟ drawings III. Partners‟ share of goodwill IV. Loan advanced to the business by a partner

A. I and II

Correct B. I and III

C. II and IV

D. I and IV

E. I, III and IV

Correct Answer: B

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Question 14 View Details

The following information relates to Phoenix and Co \(\begin{array}{lrr} & & \text{₦} \\ \text{Opening inventory} & & 125,000 \\ \text{Closing inventory} & & 96,000 \\ \text{Sales} & 8,913,300 & \\ \text{Mark-up is 10%.} & & \end{array}\) Determine the cost of sales for the period

A. N7,002,970

B. N8,050,970

C. N8,074,000

Correct D. N8,103,000

E. N8,132,000

Correct Answer: D

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Question 15 View Details

In the process of drawing up financial statements, adjustments are made for prepaid expenses and accrued expenses in order to comply with which of the following fundamental accounting concept?

Correct A. Matching

B. Prudency

C. Aggregation

D. Duality

E. Consistency

Correct Answer: A

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Question 16 View Details

The accounting principle that requires financial statements information to be supported by evidence other than someone‟s opinion or imagination is known as

A. Consistency

B. Prudence

C. Accrual

D. Aggregation

Correct E. Objectivity

Correct Answer: E

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Question 17 View Details

Which of the following must be recognised on the face of the statement of profit or loss, classified by function of expenses? I. Depreciation II. Tax charge III. Dividends IV. Finance charges

A. I and II

B. II and III

Correct C. I and IV

D. II and IV

E. III and IV

Correct Answer: C

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Question 18 View Details

Which of the following account is created to achieve a temporary agreement of the final balance or other self-balancing ledgers?

A. Total payables account

B. Total receivables account

Correct C. Suspense account

D. Adjustment account

E. Journal

Correct Answer: C

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Question 19 View Details

A company‟s tax liability at the beginning of the year was N420,000, current tax for the year was N850,000, The tax charged for the previous year was Under estimated by N14,200. During the year a tax of N428,000 was paid by the company. How much tax should be charged to the statement of profit or loss for the year?

A. N413,800

B. N422,200

C. N835,800

D. N856,200

Correct E. N864,200

Correct Answer: E

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Question 20 View Details

The difference between the assets and liabilities of a not-for-profit organisaiton is called

A. Net asset

B. Net liability

Correct C. Accumulated fund

D. Working capital

E. Net capital

Correct Answer: C

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Question 1 View Details

It was discovered on December 31, 2016, Baruwa Limited had receivables balance of N15,000,000. It was discovered, before the preparation of that final accounts, that a customer owing N3,000,000 would not be able to settle such debts. It is the policy of Baruwa Limited to make allowances for doubtful receivables of 5% of all outstanding receivables at the end of each accounting period. During the accounting year of 2017, the company made a total credit sales of N19,600,000 out of which an amount of N11,000,000 was collected from customers. A court declared a customer who owes the company an amount of N1,700,000 bankrupt in August 2017. The company recorded some cheques amounting to N3,500,000 that were dishonoured. The company recorded N30,000,000 and N17,000,000 in connection with cash and credit sales respectively in the year 2018. The company received N25,000,000 from trade receivables and also showed N13,400,000 as the outstanding balance on the sales ledger account. A cheque was received from the customer whose debt was written-off in 2016 in full settlement of his debt. You are required to post and balance the following accounts:

Requirements

(a)

Trade receivables

(b)

Bad debts

(c)

Allowances for doubtful receivables

(d)

Extract of the statement of financial position at the end of each financial period.

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Question 2 View Details

Samu PLC is a listed company. The following financial statements of the company are available: \( \begin{array}{lrr} \text{Statement of profit or loss for the year ended December 31, 2018.} & & \\ & & \text{₦'m} \\ \text{Revenue} & & 6,740 \\ \text{Cost of sales} & & (4,840) \\ \text{Gross profit} & & 1,900 \\ \text{Income from investment property} & & 60 \\ \text{Distribution costs} & & (120) \\ \text{Administrative expenses} & & (350) \\ \text{Finance costs} & & (50) \\ \text{Profit before tax} & & 1,440 \\ \text{Income tax expense} & & (160) \\ \text{Profit after expense for the year} & & 1,280 \\ & & \\ \text{Statement of financial position as at December 31} & & \\ & 2018 & 2017 \\ \text{Non-current assets (Note i):} & \text{₦'m} & \text{₦'m} \\ \text{Plant and equipment} & 2,880 & 1,860 \\ \text{Investment property} & 420 & 400 \\ \text{Current assets:} & & \\ \text{Inventory} & 1,210 & 810 \\ \text{Trade receivables} & 480 & 590 \\ \text{Bank} & 1,010 & - \\ \text{Total assets} & 6,000 & 3,660 \\ & & \\ \text{Equity:} & & \\ \text{Equity share capital of ₦0.50} & 2,000 & 600 \\ \text{Share premium} & 750 & 50 \\ \text{Retained earnings} & 1,440 & 1,310 \\ \text{Non- current liabilities:} & & \\ \text{8\% Loan notes} & 250 & 430 \\ \text{Current liabilities:} & & \\ \text{Trade payables} & 1,410 & 1,050 \\ \text{Bank overdraft} & \text{Nil} & 120 \\ \text{Income tax payable} & 150 & 100 \\ & 6,000 & 3,660 \end{array} \) The following additional information is available: (i) An item of plant with a carrying amount of N240million was sold at a loss of N90million during the year. Depreciation of N280 million was charged on property, plant and equipment in the year ended December 31, 2018. There was no sales of investment property during the year. (ii) Part of the 8% loan notes were redeemed during the year. (iii) There was an issue of shares for cash on June 1, 2018. (iv) Dividend was paid on September 1, 2018. \(Required:\) Prepare a statement of cash flows for Samu PLC for the year ended December 31, 2018 in accordance with IAS 7 Statement of cash flows, using indirect method.

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Question 3 View Details

Requirements

(a)

Identify and discuss the FOUR measurement bases for elements of financial statements, as contained in the International Accounting Standard Board‟s (IASB‟s) Conceptual Framework for Financing Reporting.

(b)

IAS 8, deals with the measurement, recognition and disclosure of accounting policies, changes in accounting estimates and correction of prior period errors Required: i. Define an accounting policy and change in accounting estimates, with TWO examples each.

(ii)

Outline the accounting treatments required to record a change in accounting estimates.

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Question 4 View Details

Lag and Kase were in partnership. Their first year of operation ended on December 31, 2018. On January 01, 2018, Lag made a cash contribution of N96,000,000 and a motor car valued at N28,000,000. The car cost N45,000,000 few years ago when it was purchased. Kase contributed N84,000,000 cash. The partnership constitution spelt out the following: (1) Profit or loss sharing ratio shall be Lag 3, Kase 2 (2) Interest on capital shall be 8% per annum (3) Interest on drawings shall be 6% per annum (4) A salary of N16,000,000 per annum shall be paid to Kase who is an active partner. During the year ended December 31, 2018, the business made a net profit of N58,000,000 before any appropriation and interest on 10% N40,000,000 loan advanced by Lag to the business. Drawings during the year were Lag N15,000,000 and Kase N18,000,000. You are required to prepare the following accounts in the book of the partnership.

Requirements

(a)

Profit or loss appropriation accounts for the year ended December 31, 2018.

(b)

The partners' current accounts and capital accounts for the year ended December 31, 2018.

(c)

The statement of financial position (extract) as at December 31, 2018.

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Question 5 View Details

Requirements

(a)

Write up a two-column cash book from the following details and balance off as at the end of the month. January 1 Started business with capital N1,000,000 cash January 2 Paid rent of N100,000 cash January 3 I.K. Opara lent N5,000,000 by cheque January 4 Ebenezer was paid by cheque N650,000 January 5 Cash sales N980,000 January 7 Ileri paid us cheque, N620,000 Cash sales, N530,000 Received cash of N650,000 from Robert January 9 Paid George N220,000 cash January 16 Took N500 out of the cash till and paid into the bank account. January 19 I.K. Opara was repaid N1,000,000 by cheque January 22 Cash sales paid directly to the bank N600,000 January 26 Motor expenses of N120,000 was paid by cheque January 30 N1,000,000 cash was withdrawn from bank for business use January 31 Paid wages of N970,000 by cash.

(b)

i. Explain the uses of the Journal.

(ii)

The following transactions took place in the books of Olson Limited in June, 2019: • A machine is bought on credit from Sylva Enterprises for N186,000 on June 1. • A motor vehicle is sold to Adefela on credit for N360,000 on June 8. • Wonu a customer owed N160,000. She offers a motor in full settlement of the debt on June 16 and the offer was accepted. • Akinola is a creditor. On June 25, his business was taken over by Akinlade Ventures, to which the debt of N45,000 is now to be paid. Required: Prepare the journal entries to record the transactions, including narrations.

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ICAN 2023 Financial Accounting | Mixed

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