ICAN 2025 Financial Accounting | Mixed

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Question 1
Using the double entry principle, describe the effect of goods purchased on credit
Correct A. Increase in both inventory and payables
B. Increase in both inventory and cash
C. Increase in both payables and cash
D. Reduction in inventory and increase in payables
E. Reduction in payables and increase in inventory

Correct Answer: A

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Question 2
Which of the following documents is NOT issued by the supplier to the customer?
A. Delivery note
B. Sales invoice
C. Account statements
Correct D. Sales order
E. Credit notes

Correct Answer: D

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Question 3
In accordance with the IASB Conceptual Framework for Financial Reporting, an asset is defined as
Correct A. A present economic resource controlled by the entity as a result of past events
B. The entity’s right to receive income or reduce expenses in future
C. An economic resource owned by the entity, from which future economic benefits is expected to flow to the entity
D. The future economic benefits that is expected to flow to an entity from a physical object
E. An economic resource controlled by the entity as a result of future events from which future economic benefits is expected to flow to the entity

Correct Answer: A

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Question 4
What measurement basis is used when an entity sells an asset at its estimated selling price less the estimated cost to sell.?
A. Value-in-use
B. Present value
C. Current cost
Correct D. Net realisable value
E. Fair value

Correct Answer: D

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Question 5
Which of the following is NOT a capital expenditure?
A. Upgrading a warehouse
B. Investing in a fleet of vehicles for transportation services
Correct C. Repair of factory truck
D. Installation cost for office computer systems
E. Purchase of copyright

Correct Answer: C

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Question 6
Which of the following is a capital receipt?
A. Interest receivable from investment
B. Cash received from customer
C. Fees receivable for provision of services
D. Rent received from letting out a building
Correct E. Loan received from the bank

Correct Answer: E

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Question 7
A repair of equipment of ₦50,000 was posted in error to equipment account. What is the effect on the trial balance and profit for the year?
A. No effect Overstated
B. No effect Understated
C. Debit side is understated Overstated
Correct D. Credit side is overstated Understated
E. Credit side is understated No effect

Correct Answer: D

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Question 8
Which of the following option(s) is/are correct according to IAS 1-Presentation of Financial Statements?
A. I only
B. II only

Correct Answer:

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Question 9
In accordance with IAS 8, which of the following is a change in accounting policy?
A. Adding more years to the original estimated useful life of plant
Correct B. Disclosing interest paid under cash flow from operating activities instead of its previous treatment under cash flow from financing activities
C. Writing down inventories to its net realisable value when it is lower than the cost
D. Applying a policy to a new set of circumstances
E. Adjusting the value of trade receivables as a result of a customer being declared bankrupt

Correct Answer: B

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Question 10
The cost of an asset less its residual value is referred to as
A. Useful life
Correct B. Depreciable amount
C. Carrying amount
D. Expired cost
E. Depreciation

Correct Answer: B

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Question 11
In which of the following statement(s) will a user find information on the financial performance and changes in them over some years?
A. I only
B. II only
C. III only
D. I and II
Correct E. I, II & III

Correct Answer: E

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Question 12
The invoice issued to a customer by a company, showed the retail price of ₦400,000 less trade discount of ₦2,000. The double entry for the transaction in the company‟s books is
Correct A. Debit receivables account with ₦398,000; credit sales account with ₦398,000
B. Debit purchases account with ₦398,000; credit payables account with ₦398,000
C. Debit receivables and discount allowed accounts with ₦398,000 and ₦2,000 respectively; credit sales account with ₦400,000
D. Debit purchases account with ₦400,000; credit payables and discount received accounts with ₦398,000 and ₦2,000 respectively
E. Debit cash with ₦398,000 and credit payables account with ₦398,000

Correct Answer: A

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Question 13
A company took a loan of ₦500,000 on January 1, 2023 payable in ten annual instalments, commencing from December 31, 2023. How much of the loan is non-current as at December 31, 2025?
A. ₦150,000
B. ₦200,000
Correct C. ₦300,000
D. ₦350,000
E. ₦450,000

Correct Answer: C

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Question 14
On completing the dissolution of partnership accounts, what does the debit balance in a partner‟s capital account represent?
Correct A. Amount owed to the other partners
B. Amount due from the other partners
C. Share of realisation gain
D. Profit of the partner
E. Loan advanced to the partnership by a partner

Correct Answer: A

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Question 15
The statement that shows the performance of a social club for a period is called
A. Statement of financial position
B. Statement of profit or loss
C. Receipts and payments account
D. Accumulated fund account
Correct E. Income and expenditure account

Correct Answer: E

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Question 16
The following information relates to Irede Enterprises ₦ Trade receivables b/f 124,000 Cash received from customers 3,400,000 Set off with payables 5,000 Discount allowed 50,000 Trade receivables c/f 131,000 How much is the credit sales for the period?
A. ₦3,200,000
B. ₦3,352,000
Correct C. ₦3,448,000
D. ₦3,462,000
E. ₦3,531,000

Correct Answer: C

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Question 17
A firm with year end of December 31, received office rent of ₦1,800,000 on January 1, 2024 in advance for one year and six months. What is the double entry for the transaction at the end of the year?
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Question 18
Which of the following will NOT be recorded in receivables control account?
Correct A. Irrecoverable debts
B. Increase in allowances for doubtful receivables
C. Set off with payables control account
D. Discount allowed
E. Cash received from credit customers

Correct Answer: A

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Question 19
The carrying amount of property, plant and equipment, (PPE) in the book of Morie Limited was ₦675,000. Thereafter, equipment which had cost ₦127,000 was sold for ₦75,000 at a gain of ₦12,000. What is the adjusted carrying amount of the PPE?
A. ₦548,000
Correct B. ₦560,000
C. ₦600,000
D. ₦612,000
E. ₦623,000

Correct Answer: B

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Question 20
Which of the following options will reduce the share premium account?
A. I & II
B. I& III
Correct C. II & III
D. II& IV
E. III & IV

Correct Answer: C

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Question 1
Define recognition and derecognition; (2 Marks)
Requirements
(b)
Discuss the type of records that a company can maintain in a blockchain and state TWO benefits of making use of the blockchain technology. (8 Marks)
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Question 2
The statement of profit or loss for the year ended March 31, 2025. (4 Marks)
Additional Information
Trial balance as at March 31, 2025 Debit Credit ₦’000 ₦’000 Building at cost 120,500 Equipment at cost 26,500 Motor vehicles at cost 17,200 Accumulated depreciation March 31, 2025: -Building 5,545 -Equipment 26,500 -Motor vehicles 17,200 Profits from operations 14,885 Inventory, March 31, 2025 27,220 Bank current account 8,400 Trade payables 11,370 Bank deposits 25,000 Interest received from bank deposits 27,220 Share premium 8,400 Ordinary shares of ₦1 each 85,000 Ordinary dividends paid 3,500 Preference dividends paid 2,000 10% loan notes 30,000 Loan interest 1,500 Receivables 19,300 Allowances for doubtful receivables, March 31, 2025 3,500 10% preference shares 20,000 Retained earnings, April 1, 2024 251,120
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Question 3
Explain the nature of the supplier statement and the importance of maintaining individual supplier‟s account. (4 Marks)
Requirements
(b)
Prepare the supplier reconciliation statement. (4 Marks)
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Question 4
Define property, plant and equipment in accordance with IAS 16. (4 Marks)
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Question 5
Explain the term inventories, giving examples, in accordance with IAS 2. (5 Marks)
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