Practice ICAN financial accounting 2025 Past Questions

Question 1 View Details

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 View Details

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 View Details

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 View Details

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 View Details

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 View Details

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 View Details

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?

Correct A. No effect (Trial balance) Overstated (Profit for the year)

B. No effect (Trial balance) Understated (Profit for the year)

C. Debit side is understated (Trial balance) Overstated (Profit for the year)

D. Credit side is overstated (Trial balance) Understated (Profit for the year)

E. Credit side is understated (Trial balance) No effect (Profit for the year)

Correct Answer: A

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Question 8 View Details

Which of the following option(s) is/are correct according to IAS 1-Presentation of Financial Statements? i. All financial statements are prepared using the accrual basis ii. Profit or loss is the total of income less expenses iii. Measuring assets net of its allowances is not an offsetting

A. I only

B. II only

Correct C. II and III

D. I and II

E. I and III

Correct Answer: C

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Question 9 View Details

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 View Details

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 View Details

In which of the following statement(s) will a user find information on the financial performance and changes in them over some years? i. Statement of financial position ii. Statement of profit or loss iii. Statement of cash flows

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 View Details

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 View Details

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 View Details

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 View Details

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 View Details

The following information relates to Irede Enterprises \( \begin{array}{lr} & \text{₦} \\ \text{Trade receivables b/f} & 124,000 \\ \text{Cash received from customers} & 3,400,000 \\ \text{Set off with payables} & 5,000 \\ \text{Discount allowed} & 50,000 \\ \text{Trade receivables c/f} & 131,000 \end{array} \) How much is the credit sales for the period?

A. ₦3,200,000

B. ₦3,352,000

C. ₦3,448,000

Correct D. ₦3,462,000

E. ₦3,531,000

Correct Answer: D

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Question 17 View Details

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?

A. Debit bank with ₦1,800,000 and credit profit or loss with ₦1,800,000

B. Debit profit or loss with ₦1,200,000 and unearned rental income with ₦600,000; credit bank with ₦1,800,000

C. Debit bank with ₦1,800,000; credit profit or loss with ₦600,000 and rental income with ₦1,200,000

D. Debit profit or loss with ₦600,000 unearned and rental income with ₦1,200,000; credit bank with ₦1,800,000

Correct E. Debit bank with ₦1,800,000; credit profit or loss with ₦1,200,000 and unearned rental income with ₦600,000

Correct Answer: E

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Question 18 View Details

Which of the following will NOT be recorded in receivables control account?

A. Irrecoverable debts

Correct 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: B

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Question 19 View Details

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

B. ₦560,000

C. ₦600,000

Correct D. ₦612,000

E. ₦623,000

Correct Answer: D

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Question 20 View Details

Which of the following options will reduce the share premium account? i. Bonus issue ii. Cost of issuing new shares iii. Rights issue iv. Cash dividends paid to ordinary shareholders.

Correct A. I & II

B. I& III

C. II & III

D. II& IV

E. III & IV

Correct Answer: A

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Question 1 View Details

Requirements

(a)

The IASB Conceptual Framework for Financial Reporting gives guidance on the criteria that an item must meet to be recognised or derecognised in the financial statements. Within the context of the Conceptual Framework for Financial Reporting, you are required to: i. Define recognition and derecognition; (2 Marks) ii. Explain the criteria the elements of financial statements must meet to be recognised; and (6 Marks) iii. Outline the processes for the recognition of the elements of financial statements. (4 Marks)

(i) Define recognition and derecognition; (2 Marks)

(ii) Explain the criteria the elements of financial statements must meet to be recognised; and (6 Marks)

(iii) Outline the processes for the recognition of the elements of financial statements. (4 Marks)

(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 View Details

(a) Identify the books of prime entry the following transactions, using a tabular format: i. Fixed amount paid weekly to employees to buy credit cards for data; ii. Opening entries in the ledger accounts; iii. Invoice sent to a customer; iv. Office equipment purchased on credit; v. Transport expenses paid to marketing staff for local running; vi. Transfer of balances from one account to another; vii. Goods returned to a supplier; viii. Carriage inwards on goods meant for resale; ix. Settlement of debt by exchange of motor vehicle; and x. Early settlement of discount received. (b) \( \begin{array}{lrr} \text{In the books of Morire Limited} & & \\ \text{Trial balance as at March 31, 2025} & & \\ & \text{Debit} & \text{Credit} \\ & \text{₦'000} & \text{₦'000} \\ \text{Building at cost} & 120,500 & \\ \text{Equipment at cost} & 26,500 & \\ \text{Motor vehicles at cost} & 17,200 & \\ \text{Accumulated depreciation March 31, 2025:} & & \\ \text{-Building} & & 5,545 \\ \text{-Equipment} & & 26,500 \\ \text{-Motor vehicles} & & 17,200 \\ \text{Profits from operations} & & 14,885 \\ \text{Inventory, March 31, 2025} & 27,220 & \\ \text{Bank current account} & 8,400 & \\ \text{Trade payables} & & 11,370 \\ \text{Bank deposits} & 25,000 & \\ \text{Interest received from bank deposits} & & 27,220 \\ \text{Share premium} & & 8,400 \\ \text{Ordinary shares of ₦1 each} & & 85,000 \\ \text{Ordinary dividends paid} & 3,500 & \\ \text{Preference dividends paid} & 2,000 & \\ \text{10\% loan notes} & & 30,000 \\ \text{Loan interest} & 1,500 & \\ \text{Receivables} & 19,300 & \\ \text{Allowances for doubtful receivables, March 31,} & & \\ \text{2025} & & 3,500 \\ \text{10\% preference shares} & & 20,000 \\ \text{Retained earnings, April 1, 2024} & & 1,500 \\ & \overline{\mathbf{251,120}} & \overline{\mathbf{251,120}} \end{array} \) Additional information 1. Accrued loan interest is ₦1,500,000. 2. Estimate of income tax is ₦5,000,000. 3. Preference shares is treated as debt instrument. 4. The company wishes to maintain the bank deposits for the next three years. 5. Interests on deposits are transferred to entity‟s bank current account. You are required to prepare the following: i. The statement of profit or loss for the year ended March 31, 2025. (4 Marks) ii. The statement of changes in equity for the year ended March 31, 2025. (3 Marks) iii. The statement of financial position as at March 31, 2025. (8 Marks)

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Question 3 View Details

a. Entities need to carry out reconciliations with individual suppliers as obtainable in bank reconciliation. Required: i. Explain the nature of the supplier statement and the importance of maintaining individual supplier‟s account. (4 Marks) ii. State FOUR reasons why there might be differences between the balance in the accounting records of an entity and the supplier statement. (2 Marks) b. On October 31, 2024 Gbajo Limited receives a statement from a supplier showing a balance of ₦185,000. On checking the payable ledger account for the supplier, the balance is shown to be ₦140,806. Investigation reveals the following:  A recent payment of ₦20,519 has not been recorded by the supplier.  An invoice for ₦35,975 has not been recorded in the payables ledger account.  A credit note for ₦12,300 has not been recorded in the payables ledger account. Required: Prepare the supplier reconciliation statement. (4 Marks) c. Akwete Enterprises purchased goods on credit from suppliers. The entity maintains control accounts. While preparing the accounts for the year ended October 31, 2023, the accountant discovered that the total of the personal balances with the supplier amounts to N1,455,725, while the purchases ledger control account balance was ₦1,610,780. On investigation, the following errors were discovered:  A contra item of ₦53,997 with the customer had not been entered in the control account.  Returns outwards of ₦151,200 had not been included in the control account.  Payment to a supplier by standing order amounting to ₦129,600 had been omitted from the records.  A balance of ₦21,384 due to a supplier had been included in the list of balances as ₦23,184.  A debit balance of ₦53,352 on a supplier‟s account had been included as a credit balance  A discount of ₦57,600 allowed to Kamoru had been correctly recorded in the books. When Kamoru eventually paid, a corresponding amount was entered in the discount received column and the double entry was completed.  A receivable balance of ₦642 had been credited in the purchases ledger control account.  Sales invoice of ₦28,860 had been entered in the purchases day book. Required: i. Make the necessary postings in the purchases control account as at November 1, 2023. (4 Marks) ii. Reconcile the adjusted purchases ledger control account balance with the list of personal account balances.

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Question 4 View Details

a. IAS 16-Property, Plant and Equipment sets out the measurement and recognition criteria on property, plant and equipment. Required: i. Define property, plant and equipment in accordance with IAS 16. (4 Marks) ii. State the recognition criteria for items of property, plant and equipment. (2 Marks) b. In June 2022, Bibiire Limited acquired an old building for the construction of their factory building. The construction of the building took about two years to complete. \( \begin{array}{lr} \text{Costs relating to the factory were as follows:} & \\ & \text{₦'000} \\ \text{Purchase of old building for site} & 196,000 \\ \text{Demolition of the old building} & 15,600 \\ \text{Stamp duties and legal cost on the land purchased} & 17,640 \\ \text{Cost of materials used at the site} & 254,000 \\ \text{Costs paid to contractors and other experts on the building} & 284,640 \\ \text{Costs incurred by expert due to errors on his original design} & 8,760 \\ \text{Costs of construction staff} & 84,000 \\ \text{Costs of planning permit paid to the relevant government agencies} & 48,020 \\ \text{Cost of management time apportioned to the project} & 21,560 \\ \text{Tendering and procurement cost} & 4,900 \\ \text{Rectification of part of building due to contractor's error} & 12,740 \\ \text{Cost of transferring staff files and other office equipment to the new} & 30,269 \\ \text{factory} & \\ \text{Publicity cost of opening the factory} & 21,740 \end{array} \) Notes: The company decided to use cost model for the building and estimated its expected useful life to be 50 years with expected residual value of ₦18,500,000 at the end of its useful life. Required: i. Compute the total costs to be capitalised in respect of the building. (8 Marks) ii. State why some of the costs should be expensed. (2 Marks) iii. Compute the depreciable amount of the building. (4 Marks)

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Question 5 View Details

a. IAS 2 provides guidance on how to determine the costs of inventories, the subsequent recognition of the costs and the formulae that are used to assign costs to inventories. Required: i. Explain the term inventories, giving examples, in accordance with IAS 2. (5 Marks) ii. State the elements of costs that should be included in the measurement of inventories. (3 Marks) b. The following information relates to the three different products P, Q and R of Oba Limited as at the year ended September 30, 2023.  Product P was made according to the specification of a customer at a cost of ₦128,400 but the customer went bankrupt, hence it became difficult to sell. The product was delivered to an agent for sale at a delivery cost of ₦13,320. The agent is expected to sell it for ₦180,000 and will receive 5% commission on the selling price.  The cost of Product Q is ₦79,200. The Product has been damaged but it can be repaired at a cost of ₦12,600 after which it is expected to be sold for ₦82,500.  Product R cost ₦112,500. The product normally sells for ₦144,400 but it has been badly damaged due to flood. A customer has agreed to buy the product for ₦58,600. Required: i. Calculate the amount at which the inventories should be included in the statement of financial position as at September 30, 2023. (8 Marks) ii. Determine the total amount written down on the inventories. (2 Marks) iii. Explain how the total amount written down on the inventories will be accounted for in the financial statements. (2 Marks)

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ICAN 2025 Financial Accounting | Mixed

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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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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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