Practice ICAN financial accounting 2026 Past Questions

Question 1 View Details

Which of the following principles indicates that an entity will use its assets for their intended purpose rather than for sale?

A. Materiality

Correct B. Going concern

C. Periodicity

D. Prudence

Correct Answer: B

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Question 2 View Details

Which data structure is commonly used in financial accounting to store and manage chart of accounts, including account numbers, names and types?

A. Binary Search Tree

B. Graph

Correct C. Hash Table

D. Linked List

Correct Answer: C

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Question 3 View Details

Which of the following statements is NOT true regarding bad debt written-off?

Correct A. Recorded as a liability

B. Recorded when the debt is deemed uncollectible

C. Reduces net income

D. Does not affect cost of sales

Correct Answer: A

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Question 4 View Details

Which of these is the primary application of Artificial Intelligence (AI) in accounting?

Correct A. Automating repetitive tasks such as data entry and reconciliation

B. Enhancing financial reporting through application of Excel

C. Replacing accountants with automated systems

D. Managing complex financial forecasting without human input

Correct Answer: A

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Question 5 View Details

Which of the following are capital expenditures? I. Cost incurred on a motor car for resale II. Cost incurred which improves production quality of an asset III. Cost incurred which reduces future operating expenses IV. Cost incurred on annual painting of factory building

A. I and II

Correct B. II and III

C. II and IV

D. II, III and IV

Correct Answer: B

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Question 6 View Details

Determine the gross profit of an entity that does not keep proper accounting records, from the following information; Opening inventory N670,000 Purchases N8,400,000 Closing inventory N570,000 All sales are made at a mark-up of 20%

A. N1,417,000

B. N1,654,000

Correct C. N1,700,000

D. N2,125,000

Correct Answer: C

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Question 7 View Details

A company produces tables for sale. A table that cost the company N165,000 got damaged in a flood. This type of table usually sells for N250,000 but it is now expected to be sold for N171,000. At what amount should the table be valued?

A. N79,000

B. N85,000

C. N165,000

Correct D. N171,000

Correct Answer: D

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Question 8 View Details

What accounting entry is passed for dissolution expenses during the winding up of a partnership?

Correct A. Debit realisation account and credit cash account

B. Debit payables account and credit cash account

C. Debit cash account and credit realisation account

D. Debit realisation account and credit payables account

Correct Answer: A

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Question 9 View Details

What type of error is committed when a payment is recorded to the wrong supplier's account?

A. Error of principle

B. Error of compensation

Correct C. Error of commission

D. Error of original entry

Correct Answer: C

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Question 10 View Details

What is a key responsibility of directors regarding financial statements?

A. Preparing and analysing financial statements

Correct B. Ensuring compliance with accounting frameworks

C. Providing direction to management on daily operations of the entity

D. Managing cash flows

Correct Answer: B

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Question 11 View Details

When an accountant evaluates their own prior judgments or conclusions, which ethical principle is compromised?

A. Familiarity threat

B. Self-interest threat

C. Intimidation threat

Correct D. Self-review threat

Correct Answer: D

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Question 12 View Details

A recognised intangible asset is amortised over its useful life, EXCEPT

A. The pattern of consumption of the economic benefit of the asset is not reliably determinable

B. The life of the asset is determined to be finite

C. The precise length of the asset’s life is not known

Correct D. The life of the asset is indefinite

Correct Answer: D

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Question 13 View Details

What is the primary purpose of an impairment test?

A. To determine the asset's recoverable value

B. To ensure that the asset's fair value less costs to sell does not exceed its value in use

C. To recognise the asset at its recoverable amount when it exceeds its carrying amount

Correct D. To assess whether the asset's carrying amount exceeds its recoverable amount

Correct Answer: D

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Question 14 View Details

According to IAS 37 “Accounting for Provisions, Contingent Liabilities and Contingent Assets”, which of the following is NOT a criterion for recognising a provision?

A. Presence of a constructive obligation

B. Presence of a current obligation

Correct C. Expectation of future operating losses

D. Ability to make a reliable estimate

Correct Answer: C

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Question 15 View Details

How should a bank classify interest receivable on loans and a hospitality company classify interest receivable on a bond investment, under IFRS 18 “Presentation and Disclosures in Financial Statements”?

A. (Bank) Operating | (Hospitality company ) Financing

Correct B. (Bank) Operating | (Hospitality company ) Investing

C. (Bank) Financing | (Hospitality company ) Operating

D. (Bank) Investing | (Hospitality company ) Operating

Correct Answer: B

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Question 16 View Details

An entity purchased goods on credit, during the last month of its reporting period for N750,000. During the month, the entity sold 50% of the goods for N450,000 cash and 35% of the goods on credit for N490,000. Determine the current assets to be recognised at the reporting date.

A. N562,500

B. N602,500

Correct C. N940,000

D. N1,052,500

Correct Answer: C

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Question 17 View Details

What are the primary distinctions between revenue/expense and gain/loss in financial reporting? I. Revenue and expenses relate to primary business activities, while gains and losses relate to incidental transactions II. Revenue and expenses are reported on gross basis, while gains and losses are reported on net basis III. Revenue and expenses are accounted for using accrual basis, while gains and losses are accounted for using cash basis IV. Revenue and expenses are reported on the statement of profit or loss, while gains and losses are reported on the other comprehensive income

Correct A. I and II

B. I and III

C. II and IV

D. I and IV

Correct Answer: A

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Question 18 View Details

Which of the following is NOT a transaction with owners of a company in their capacity as owners?

A. Issue of ordinary shares

Correct B. Issue of redeemable preference shares

C. Scrip issue

D. Payment of dividends

Correct Answer: B

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Question 19 View Details

Which of the following is NOT true about the accounting process?

Correct A. The financial accounting system follows standards and regulations that do not permit estimations

B. Business activities can be classified into operating activities, investing activities and financing activities

C. Companies classify financial transactions to five elements

D. The core accounting process revolves around the basic accounting equation

Correct Answer: A

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Question 20 View Details

Goods that cost N706,490, VAT inclusive, were returned by an entity to the supplier. VAT is at the rate of 7.5% What is the double entry for the transaction in the books of the buyer?

A. Debit purchases returns N657,200 and VAT N49,290; credit supplier’s account N706,490

B. Debit purchases returns N657,200 and VAT N53,987; credit supplier’s account N706,490

Correct C. Debit supplier’s account N706,490; credit purchases returns N657,200 and VAT N49,290

D. Debit supplier’s account N706,490; credit purchases returns N653,503 and VAT N53,987

Correct Answer: C

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Question 1 View Details

QUESTION 1

Requirements

(a)

Ayedara Limited is a medium-sized manufacturing company in Nigeria. The company's management is preparing the financial statements for the year ended September 30, 2025. \(Required:\) i. Explain the primary objective of the general-purpose financial statements? ii. What is the nature of the reporting entity in this scenario and what are its implications for financial reporting? iii. Briefly explain how the financial statements achieve the objective of providing useful financial information to stakeholders.

(b)

Bright Enterprises is a growing retail business that currently uses manual accounting systems to record its financial transactions. However, the management is considering switching to a computerised accounting system to improve efficiency and accuracy. \(Required:\) i. Explain how computer tools can be used to process business transactions, including entering and editing accounting information for Bright Enterprises. ii. State THREE advantages of adopting a computerised accounting system by Bright Enterprises. iii. State THREE potential disadvantages of adopting a computerised accounting system that Bright Enterprises should consider.

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Question 2 View Details

QUESTION 2

Requirements

(a)

State THREE benefits an entity would derive by maintaining a petty cash system.

(b)

Abajeri Enterprises has a departmental store. The balances brought forward from October 26, 2025, in relation to the cash book are as follows: \(\begin{array}{lr} & \text{₦} \\ \text{Cash balance-debit} & 91,000 \\ \text{Bank balance-debit} & 997,000 \\ \text{Discount allowed} & 9,000 \\ \text{Discount received} & 7,000 \end{array} \) The following cash ransactions took place during the last week in October: October 27: A cheque for N77,700 was received from Ladi & Co, being full settlement of an invoice for N78,000. An online transfer of N39,000 was made to Ime Limited in full settlement of an utstanding balance of N40,000. October 28: Cash amount of ₦80,000 was received into the cash till in respect of retail sales. An online payment of N15, 000 was made for rates due to the Kowope Local Government Authority (KLGA). October 29: Goods were purchased for N50,000 cash. Cash sales were made for N37,000. October 30: Owoh settled his account for N195,000 in full settlement of N200,000 owed via online banking. A motorcycle for ispatching goods was bought for N675,000 through online bank transfer. Cash sales of N81,000 were made and paid to the bank. October 31: A cheque for N100,000 received for sales was paid to the bank. Salaries amounting to N92,000 were paid through online bank transfer. N75,000 was paid from the cash till to the bank. \(Required:\) Prepare the three-columnar cash book of Abajeri Enterprises.

(c)

A business is expanding its financial operations and needs to understand the implications of different payment methods. \(Required:\) i. Explain THREE advantages and THREE disadvantages of using digital payments system for business transactions. ii. State the security measures that can be taken to minimise risks associated with the method.

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Question 3 View Details

QUESTION 3

Requirements

(a)

Ambito Limited is facing financial difficulties and wants to improve its financial performance. The management decided to: Revalue its land from N80,000,000 to N125,000,000. Change the depreciation method for plant and equipment from straight-line to reducing balance. \(Required:\) i. Identify and explain the ethical accounting practices employed by Ambito Limited. ii. State THREE consequences of these practices on the financial statements. iii. Suggest alternative accounting treatments or disclosures that Ambito Limited should adopt

(b)

Monsura Limited has the following information regarding its non-current assets: Balance at October 1, 2024: i. \(Cost:\) Freehold land and building: N5,000 million (land element: N2,000 million) Plant and equipment: N260 million Furniture and fittings: N160 million ii. \(\text{Accumulated depreciation:}\) Building: N900 million Plant and equipment: N104 million Furniture and fittings: N60 million The following movements took place during the year ended September 30, 2025: A new plant was purchased on December 31, 2024, at a cost of N75 million. An old plant that originally cost N51 million on March 1, 2021 was used in part exchange for the new plant, at a fair value of N21.6 million. A leasehold building was acquired for N120 million on December 1, 2024. Non-current assets are depreciated on a straight-line basis using the following rates: Freehold land and building: 2% Leasehold building: 5% Plant and machinery: 20% Furniture and fittings: 25% Depreciation is charged from the date of acquisition to the date of disposal. \( Required:\) i. Calculate the gain or loss on the disposal of the old plant. ii. Prepare the non-current assets schedule for the period ended September 30, 2025, in accordance with IAS 16.

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Question 4 View Details

QUESTION 4

Requirements

(a)

Owambe Limited, a fashion house, needs to purchase 1,000 metres of fabric, on credit, from their supplier, Fabrics Plus. The fabric costs N500 per metre and Owambe Limited wants to ensure timely delivery. To fulfill their fabric requirements, Owambe Limited initiates a series of interactions with Fabrics Plus. \(Required:\) In relation to bookkeeping, explain briefly the sequence of events between Owambe Limited and Fabrics Plus.

(b)

A control account is a summary of a customer's or supplier's ledger in total. The balance on the control account, under a normal circumstance must equal the addition in individual suppliers’ account at a particular date. \(Required:\0 Explain FOUR possible reasons for discrepancies and suggest steps to reconcile the control account with the individual supplier accounts.

(c)

AJK Limited is a company selling electronic goods in Ekiti State. The accountant is carrying out a reconciliation of the payables ledger control account and individual accounts for September 2025. As at September 30, 2025, the total of the balances on the individual accounts in the payable ledger is N3,002,888 and the payables control account balance is N3,318,000. Further investigation reveals the following errors: The purchases day book total for September has been understated by N303,992. A cash payment of N10,736 to a supplier has been correctly treated in the control account but no entry has been made in the individual ledger accounts. A set-off of N304,600 with the receivables ledger, has been correctly treated in the individual ledger accounts but no entry has been made in the control account. An individual credit balance of N32,320 has been incorrectly treated as debit. The total discount received of N260,600, has been treated correctly in the individual ledger accounts but has not been recorded in the control account. \(Required:\) i. Correct the payables ledger control account. ii. Reconcile the total of the individual balances with the corrected balance in the control account.

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Question 5 View Details

Requirements

(a)

Tunde, Edem and Iorzua are in partnership sharing profits equally; on October 1, 2025 Iorzua retired and Akaa was admitted. The statement of financial position as at September 30, 2025 was as follows: \( \begin{array}{lr} & \textbf{₦'000} \\ \textbf{Assets:} & \\ \textbf{Non-current at carrying amount:} & \\ \text{Plant} & 18,000 \\ \text{Motor vehicles} & \underline{13,800} \\ & \underline{31,800} \\ \textbf{Current assets:} & \\ \text{Inventory} & 9,200 \\ \text{Receivables} & 6,300 \\ \text{Cash and cash equivalents} & \underline{2,600} \\ & \underline{18,100} \\ \textbf{Total assets} & \underline{\mathbf{49,900}} \\ \textbf{Equity and liabilities} & \\ \textbf{Capital:} & \\ \text{Tunde} & 16,300 \\ \text{Edem} & 14,700 \\ \text{Iorzua} & \underline{11,800} \\ & \underline{42,800} \\ \textbf{Current accounts:} & \\ \text{Tunde} & 1,300 \\ \text{Edem} & 1,900 \\ \text{Iorzua} & \underline{1,400} \\ & \underline{4,600} \\ \textbf{Current liabilities:} & \\ \text{Payables} & \underline{2,500} \\ \textbf{Total equity and liabilities} & \underline{\mathbf{49,900}} \\ \\ \textbf{Additional information:} & \end{array}\) i. Iorzua should take a car with a carrying amount of N2,600,000 at a valuation of N3,700,000. Iorzua agreed to leave the amount owing to him in the business as a loan, for two years, at 6% interest per annum. Akaa was to contribute N6,000,000 as fixed capital but will not introduce any payment for goodwill. Profits are now to be shared in ratio 2:1:1 to Tunde, Edem and Akaa respectively. ii. Goodwill was valued at N3,000,000 but was not to be kept in the books. iii. It was decided to value inventory at N8,000,000 and the remaining vehicles at N19,385,000. N900,000 of receivables was considered doubtful. \(Required:\) a. Prepare the revaluation account. b. Compute the amount due to Iorzua on his retirement. c. Prepare the opening capital accounts of Tunde, Edem and Akaa. d. Prepare the statement of financial position as at October 1, 2025. (7 Marks)

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ICAN 2026 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

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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

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

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