ICAN Financial Accounting
Past Questions
30+ verified Financial Accounting past questions for ICAN. Step-by-step worked answers in 5 Nigerian languages.
Financial Accounting topics (3)
Sample Financial Accounting past questions
1. Gross profit = Sales − ?
- A. Tax
- B. Cost of goods sold
- C. Expenses
- D. Capital
Answer: B
2. Trial balance ensures:
- A. Profit
- B. Equal debits and credits
- C. Capital
- D. Cash flow
Answer: B
3. Closing stock appears in:
- A. Liability
- B. Trading account and balance sheet
- C. Cash book
- D. Bank statement
Answer: B
4. Depreciation is the:
- A. Increase in value
- B. Loss in value over time
- C. Profit
- D. Bad debt
Answer: B
5. Drawings reduce:
- A. Sales
- B. Capital
- C. Liabilities
- D. Stock
Answer: B
6. The accounting equation is Assets =
- A. Capital − Liabilities
- B. Capital + Liabilities
- C. Liabilities − Capital
- D. Revenue + Expenses
Answer: B
7. A debit entry increases which account?
- A. Liability
- B. Capital
- C. Asset
- D. Income
Answer: C
8. The double-entry principle means every debit has a:
- A. Tax
- B. Credit
- C. Profit
- D. Loss
Answer: B
9. A trial balance checks the ___ of the ledger.
- A. Profit
- B. Arithmetical accuracy
- C. Tax
- D. Cash
Answer: B
10. Drawings reduce the owner's:
- A. Revenue
- B. Capital
- C. Assets only
- D. Tax
Answer: B
11. A credit balance on a cash account is:
- A. Normal
- B. Unusual (overdraft)
- C. Impossible
- D. Profit
Answer: B
12. Prepaid rent is a/an:
- A. Liability
- B. Asset
- C. Expense
- D. Income
Answer: B
13. The matching concept matches revenue with:
- A. Tax
- B. Related expenses
- C. Assets
- D. Capital
Answer: B
14. Accounting equation:
- A. Assets = Liabilities − Equity
- B. Assets = Liabilities + Equity
- C. Equity = Assets + Liabilities
- D. Liabilities = Assets + Equity
Answer: B
AI Explanation
A = L + E. Fundamental equation; preserved by every double-entry.
15. Which is a current asset?
- A. land
- B. buildings
- C. trade receivables
- D. long-term loan
Answer: C
AI Explanation
Current assets are realised within 12 months. Receivables qualify.
16. Depreciation is:
- A. a cash outflow
- B. the systematic allocation of an asset's cost over its useful life
- C. market value gain
- D. revenue
Answer: B
AI Explanation
Depreciation is a non-cash expense that spreads cost over useful life.
17. Closing inventory is valued at:
- A. cost only
- B. NRV only
- C. lower of cost and NRV (IAS 2)
- D. higher of cost and NRV
Answer: C
AI Explanation
IAS 2 requires lower of cost and NRV — applies prudence.
18. Trial balance verifies:
- A. profit
- B. arithmetic accuracy of double-entry (debits = credits)
- C. bank balance
- D. tax payable
Answer: B
AI Explanation
Trial balance ensures total debits = total credits. Not a complete error check.
19. Bank reconciliation explains:
- A. sales vs purchases
- B. differences between cash book and bank statement
- C. income vs expense
- D. budgeted vs actual
Answer: B
AI Explanation
BR reconciles cash-book balance to bank statement, finding timing items and errors.
20. Accruals concept requires:
- A. cash recognition only
- B. expenses/income recognised when incurred/earned, regardless of cash flow
- C. no accruals
- D. tax basis
Answer: B
AI Explanation
Accrual accounting matches revenue with related expenses in the period earned/incurred.
21. Prepayments are:
- A. cash received in advance
- B. cash paid for future-period benefit
- C. bad debts
- D. share capital
Answer: B
AI Explanation
Prepayment = cash paid in advance for goods/services to be consumed later (current asset).
22. Bad debts written off go to:
- A. statement of changes in equity
- B. profit or loss as expense
- C. balance sheet only
- D. investing activities
Answer: B
AI Explanation
Bad debts and movements in allowances are expensed to P&L.
23. Equity (in a company) consists of:
- A. only share capital
- B. share capital + reserves (incl. retained earnings)
- C. long-term loan
- D. trade payables
Answer: B
AI Explanation
Equity = paid-in capital + reserves + accumulated retained earnings (and other comprehensive income).
24. Straight-line depreciation of asset costing ₦600,000 with residual ₦60,000 over 5 years:
- A. ₦108,000
- B. ₦120,000
- C. ₦100,000
- D. ₦60,000
Answer: A
AI Explanation
(600,000 − 60,000) / 5 = 108,000 per year.
25. Going concern assumes:
- A. imminent liquidation
- B. the entity will continue operations for the foreseeable future
- C. all assets will be sold
- D. revenue is uncertain
Answer: B
AI Explanation
Going concern is a fundamental IFRS assumption — guides asset/liability valuation.
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