ICAG Professional Qualifying Examination

Sample Chartered Accountancy practice questions

Try these 12 questions from different topics. Open "Show answer" to check yourself and read the explanation.

1. Question 1 · Financial Reporting

   An entity has inventory costing GH₵120,000 with an estimated net realisable value of GH₵105,000. At what amount should it be carried under IAS 2?

   1. A.GH₵120,000
   2. B.GH₵105,000
   3. C.GH₵225,000
   4. D.GH₵15,000
   Show answer

   Answer: B. GH₵105,000

   IAS 2 measures inventories at the lower of cost and net realisable value.

2. Question 2 · Audit & Assurance

   Why does an external audit ordinarily provide reasonable rather than absolute assurance?

   1. A.Auditors are not required to obtain evidence
   2. B.Financial statements never contain estimates
   3. C.Audit evidence and procedures have inherent limitations, including judgment, sampling and possible concealment
   4. D.Reasonable assurance means no work is performed
   Show answer

   Answer: C. Audit evidence and procedures have inherent limitations, including judgment, sampling and possible concealment

   An audit reduces engagement risk to an acceptably low level but cannot eliminate every possible undetected misstatement.

3. Question 3 · Ethics & Governance

   An accountant identifies a financial interest that threatens objectivity. What is the appropriate first response?

   1. A.Keep the interest secret
   2. B.Assume professional experience removes every conflict
   3. C.Alter the client records to hide the interest
   4. D.Identify and evaluate the threat, then apply safeguards or decline the work if it cannot be reduced acceptably
   Show answer

   Answer: D. Identify and evaluate the threat, then apply safeguards or decline the work if it cannot be reduced acceptably

   The ethical framework requires threats to fundamental principles to be identified, evaluated and addressed.

4. Question 4 · Financial Accounting Fundamentals

   The accounting equation is:

   1. A.Assets = Liabilities − Equity
   2. B.Assets = Liabilities + Equity
   3. C.Assets + Liabilities = Equity
   4. D.Equity = Assets + Liabilities
   Show answer

   Answer: B. Assets = Liabilities + Equity

   Every transaction keeps the equation in balance.

5. Question 5 · Specialised IFRS Topics

   Cocoa trees and growing crops held by a farming company are accounted for under:

   1. A.IAS 2 Inventories at the lower of cost and NRV
   2. B.IFRS 15 Revenue from contracts with customers
   3. C.IAS 41 (bearer plants under IAS 16)
   4. D.IAS 40 Investment Property
   Show answer

   Answer: C. IAS 41 (bearer plants under IAS 16)

   Biological assets are measured at fair value less costs to sell; bearer plants follow IAS 16.

6. Question 6 · Costing & Performance Management

   A product sells for GH₵50, variable cost is GH₵30 per unit and fixed costs are GH₵40,000. The break-even point in units is:

   1. A.800 units
   2. B.1,333 units
   3. C.2,000 units
   4. D.4,000 units
   Show answer

   Answer: C. 2,000 units

   40,000 ÷ contribution of 20 per unit.

7. Question 7 · Financial Management

   A project has a positive net present value at the company's cost of capital. It should normally be:

   1. A.Rejected, because NPV ignores the timing of cash flows
   2. B.Delayed until the payback is under one year
   3. C.Accepted, because it increases shareholder wealth
   4. D.Accepted only if IRR is below the cost of capital
   Show answer

   Answer: C. Accepted, because it increases shareholder wealth

   NPV is the preferred investment appraisal method.

8. Question 8 · Ghana Taxation

   The main law governing income tax in Ghana is the:

   1. A.Value Added Tax Act, 2013 (Act 870)
   2. B.Income Tax Act, 2015 (Act 896)
   3. C.Companies Act, 2019 (Act 992)
   4. D.Revenue Administration Act, 2016 (Act 915)
   Show answer

   Answer: B. Income Tax Act, 2015 (Act 896)

   Act 915 deals with tax administration procedures.

9. Question 9 · Business & Company Law

   Ghana's current companies legislation is the:

   1. A.Companies Act, 2019 (Act 992)
   2. B.Companies Code, 1963 (Act 179)
   3. C.Incorporated Private Partnerships Act
   4. D.Insolvency Act, 2006
   Show answer

   Answer: A. Companies Act, 2019 (Act 992)

   Act 992 repealed the 1963 Companies Code.

10. Question 10 · Public Sector Financial Management

    The main law on public financial management in Ghana is the:

    1. A.Public Procurement Act, 2003
    2. B.Companies Act, 2019 (Act 992)
    3. C.Financial Administration Act, 1979
    4. D.Public Financial Management Act, 2016
    Show answer

    Answer: D. Public Financial Management Act, 2016

    It regulates budgeting, spending and reporting by government bodies.

11. Question 11 · Group Accounts & Corporate Reporting

    P acquires 80% of S for GH₵900,000. NCI is measured at its fair value of GH₵200,000 and S's identifiable net assets are worth GH₵950,000. Goodwill is:

    1. A.GH₵50,000
    2. B.GH₵140,000
    3. C.GH₵1,100,000
    4. D.GH₵150,000
    Show answer

    Answer: D. GH₵150,000

    900,000 + 200,000 − 950,000.

12. Question 12 · Advanced Audit & Assurance

    A review engagement under ISRE 2400 provides:

    1. A.Reasonable assurance expressed as a positive opinion
    2. B.Absolute assurance
    3. C.No assurance at all
    4. D.Limited assurance expressed as a negative conclusion
    Show answer

    Answer: D. Limited assurance expressed as a negative conclusion

    Procedures are mainly enquiry and analytical review.