ICAEW ACA Accounting Exam Questions And
Correct Answers
Accounts - Answer A method of recording, analyzing and summarizing transactions of
an entity.
Statement of Profit or Loss - Answer It reflects the performance of a business over a
period of time.
Statement of Financial Position - Answer It reflects the position of a business at a point
in time.
Users of Accounting - Answer Any organization / business / individual who needs to
keep track of their income, expenses, assets, and liabilities.
Types of Business Entity - Answer • Sole trader
• Partnership
• Limited Liability Companies
SOFP - Answer A list of assets and liabilities of the business.
SPL - Answer The revenue and expense of a business for the accounting period.
Purpose of SOFP - Answer To show the total value of the net assets of the business at
the end of a period.
Purpose of SPL - Answer To show the amount of profit and loss that the business has
made during that period.
, Stakeholders for financial information - Answer • Managers/Directors
• Owners of the company
• Trade contracts
• Finance providers
•HMRC
Capital Expenditure - Answer Expenditure which results in the acquisition of non-current
assets or an improvement or enhancement of their earning capacity (>1yr) (NCA)
Revenue Expenditure - Answer Expenditure which is incurred either for trade
purposes-e.g. items for resale-or to maintain the existing earning capacity of
non-current assets-e.g repairing
Code of Ethics (IFAC) - Answer • Professional Behaviour
• Objectivity
• Professional Competence & due care
• Confidentiality
• Integrity
Business entity concept - Answer A business is a separate entity from its owner.
Capital - Answer How much the business owes back to the owner.
Formula for year-end capital - Answer Bal. at start of year + net profit + capital injection -
drawings
Share capital formula - Answer = Bal. at start of year + Further investment in shares by
new stakeholders
Correct Answers
Accounts - Answer A method of recording, analyzing and summarizing transactions of
an entity.
Statement of Profit or Loss - Answer It reflects the performance of a business over a
period of time.
Statement of Financial Position - Answer It reflects the position of a business at a point
in time.
Users of Accounting - Answer Any organization / business / individual who needs to
keep track of their income, expenses, assets, and liabilities.
Types of Business Entity - Answer • Sole trader
• Partnership
• Limited Liability Companies
SOFP - Answer A list of assets and liabilities of the business.
SPL - Answer The revenue and expense of a business for the accounting period.
Purpose of SOFP - Answer To show the total value of the net assets of the business at
the end of a period.
Purpose of SPL - Answer To show the amount of profit and loss that the business has
made during that period.
, Stakeholders for financial information - Answer • Managers/Directors
• Owners of the company
• Trade contracts
• Finance providers
•HMRC
Capital Expenditure - Answer Expenditure which results in the acquisition of non-current
assets or an improvement or enhancement of their earning capacity (>1yr) (NCA)
Revenue Expenditure - Answer Expenditure which is incurred either for trade
purposes-e.g. items for resale-or to maintain the existing earning capacity of
non-current assets-e.g repairing
Code of Ethics (IFAC) - Answer • Professional Behaviour
• Objectivity
• Professional Competence & due care
• Confidentiality
• Integrity
Business entity concept - Answer A business is a separate entity from its owner.
Capital - Answer How much the business owes back to the owner.
Formula for year-end capital - Answer Bal. at start of year + net profit + capital injection -
drawings
Share capital formula - Answer = Bal. at start of year + Further investment in shares by
new stakeholders
