ICAM Accounting Technician Diploma (Malawi)

Which accounting document is initially issued by a seller to notify a buyer that their account has been reduced due to an overcharge or returned goods?

• ACredit note
• BDebit note
• CPro-forma invoice
• DRemittance advice

A business in Blantyre purchases office equipment for MK 450,000 on credit from City Supplies Ltd. What is the correct double-entry recording in the general ledger?

• ADebit Purchases Account MK 450,000; Credit City Supplies Ltd Account MK 450,000
• BDebit Office Equipment Account MK 450,000; Credit City Supplies Ltd Account MK 450,000
• CDebit Office Equipment Account MK 450,000; Credit Cash Account MK 450,000
• DDebit City Supplies Ltd Account MK 450,000; Credit Office Equipment Account MK 450,000

Which of the following errors would cause an imbalance in the trial balance totals?

• AA credit purchase of stationery for MK 25,000 was debited to Office Expenses instead of S…
• BA sales invoice for MK 65,000 was completely omitted from the accounting records
• CA cash payment of MK 80,000 was debited to Rent Account as MK 80,000 and credited to Cash…
• DA payment of MK 40,000 to creditor Phiri was entered on the credit side of Phiri's accoun…

A Blantyre retailer receives a customer's non-binding order on 2 June, collects payment on 5 June, and delivers the goods so that the customer obtains control on 8 June. Which event determines revenue recognition under IFRS 15?

• AWhen the supplier places the manufacturing order for raw materials
• BWhen cash is physically received and banked by the seller
• CWhen the customer signs a non-binding purchase order
• DWhen performance obligations are satisfied and control of the goods passes to the buyer

In a partnership registered in Malawi without a formal partnership deed, which rule applies under the Partnership Act regarding interest on capital?

• ANo interest is allowed on capital contributed by partners
• BInterest is allowed at a statutory rate of 5% per annum on all capital
• CInterest is allowed at the commercial prime lending rate of the Reserve Bank of Malawi
• DInterest is allowed equally up to 10% of annual net profit

What is the primary function of maintaining a sales ledger control account in a manual or computerized bookkeeping system?

• ATo calculate the total gross sales revenue before deducting sales tax
• BTo verify the arithmetic accuracy of the individual customer balances in the sales ledger
• CTo record every individual invoice line item issued to debtors during the month
• DTo replace the need for maintaining subsidiary individual debtor accounts

A trader's cash book shows a bank balance of MK 340,000 debit. Comparing this with the bank statement reveals unpresented cheques of MK 85,000 and uncredited lodgements of MK 120,000. What is the balance shown on the bank statement?

• AMK 305,000 debit
• BMK 375,000 credit
• CMK 305,000 credit
• DMK 545,000 credit

On 1 January 2024, Mzuzu Retailers purchased delivery equipment for MK 2,400,000. It is depreciated at 20% per annum using the reducing balance method. What will be the accumulated depreciation at 31 December 2025?

• AMK 1,536,000
• BMK 960,000
• CMK 480,000
• DMK 864,000

At 31 December 2025, trade receivables stood at MK 1,800,000. The accountant wishes to write off an irrecoverable debt of MK 50,000 and create an allowance for doubtful debts of 5% on the remaining receivables. The existing allowance from the prior year is MK 60,000. What is the net charge in the Statement of Profit or Loss for doubtful and bad debts?

• AMK 77,500
• BMK 87,500
• CMK 27,500
• DMK 137,500

A manufacturing business has opening inventory of raw materials MK 320,000, purchases of raw materials MK 1,450,000, carriage inwards on materials MK 40,000, and closing inventory of raw materials MK 290,000. If direct labor is MK 650,000, what is the prime cost?

• AMK 1,520,000
• BMK 2,170,000
• CMK 2,210,000
• DMK 2,130,000

A bookkeeper opened a suspense account with a debit balance of MK 18,000. Two errors were subsequently discovered: (1) Cash sales of MK 30,000 had been credited to the sales account but omitted from the cash account; (2) Discount received of MK 6,000 had been entered on the debit side of the discount received account. After correcting both errors, what is the balance on the suspense account?

• AMK 12,000 credit
• BMK 6,000 debit
• CNil (cleared)
• DMK 24,000 debit

Chisomo and Kondwani share profits in the ratio 3:2. On 30 June 2025, they agree to admit Alinafe with a 1/5 share of future profits. Chisomo and Kondwani will share the remaining profits in their original relative proportions. What is the new profit-sharing ratio between Chisomo, Kondwani, and Alinafe?

• A6 : 4 : 5
• B3 : 2 : 1
• C9 : 6 : 5
• D12 : 8 : 5

During the year ended 31 December 2025, a business paid rent of MK 1,680,000. On 1 January 2025, prepaid rent was MK 120,000. On 31 December 2025, rent accrued was MK 150,000. What is the rent expense to be charged in the Statement of Profit or Loss for 2025?

• AMK 1,950,000
• BMK 1,710,000
• CMK 1,410,000
• DMK 1,650,000

A business sells goods with a gross profit margin of 25% on selling price. For the year, sales totaled MK 4,800,000, opening inventory was MK 600,000, and closing inventory was MK 750,000. What were the total purchases for the year?

• AMK 3,600,000
• BMK 3,750,000
• CMK 3,450,000
• DMK 4,200,000

Under IFRS for SMEs, how should research costs incurred in developing a new product be treated in the financial statements?

• ADeferred as a current asset until commercial manufacturing commences
• BCapitalized as an intangible asset and amortized over its expected useful economic life
• CRecognized entirely as an expense in the Statement of Profit or Loss when incurred
• DDebited directly to retained earnings as an equity movement

A Malawi company incorporated before the Companies Act 2013 lawfully retained par-value shares. It issued 500,000 ordinary shares of par value MK 50 each at an issue price of MK 75 per share, payable in full on application. How should the transaction be recognized in its equity accounts?

• ACredit Revenue Reserves MK 37,500,000
• BCredit Stated / Share Capital MK 37,500,000 in full
• CCredit Retained Earnings MK 12,500,000; Credit Share Capital MK 25,000,000
• DCredit Stated / Share Capital MK 25,000,000; Credit Share Premium MK 12,500,000

On 1 January 2023, Lilongwe Logistics acquired a motor vehicle for MK 12,000,000 with an estimated useful life of 5 years and a residual value of MK 2,000,000, depreciated on a straight-line basis. On 31 December 2024, an impairment review showed its recoverable amount was MK 6,500,000. What is the impairment loss to be recognized at 31 December 2024?

• AMK 1,500,000
• BMK 3,500,000
• CMK 500,000
• DNil — no impairment has occurred

A company entered into a 3-year lease on 1 January 2025 for production equipment. The present value of three annual lease payments is MK 8,952,667. Payments of MK 3,600,000 are due in arrears on 31 December each year, and the interest rate implicit in the lease is 10% per annum. What is the approximate non-current lease liability at 31 December 2025?

• AMK 6,300,000
• BMK 3,270,000
• CMK 3,030,000
• DMK 3,600,000

A company's draft accounts show a profit of MK 2,850,000 before the following errors were adjusted: (1) Closing inventory was undervalued by MK 180,000; (2) Depreciation on a newly acquired machine was undercharged by MK 60,000; (3) An ordinary repair of MK 90,000 was capitalized as plant addition and depreciated at 10%. What is the revised net profit?

• AMK 2,829,000
• BMK 2,970,000
• CMK 2,889,000
• DMK 3,069,000

Under IAS 7, which statement correctly describes how an entity may classify interest paid and dividends paid in its statement of cash flows?

• ADividends paid as investing activities; Interest paid as financing activities
• BDividends paid strictly as operating activities; Interest paid strictly as investing acti…
• CBoth dividends paid and interest paid strictly as investing activities
• DInterest paid may be operating or financing, and dividends paid may be operating or finan…

Which of the following costs is classified as an indirect production cost (production overhead)?

• AFactory supervisor's monthly salary
• BRaw timber used in manufacturing wooden chairs
• CWages paid to machine operators based on units produced
• DRoyalty paid per item produced to the patent holder

What is the primary characteristic of a fixed cost within the relevant range of production activity?

• ATotal cost increases proportionately with output while cost per unit remains constant
• BTotal cost remains constant while cost per unit decreases as output volume increases
• CBoth total cost and cost per unit increase as production volume expands
• DTotal cost decreases and cost per unit remains completely unchanged

In a perpetual inventory system, which inventory valuation method issues goods at the price of the oldest stock on hand?

• AWeighted Average Cost (AVCO)
• BLast-In, First-Out (LIFO)
• CFirst-In, First-Out (FIFO)
• DStandard Costing Method

What is the formula used to calculate the break-even point in units for a single-product enterprise?

• A(Total Fixed Costs + Target Profit) / Variable Cost per unit
• BTotal Fixed Costs / Selling Price per unit
• CTotal Variable Costs / Contribution Margin ratio
• DTotal Fixed Costs / Contribution per unit

Using the high-low method, an enterprise recorded total maintenance costs of MK 680,000 at an activity level of 4,000 machine hours and MK 920,000 at 7,000 machine hours. What is the estimated total fixed maintenance cost?

• AMK 360,000
• BMK 320,000
• CMK 80,000
• DMK 440,000

In a period where sales volume is 8,000 units and production volume is 10,000 units, opening inventory is nil. If fixed production overhead is MK 200 per unit, how will profit reported under absorption costing compare with profit reported under marginal costing?

• AAbsorption costing profit will be MK 400,000 lower than marginal costing profit
• BAbsorption costing profit will be MK 400,000 higher than marginal costing profit
• CBoth methods will report identical profit because sales prices are unchanged
• DAbsorption costing profit will be MK 1,600,000 higher than marginal costing profit

A factory has two production cost centers (Machining and Assembly) and one service cost center (Stores). Allocated overheads are Machining MK 800,000, Assembly MK 600,000, and Stores MK 300,000. Stores overheads are reapportioned to Machining and Assembly in the ratio 3:2 based on material requisitions. What is the total overhead for Machining after reapportionment?

• AMK 920,000
• BMK 950,000
• CMK 980,000
• DMK 1,100,000

Blantyre Mills uses 10,000 bags of maize annually. The purchase cost per bag is MK 20,000. Ordering costs are MK 25,000 per order, and annual holding cost is MK 500 per bag. Using the Economic Order Quantity (EOQ) formula, what is the optimal order quantity?

• A1,414 bags
• B500 bags
• C2,000 bags
• D1,000 bags

A production employee is paid MK 250 per piece produced, with a guaranteed minimum day-rate of MK 8,000 for an 8-hour shift. On Monday, the worker produces 28 units. On Tuesday, the worker produces 36 units. What are the worker's total gross earnings for the two days?

• AMK 17,000
• BMK 16,000
• CMK 15,000
• DMK 18,000

A business budgets to use 3 kg of raw material per unit at a standard price of MK 400 per kg. During March, 1,200 units were produced using 3,800 kg of material purchased for MK 1,444,000. What are the direct material price and usage variances?

• APrice variance: MK 76,000 Adverse; Usage variance: MK 80,000 Favorable
• BPrice variance: MK 76,000 Favorable; Usage variance: MK 80,000 Adverse
• CPrice variance: MK 80,000 Favorable; Usage variance: MK 76,000 Adverse
• DPrice variance: MK 44,000 Adverse; Usage variance: MK 80,000 Adverse

A manufacturer sells two products: Product X (selling price MK 1,000, variable cost MK 600) and Product Y (selling price MK 1,500, variable cost MK 750). The normal sales mix in units is 2 units of X for every 1 unit of Y. Total annual fixed costs are MK 6,200,000. What is the total number of units of Product X required to break even?

• A12,000 units
• B4,000 units
• C8,000 units
• D6,200 units

Standard labor hours allowed for producing 500 units of Product Alpha are 1,000 hours at a standard rate of MK 1,200 per hour. Actual results showed 1,150 hours were worked and paid at a total labor cost of MK 1,437,500, including 50 hours of machine breakdown idle time. What are the labor idle time variance and labor efficiency variance?

• AIdle time variance: MK 50,000 Adverse; Efficiency variance: MK 150,000 Adverse
• BIdle time variance: MK 62,500 Adverse; Efficiency variance: MK 180,000 Adverse
• CIdle time variance: MK 60,000 Favorable; Efficiency variance: MK 120,000 Favorable
• DIdle time variance: MK 60,000 Adverse; Efficiency variance: MK 120,000 Adverse

Under the Malawi Companies Act 2013 and the Public Accountants and Auditors Act (PAAA 2013), what is the statutory duty of an external auditor when reporting to shareholders on annual financial statements?

• ATo state whether the financial statements give a true and fair view and comply with the A…
• BTo guarantee the complete absence of fraud, minor clerical errors, and theft across all c…
• CTo certify the future financial profitability and commercial viability of the company for…
• DTo prepare and balance the general ledger and financial statements on behalf of executive…

According to ISA 500 (Audit Evidence), what do the terms 'sufficiency' and 'appropriateness' evaluate regarding audit evidence?

• ASufficiency refers to the accuracy of evidence; Appropriateness refers to the cost of obt…
• BSufficiency refers to the quantity of evidence; Appropriateness refers to its quality (re…
• CSufficiency refers to whether evidence is oral or written; Appropriateness refers to its…
• DSufficiency refers to the source of evidence; Appropriateness refers to the quantity gath…

When an auditor verifies that all sales transactions that actually occurred during the financial year have been recorded in the general ledger, which management assertion is being tested?

• AAccuracy
• BOccurrence
• CCompleteness
• DExistence

What is the primary purpose of an audit engagement letter sent by an audit firm to a client prior to commencing an audit?

• ATo list the specific sample sizes and audit testing programs that will be executed by jun…
• BTo state the auditor's final unmodified audit opinion on the draft financial statements
• CTo report all internal control deficiencies identified during the interim audit to the bo…
• DTo document and confirm the objective, scope, respective responsibilities, and terms of t…

In accordance with ISA 505 (External Confirmations), what is the proper procedure for obtaining direct bank confirmation letters?

• AThe client prepares and signs the authorization request, but the auditor directly mails t…
• BThe client delivers the confirmation request to the bank, collects the response, and hand…
• CThe auditor independently inspects client-prepared bank statements and dispenses with wri…
• DThe bank sends the confirmation to the client's internal audit department, which validate…

What is the primary role of the external auditor when attending the year-end physical inventory count conducted by the client's staff?

• ATo physically count, weigh, and tag all items in the warehouse on behalf of the warehouse…
• BTo observe compliance with management count instructions and perform test counts to evalu…
• CTo adjust stock records immediately whenever a physical shortage is discovered during the…
• DTo supervise and assign daily duties to warehouse personnel during the inventory taking p…

Which of the following auditing procedures is an example of a test of control rather than a substantive test?

• ASending confirmation letters to customers to confirm year-end trade receivable balances
• BRecalculating the mathematical depreciation charge on a schedule of non-current assets
• CInspecting a sample of purchase invoices for the signature of the finance manager authori…
• DVouching cash disbursements recorded in the cash book to supplier receipts and bank state…

Which internal control weakness creates the greatest risk of undetected misappropriation of cash in a small commercial enterprise?

• ANumbered delivery notes are matched with sales invoices before invoices are sent to custo…
• BCheques above MK 500,000 require two authorized director signatures before release
• CThe petty cashier maintains a petty cash book on an imprest system with monthly superviso…
• DThe same accounts clerk receives customer cash, writes receipts, posts to the sales ledge…

In trade receivables circularization, what is the key operational distinction between a positive confirmation request and a negative confirmation request?

• AA positive confirmation requests a reply whether the customer agrees or disagrees; a nega…
• BA positive confirmation is used only for small balances; a negative confirmation is used…
• CA positive confirmation is sent via email; a negative confirmation must be hand-delivered…
• DA positive confirmation confirms credit terms; a negative confirmation confirms annual sa…

After the reporting date of 31 December 2025, but before the financial statements were authorized for issue, a major customer of Limbe Wholesalers went into liquidation. The outstanding receivable of MK 1,200,000 at year end was uncollected. How should this subsequent event be treated under IAS 10?

• AAs a non-adjusting event: disclose the event in the notes without adjusting 2025 figures
• BAs an adjusting event: create an allowance or write off the debt in the 31 December 2025…
• CIgnore the event completely as the liquidation occurred after the balance sheet date
• DPostpone the final audit sign-off for twelve months until liquidation dividends are deter…

An auditor identifies that an entity has misstated inventory by MK 15,000,000, which exceeds the planning materiality of MK 10,000,000 but does not render the overall financial statements fundamentally misleading or pervasive. Management refuses to adjust the error. What type of audit opinion must the auditor express under ISA 705?

• ADisclaimer of opinion
• BAdverse opinion
• CQualified opinion ('Except for')
• DUnmodified opinion with an Emphasis of Matter paragraph

A company has experienced severe trading losses and has breached its primary banking covenants, creating material uncertainty regarding its ability to continue as a going concern. Management has adequately disclosed these uncertainties in Note 24 of the financial statements. How should the external auditor report on this matter under ISA 570 (Revised)?

• AIssue a disclaimer of opinion due to the presence of significant business uncertainty
• BIssue an adverse opinion because material uncertainties exist regarding future solvency
• CExpress a qualified opinion stating that the financial statements are materially misstated
• DExpress an unmodified opinion and include a separate section titled 'Material Uncertainty…

Which statutory body is established by law in Malawi to assess, collect, and account for all central government tax revenues under the administration of the Ministry of Finance?

• AMalawi Revenue Authority (MRA)
• BMalawi Accountants Board (MAB)
• CReserve Bank of Malawi (RBM)
• DInstitute of Chartered Accountants in Malawi (ICAM)

A payroll clerk separates taxes charged directly on a taxpayer's income from taxes collected through spending on goods. Which item belongs in the direct-tax column?

• AValue Added Tax (VAT)
• BPay-As-You-Earn (PAYE) income tax
• CCustoms and import duty
• DExcise tax on carbonated beverages

Under the Malawi Taxation Act, which 12-month period is the year of assessment for income tax collected through PAYE?

• A1 July to 30 June of the following year
• B1 January to 31 December of the calendar year
• C1 April to 31 March of the following year
• D1 October to 30 September of the following year