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Free Practice Questions for CA Sri Lanka Business Level Exam

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Sample CA Sri Lanka Business Level Exam Practice Questions

Try these sample questions to review concepts for the CA Sri Lanka Business Level Exam exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under the conceptual framework for financial reporting adopted in Sri Lanka, which fundamental accounting concept dictates that a business organization must be accounted for and treated as distinct and separate from its owners?
A.Business entity concept
B.Going concern concept
C.Accrual concept
D.Prudence concept
Explanation: The business entity concept requires that the financial activities and affairs of a business enterprise be kept strictly separate from the personal affairs of its owners or proprietors. Consequently, owner contributions are recognized as equity liabilities of the enterprise and personal drawings reduce equity.
2A trader registered in Sri Lanka purchases office equipment costing LKR 450,000 on credit from City Machines Ltd. What is the correct double-entry recording in the general ledger?
A.Debit Purchases Account LKR 450,000; Credit City Machines Ltd LKR 450,000
B.Debit Office Equipment Account LKR 450,000; Credit City Machines Ltd (Payable) LKR 450,000
C.Debit City Machines Ltd LKR 450,000; Credit Office Equipment Account LKR 450,000
D.Debit Office Equipment Account LKR 450,000; Credit Cash/Bank Account LKR 450,000
Explanation: Purchasing a non-current asset on credit increases the non-current asset account (debit Office Equipment Account LKR 450,000) and increases a liability towards the supplier (credit City Machines Ltd LKR 450,000). Purchases account is reserved only for trading inventory purchases.
3Perera Traders pays an annual warehouse rent of LKR 600,000 on 1 October 2025 for the 12 months ending 30 September 2026. What rent expense should be recognized in the statement of profit or loss for the financial year ended 31 March 2026, and what prepayment appears in the statement of financial position?
A.Rent Expense LKR 600,000; Prepayment LKR 0
B.Rent Expense LKR 250,000; Prepayment LKR 350,000
C.Rent Expense LKR 300,000; Prepayment LKR 300,000
D.Rent Expense LKR 400,000; Prepayment LKR 200,000
Explanation: The financial year ended 31 March 2026 encompasses 6 months of occupancy (1 October 2025 to 31 March 2026). The rent expense for this 6-month period is (6/12) * LKR 600,000 = LKR 300,000. The remaining 6 months (1 April 2026 to 30 September 2026) represent an advance payment, creating a prepaid expense current asset of LKR 300,000.
4On 1 January 2024, Lanka Logistics acquired a delivery lorry for LKR 4,800,000. The estimated useful life is 5 years, with an estimated residual scrap value of LKR 800,000. Under the straight-line method, what is the carrying amount of the lorry as of 31 December 2025?
A.LKR 4,000,000
B.LKR 2,400,000
C.LKR 3,600,000
D.LKR 3,200,000
Explanation: Depreciable amount = Cost - Residual Value = LKR 4,800,000 - LKR 800,000 = LKR 4,000,000. Annual straight-line depreciation = LKR 4,000,000 / 5 = LKR 800,000 per year. For two full years (2024 and 2025), accumulated depreciation is LKR 800,000 * 2 = LKR 1,600,000. The carrying amount at 31 December 2025 is Cost - Accumulated Depreciation = LKR 4,800,000 - LKR 1,600,000 = LKR 3,200,000.
5A machine was acquired on 1 April 2023 for LKR 2,000,000 and depreciated at 20% per annum using the reducing balance method. On 31 March 2025, the machine was sold for LKR 1,350,000. What is the profit or loss on disposal?
A.Profit on disposal of LKR 70,000
B.Loss on disposal of LKR 70,000
C.Profit on disposal of LKR 150,000
D.Loss on disposal of LKR 250,000
Explanation: Year 1 depreciation (2023/24) = 20% of LKR 2,000,000 = LKR 400,000, leaving a carrying amount of LKR 1,600,000. Year 2 depreciation (2024/25) = 20% of LKR 1,600,000 = LKR 320,000. Accumulated depreciation at disposal = LKR 400,000 + LKR 320,000 = LKR 720,000. Carrying amount at disposal = LKR 2,000,000 - LKR 720,000 = LKR 1,280,000. Proceeds of LKR 1,350,000 minus carrying amount of LKR 1,280,000 yields a profit on disposal of LKR 70,000.
6Under Sri Lanka Accounting Standard LKAS 2 (Inventories), at what value should closing inventory be measured in the financial statements?
A.At historical cost or replacement cost, whichever is higher
B.At the lower of cost and net realizable value (NRV)
C.At fair value less costs to complete and sell
D.At estimated market selling price plus carriage inwards
Explanation: LKAS 2 paragraph 9 strictly requires inventories to be measured at the lower of cost and net realizable value (NRV). Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
7At the reporting date, a retailer has 200 units of Product K on hand. The original purchase cost was LKR 1,500 per unit. Due to minor water damage, each unit can be sold for LKR 1,600 only after incurring repackaging costs of LKR 250 per unit and transport selling costs of LKR 50 per unit. What is the total valuation of Product K under LKAS 2?
A.LKR 300,000
B.LKR 320,000
C.LKR 260,000
D.LKR 280,000
Explanation: Unit cost = LKR 1,500. Estimated selling price = LKR 1,600. Costs to complete and sell = LKR 250 (repackaging) + LKR 50 (transport) = LKR 300. Net realizable value (NRV) per unit = LKR 1,600 - LKR 300 = LKR 1,300. Since NRV (LKR 1,300) is lower than cost (LKR 1,500), each unit must be written down to NRV. Total inventory value = 200 units * LKR 1,300 = LKR 260,000.
8Which of the following items represents a timing difference that requires inclusion in the bank reconciliation statement rather than an adjustment to the cash book?
A.Bank service charges debited by the commercial bank
B.Direct credit transfer received from a trade customer into the bank account
C.Standing order payment processed directly by the bank for office insurance
D.Unpresented cheques issued to trade payables but not yet cleared by the bank
Explanation: Unpresented cheques have already been recorded correctly as payments in the entity's cash book, but the payee has not yet presented them to the clearing bank. Because the cash book is already up to date, this is a timing difference that appears only in the bank reconciliation statement.
9A business cash book shows a debit balance of LKR 142,000 on 31 December 2025. Upon inspecting the bank statement, the accountant discovers bank charges of LKR 4,500 not yet recorded, a dishonoured cheque from customer Silva of LKR 12,500, and bank interest received of LKR 2,000. What is the corrected cash book balance to be reported in the statement of financial position?
A.Debit balance of LKR 127,000
B.Debit balance of LKR 152,000
C.Debit balance of LKR 138,000
D.Debit balance of LKR 123,000
Explanation: Starting cash book balance = +LKR 142,000. Add bank interest received = +LKR 2,000. Deduct bank service charges = -LKR 4,500. Deduct dishonoured customer cheque = -LKR 12,500. Corrected cash book balance = LKR 142,000 + LKR 2,000 - LKR 4,500 - LKR 12,500 = LKR 127,000 (debit balance).
10At 1 April 2024, Bandara Ltd had an allowance for doubtful debts of LKR 60,000. During the year ended 31 March 2025, trade receivables of LKR 25,000 were written off as irrecoverable. At 31 March 2025, total trade receivables stood at LKR 1,200,000 (after writing off the bad debt), and the company policy requires an allowance of 4% on closing receivables. What is the net charge to the statement of profit or loss for the year?
A.LKR 48,000
B.LKR 13,000
C.LKR 37,000
D.LKR 73,000
Explanation: Required closing allowance = 4% * LKR 1,200,000 = LKR 48,000. The opening allowance was LKR 60,000, so the allowance must be reduced by LKR 12,000 (credit to profit or loss). Bad debts written off during the year = LKR 25,000 (debit to profit or loss). Net expense in profit or loss = Bad debt expense LKR 25,000 - Allowance reduction LKR 12,000 = LKR 13,000.

About the CA Sri Lanka Business Level Exam Exam

The Business Level is the foundational stage of the CA Sri Lanka professional qualification under Curriculum 2025-30, leading upon completion of its modules, B-CAP, and first-tier practical training to the Certified Business Accountant (CBA) credential. It provides essential grounding in double-entry bookkeeping, Sri Lanka Accounting Standards (LKAS/SLFRS for SMEs), cost accounting, business processes, audit fundamentals, Sri Lankan commercial and company law (Companies Act No. 07 of 2007), and basic income tax and VAT.

Exam sponsor: Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka). The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

Four 2-hour computer-based objective examinations: BL-25-1 Fundamentals of Financial Reporting, BL-25-2 Management Accounting, BL-25-3 Processes, Audit & Assurance, and BL-25-4 Business Fundamentals, Law & Tax. Each paper carries 50 objective test questions of two marks each (100 marks, 50% pass mark) and may be answered in English, Sinhala or Tamil medium. Business Level papers run as on-demand computer-based examinations, with first attempts in March, June, September and December and sub-attempts in May, July, August, October and November. Candidates also complete the Business Capstone (B-CAP), held in June and December, which combines a pre-seen case, a recorded verbal pitch submitted to the CA Sri Lanka LMS and an unseen written assessment, alongside the Power & Integrity Skills suite and the Digital Enabling Skill Suite (DESS).

Time Limit

2 hours per module (8 hours total across 4 modules).

Passing Score

50% for each module and 50% for the Business Capstone (B-CAP).

Exam / Certification Fees

LKR 5,200 per examination (physical) / LKR 11,300 (virtual, overseas candidates); B-CAP is LKR 5,200 (physical) / LKR 11,300 (virtual). Payment codes EX01 and EX17.

Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

25%

BL-25-1 Fundamentals of Financial Reporting

Accounting equation, double-entry bookkeeping, trial balance, LKAS/SLFRS for SMEs principles, property, plant & equipment depreciation, inventory valuation (LKAS 2), bank reconciliation, and sole trader and company financial statements preparation.

25%

BL-25-2 Management Accounting

Cost classification, material and labor costing, overhead allocation and absorption, marginal costing, cost-volume-profit (CVP) breakeven analysis, budgeting techniques, and standard costing basic variance analysis.

25%

BL-25-3 Processes, Audit & Assurance

Business operations and transaction cycles, internal control systems, statutory audit concepts, Sri Lanka Auditing Standards (SLAuSs), audit evidence collection, documentation, and fundamental professional ethics.

25%

BL-25-4 Business Fundamentals, Law & Tax

Sri Lankan commercial environment, Law of Contract fundamentals, Companies Act No. 07 of 2007 essential provisions, direct taxation under Inland Revenue Act No. 24 of 2017 (assessable income and tax calculation), and Value Added Tax (VAT Act No. 14 of 2002) basics.

Preparing for the CA Sri Lanka Business Level Exam Exam

What You Need to Know

  • Passing score: 50% for each module and 50% for the Business Capstone (B-CAP).
  • Assessment: Four 2-hour computer-based objective examinations: BL-25-1 Fundamentals of Financial Reporting, BL-25-2 Management Accounting, BL-25-3 Processes, Audit & Assurance, and BL-25-4 Business Fundamentals, Law & Tax. Each paper carries 50 objective test questions of two marks each (100 marks, 50% pass mark) and may be answered in English, Sinhala or Tamil medium. Business Level papers run as on-demand computer-based examinations, with first attempts in March, June, September and December and sub-attempts in May, July, August, October and November. Candidates also complete the Business Capstone (B-CAP), held in June and December, which combines a pre-seen case, a recorded verbal pitch submitted to the CA Sri Lanka LMS and an unseen written assessment, alongside the Power & Integrity Skills suite and the Digital Enabling Skill Suite (DESS).
  • Time limit: 2 hours per module (8 hours total across 4 modules).
  • Exam / certification fees: LKR 5,200 per examination (physical) / LKR 11,300 (virtual, overseas candidates); B-CAP is LKR 5,200 (physical) / LKR 11,300 (virtual). Payment codes EX01 and EX17. Official sources

Using Our Practice Resources

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CA Sri Lanka Business Level Exam: Suggested Study Strategy

1Master the mechanics of double-entry accounting and financial statement adjustments under LKAS: accurate ledger balancing, depreciation schedules, and inventory reconciliations form the core of BL-25-1.
2Work through numerical calculations for cost-volume-profit analysis, absorption overhead rates, and variance analysis under timed conditions to build speed for BL-25-2.
3Thoroughly review Sri Lankan statutory basics, specifically key sections of the Companies Act No. 07 of 2007, assessable income rules under the Inland Revenue Act No. 24 of 2017, and VAT registration thresholds.

Frequently Asked Questions

What is the qualification award after completing the CA Sri Lanka Business Level?

Completing all four Business Level modules (BL-25-1 to BL-25-4), the Business Capstone (B-CAP), the Power & Integrity Skills suite, the Digital Enabling Skill Suite (DESS), and the required first-level practical training leads to the Certified Business Accountant (CBA) credential awarded by CA Sri Lanka.

What is the examination format and schedule for the Business Level?

Each module is examined by a 2-hour computer-based objective test of 50 questions worth two marks each, carrying 100 marks in total, with a pass mark of 50%. Business Level papers are held as on-demand computer-based examinations: first attempts in March, June, September and December, with sub-attempt opportunities in May, July, August, October and November. The Business Capstone (B-CAP) is held in June and December.

In what languages can candidates sit the CA Sri Lanka Business Level?

CA Sri Lanka states that Business Level examination papers may be answered in English, Sinhala or Tamil; candidates choose their medium when they apply. Corporate Level, Strategic Level and all Capstone assessments are English medium only.

Is this practice question bank an official CA Sri Lanka examination paper?

No. This bank is an independent English-language MCQ study adaptation produced by OpenExamPrep to help candidates revise the four Business Level modules. It is not supplied, endorsed or reviewed by CA Sri Lanka and does not reproduce the official examination, which uses objective test items of several types including multiple-choice, short-answer and drag-and-drop formats.