100+ Free ICAP PRC-1 Fundamentals of Accounting Practice Questions

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2026 Statistics

Key Facts: ICAP PRC-1 Fundamentals of Accounting Exam

PRC-01

Education Scheme 2025 paper code for Fundamentals of Accounting

https://student.icap.org.pk/viewfile?add=students%2Fscheme2025%2Fprc%2F&file=PRC-Syllabus.pdf

20–30%

Syllabus weight for Recording financial information

https://student.icap.org.pk/viewfile?add=students%2Fscheme2025%2Fprc%2F&file=PRC-Syllabus.pdf

25–35%

Syllabus weight for Adjustments to recorded information

https://student.icap.org.pk/viewfile?add=students%2Fscheme2025%2Fprc%2F&file=PRC-Syllabus.pdf

~2 hours

Typical CBT duration per PRC paper

ICAP PRC assessment practice / candidate guides

50%

Typical per-subject pass mark for PRC

ICAP PRC assessment rules (widely published candidate guidance)

PKR 7,500

PRC examination fee per paper (July 2026 fee table)

https://icap.org.pk/students/fees-and-forms/fees

IAS 2 / 16

Specific examinable knowledge references on the PRC-1 syllabus

https://student.icap.org.pk/viewfile?add=students%2Fscheme2025%2Fprc%2F&file=PRC-Syllabus.pdf

ICAP PRC-1 Fundamentals of Accounting is a computer-based foundation paper for CA Pakistan candidates. Education Scheme 2025 weights Recording financial information 20–30%, Adjustments 25–35%, Preparing financial statements 20–30%, and Depreciation and inventories 15–25%, with IAS 2 and IAS 16 as specific examinable knowledge references. Assessments are CBT (about 2 hours), with a typical 50% pass mark per subject; the PRC exam fee is PKR 7,500 per paper on ICAP’s July 2026 fee table.

Sample ICAP PRC-1 Fundamentals of Accounting Practice Questions

Try these sample questions to test your ICAP PRC-1 Fundamentals of Accounting exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under the ICAP PRC Fundamentals of Accounting syllabus, which statement best describes the purpose of bookkeeping?

A.Recording financial transactions systematically in the books of account

B.Setting income-tax rates for the federal budget

C.Auditing financial statements as an independent assurance engagement

D.Negotiating bank loan covenants for listed companies

Explanation: Bookkeeping is the systematic recording of financial transactions. PRC learning outcomes begin with describing accounting and bookkeeping before progressing to ledgers, adjustments, and statements.

2Which of the following is an element of financial statements under the conceptual framework referenced for PRC accounting?

A.Marketing strategy

B.Assets

C.Employee job descriptions

D.Board seating arrangement

Explanation: Elements of financial statements include assets, liabilities, equity, income, and expenses. PRC requires candidates to discuss these elements as foundations for recording and reporting.

3The accounting equation that underpins double-entry bookkeeping is:

A.Assets = Revenue − Expenses

B.Liabilities = Assets + Equity

C.Assets = Liabilities + Equity

D.Equity = Assets + Liabilities

Explanation: The fundamental accounting equation is Assets = Liabilities + Equity. Every double-entry transaction preserves this equality.

4Under the business entity concept, which item is correctly treated?

A.The owner’s personal house is recorded as a business non-current asset

B.Personal grocery bills are debited to business purchases

C.Owner drawings increase business revenue

D.Business cash is kept separate from the owner’s personal cash in the accounts

Explanation: The business entity (separate entity) concept requires the business to be accounted for separately from its owners. Personal assets and expenses are excluded from business books.

5Which source document typically supports a credit sale to a customer?

A.Sales invoice

B.Purchase order from a supplier only

C.Bank paying-in slip alone

D.Petty cash voucher for postage

Explanation: A sales invoice evidences a credit sale and supports entries in the sales day book and receivables ledger. PRC covers books of prime entry driven by source documents.

6The sales day book (sales journal) is primarily used to record:

A.Cash sales only

B.Credit sales of goods

C.Owner capital introduced in cash

D.Depreciation of plant

Explanation: The sales day book lists credit sales from invoices before posting totals to the sales and receivables control accounts. Cash sales are usually recorded via the cash book.

7A credit purchase of inventory is first recorded in which book of prime entry?

A.Sales returns day book

B.Petty cash book

C.Purchases day book

D.Fixed asset register only

Explanation: Credit purchases are listed in the purchases day book from supplier invoices, then posted to purchases and payables.

8In double-entry bookkeeping, which pair correctly describes the effect of receiving cash from a credit customer?

A.Debit trade receivables; credit cash/bank

B.Debit purchases; credit cash/bank

C.Debit sales; credit trade payables

D.Debit cash/bank; credit trade receivables

Explanation: Cash increases (debit) and the receivable is settled (credit). The dual entry maintains the accounting equation.

9When the owner introduces additional cash capital into a sole proprietorship, the correct double entry is:

A.Debit cash/bank; credit capital

B.Debit capital; credit cash/bank

C.Debit drawings; credit cash/bank

D.Debit sales; credit capital

Explanation: Cash increases and owner’s capital increases. Drawings would decrease capital; sales is income, not capital introduced.

10A general ledger account that normally has a debit balance is:

A.Trade payables

B.Trade receivables

C.Bank loan (liability)

D.Share capital

Explanation: Assets such as trade receivables normally carry debit balances. Liabilities and equity normally carry credit balances.

About the ICAP PRC-1 Fundamentals of Accounting Exam

Free practice questions for ICAP PRC-1 Fundamentals of Accounting (Education Scheme 2025 PRC-01; formerly PRC-4 Introduction to Accounting). Covers recording financial information, period-end adjustments, bank reconciliations, partnership profit distribution, statements of profit or loss and financial position, IAS 2 inventories, and IAS 16 depreciation.

Assessment

Question count not published by the exam provider

Time Limit

Approximately 2 hours per PRC paper (CBT)

Passing Score

Typically 50% per subject (aggregate rules apply across PRC)

Exam Fee

PKR 7,500 per PRC paper (W.E.F. July 01, 2026 / Autumn 2026 fee table) (Institute of Chartered Accountants of Pakistan (ICAP))

ICAP PRC-1 Fundamentals of Accounting Exam Content Outline

25%

Recording Financial Information

Describe bookkeeping and accounting; identify users and basic concepts; discuss FS elements, capital/revenue, and debit/credit rules; record transactions in books of prime and secondary entry using supporting documents.

30%

Adjustments to Recorded Information

Account for bad and doubtful receivables, accruals, and prepayments; analyse error impacts; prepare bank reconciliations and correct the books; prepare a trial balance after rectifications and adjustments.

25%

Preparing Financial Statements

Distribute profits of a partnership; prepare the statement of profit or loss; prepare the statement of financial position.

20%

Depreciation and Inventories

Apply IAS 2 inventory measurement and expense recognition; apply IAS 16 PPE measurement, recognition, presentation, and depreciation.

How to Pass the ICAP PRC-1 Fundamentals of Accounting Exam

What You Need to Know

Passing score: Typically 50% per subject (aggregate rules apply across PRC)
Assessment: Question count not published by the exam provider
Time limit: Approximately 2 hours per PRC paper (CBT)
Exam fee: PKR 7,500 per PRC paper (W.E.F. July 01, 2026 / Autumn 2026 fee table)

Keys to Passing

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

ICAP PRC-1 Fundamentals of Accounting Study Tips from Top Performers

1Drill the bookkeeping cycle: source documents → day books → ledgers → trial balance → adjustments → statements.

2Practise bank reconciliations by updating the cash book first (charges, interest, direct debits), then timing differences.

3For partnerships, appropriate salaries and interest on capital before sharing residual profit in the agreed ratio.

4Memorise IAS 2 lower of cost and NRV, and inventoriable vs excluded costs (especially selling costs).

5Work straight-line and reducing-balance depreciation with residual values and time apportionment.

6Use timed objective mocks; official CBT mixes MCQs with some structured numeric responses on statement workings.

Frequently Asked Questions

What is ICAP PRC-1 Fundamentals of Accounting?

Under Education Scheme 2025 it is PRC-01, the foundation accounting paper in Pre-Requisite Competencies. It maps from Education Scheme 2021 PRC-4 Introduction to Accounting and tests recording, adjustments, basic financial statements (including partnership profit distribution), inventories, and depreciation.

How long is the PRC accounting assessment?

PRC papers are computer-based and commonly about 2 hours each. Confirm the exact sitting instructions on your ICAP admit card/assessment notice.

What is the pass mark for ICAP PRC papers?

Candidates typically need at least 50% in each PRC subject, with aggregate requirements across PRC as set by ICAP.

How much is the PRC exam fee?

ICAP’s student fee page (W.E.F. July 01, 2026 / Autumn 2026) lists PKR 7,500 for one PRC paper and PKR 7,500 for each additional PRC paper. Enrollment and annual subscription are separate.

What topics does PRC-1 cover?

Official Scheme 2025 grid: Recording financial information (20–30%), Adjustments to recorded information (25–35%), Preparing financial statements (20–30%), and Accounting for depreciation and inventories (15–25%), with IAS 2 and IAS 16 as specific examinable knowledge references.