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ICAN Business Environment 2025 past questions and answers

This 2025 ICAN Business Environment set has 20 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2025 set with instant marking.

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Sample ICAN Business Environment 2025 questions

1. Two friends want to operate a small consultancy together, share its profits and losses, and make decisions jointly. Which form of business organisation best fits their plan?
  1. Public limited company
  2. Partnership
  3. Co-operative society
  4. Statutory corporation

Answer: B. Partnership

A partnership is formed by persons carrying on business together with a view to profit and allows shared ownership and decision-making. A public company has a separate corporate structure and is not simply a two-person joint venture.

2. A shareholder in a company has fully paid for all the shares held. Which statement best describes the shareholder's liability for company debts?
  1. The shareholder is normally liable only up to the unpaid amount on the shares, which here is nil.
  2. The shareholder must settle all company debts in proportion to share ownership.
  3. The shareholder is personally liable for debts approved at a shareholders' meeting.
  4. The shareholder guarantees the company's debts unless the company makes a profit.

Answer: A. The shareholder is normally liable only up to the unpaid amount on the shares, which here is nil.

A company limited by shares separates the company's obligations from those of its members; a member's liability is generally limited to any amount unpaid on their shares. Share ownership does not make the member a proportionate guarantor of company debts.

3. A company groups its activities into separate units for production, marketing and finance, each led by a specialist manager. What is this organisational structure?
  1. Product structure
  2. Geographical structure
  3. Functional structure
  4. Matrix structure

Answer: C. Functional structure

A functional structure groups roles by specialist activities such as production, marketing and finance. A product structure instead groups around product lines.

4. The general price level rises steadily while consumers' nominal incomes remain unchanged. What is the most direct effect on their purchasing power?
  1. It rises because each unit of currency buys more goods.
  2. It is unchanged because nominal income has not changed.
  3. It rises only if the government reduces taxes.
  4. It falls because the same income buys fewer goods and services.

Answer: D. It falls because the same income buys fewer goods and services.

Inflation reduces the real value of a fixed nominal income, so consumers can buy less. Unchanged cash income does not mean unchanged purchasing power when prices rise.

5. A central bank increases its policy interest rate. Assuming other conditions do not change, which outcome is most likely in the short run?
  1. Borrowing costs fall and consumer credit expands.
  2. Borrowing becomes more expensive, tending to reduce spending and investment.
  3. The quantity of money automatically doubles.
  4. Import prices must immediately fall to zero.

Answer: B. Borrowing becomes more expensive, tending to reduce spending and investment.

A higher policy rate generally passes through to higher borrowing costs, which can restrain credit-financed consumption and investment. It does not automatically double the money supply or eliminate import prices.

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