ICAN Business, Management and Finance
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130+ verified Business, Management and Finance practice questions for ICAN. Step-by-step worked answers in 5 Nigerian languages.
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Sample Business, Management and Finance practice questions
1. Zenith Manufacturing Plc is appraising a new project with the following cash flows: initial investment of ₦50,000,000; net cash inflows of ₦18,000,000 per annum for four years; cost of capital 12%. The annuity factor (PVIFA) for 12%, 4 years is 3.0373. What is the Net Present Value (NPV) of the project, and what investment decision should management take?
- A. NPV = ₦4,671,400 (positive); accept the project
- B. NPV = −₦4,671,400 (negative); reject the project
- C. NPV = ₦22,000,000 (positive); accept the project
- D. NPV = ₦3,200,000 (positive); accept the project
Answer: A
AI Explanation
NPV = (Annual cash inflow × PVIFA) − Initial investment = (₦18,000,000 × 3.0373) − ₦50,000,000 = ₦54,671,400 − ₦50,000,000 = ₦4,671,400. Since the NPV is positive, the project generates value above the required return of 12% and should be accepted. A positive NPV is the standard accept criterion under the NPV decision rule.
ICAN 2021
2. Under the PESTLE framework for analysing the business environment, the introduction of the Nigerian Data Protection Act (NDPA) 2023 would PRIMARILY be classified as which type of environmental factor?
- A. Economic
- B. Social
- C. Legal
- D. Technological
Answer: C
AI Explanation
The NDPA 2023 is a piece of legislation enacted by the Nigerian government to regulate the processing of personal data. Legislation and regulatory frameworks fall squarely within the Legal (L) component of PESTLE analysis. Although it has technological and social implications, its primary classification is Legal because it creates enforceable legal obligations on businesses.
ICAN 2025
3. Abuja Capital Ltd, a Nigerian resident company, received a dividend of ₦12,000,000 from its 60% subsidiary, Kano Textiles Ltd, in 2023. Under CITA (as amended), what is the CIT treatment of this dividend in the hands of Abuja Capital Ltd?
- A. The dividend is fully taxable at 30% CIT, giving a tax liability of ₦3,600,000
- B. The dividend is exempt from CIT because it is received from a Nigerian resident subsidiary in which Abuja Capital Ltd holds at least 25% equity
- C. The dividend is subject to a 10% withholding tax which constitutes the final tax
- D. The dividend is exempt only up to ₦5,000,000; the excess of ₦7,000,000 is taxed at 30%
Answer: B
AI Explanation
Under CITA (as amended), dividends received by a Nigerian company from another Nigerian resident company in which it holds at least 25% of the equity are exempt from CIT to avoid economic double taxation. Since Abuja Capital Ltd holds 60% of Kano Textiles Ltd—well above the 25% threshold—the ₦12,000,000 dividend is fully exempt from CIT in its hands. Withholding tax deducted at source would be a credit, not the final tax in this context.
ICAN 2021
4. Under the Personal Income Tax Act (PITA) Cap P8 LFN 2004 (as amended by the Finance Act 2020), which of the following is the CORRECT treatment of the Consolidated Relief Allowance (CRA) for a Nigerian resident individual with an annual gross income of ₦9,600,000?
- A. CRA = ₦200,000 + 20% of gross income = ₦200,000 + ₦1,920,000 = ₦2,120,000
- B. CRA = ₦600,000 + 20% of gross income = ₦600,000 + ₦1,920,000 = ₦2,520,000
- C. CRA = ₦200,000 only, as the 20% relief was abolished by the Finance Act 2020
- D. CRA = 1% of gross income + ₦200,000 = ₦96,000 + ₦200,000 = ₦296,000
Answer: B
AI Explanation
Under PITA (as amended), the Consolidated Relief Allowance is computed as the higher of ₦200,000 or 1% of gross income, PLUS 20% of gross income. For gross income of ₦9,600,000: 1% = ₦96,000, which is less than ₦200,000, so the fixed element is ₦200,000. However, the Finance Act 2020 increased the fixed portion to ₦600,000 (higher of ₦600,000 or 1% of gross income). Therefore CRA = ₦600,000 + (20% × ₦9,600,000) = ₦600,000 + ₦1,920,000 = ₦2,520,000. Option A uses the pre-Finance Act 2020 figure of ₦200,000.
ICAN 2024
5. The Financial Reporting Council of Nigeria (FRCN) Act 2011 established the FRCN to, among other things, regulate financial reporting in Nigeria. Which of the following falls OUTSIDE the statutory functions of the FRCN?
- A. Developing and publishing accounting and auditing standards applicable in Nigeria
- B. Investigating reported cases of money laundering involving public interest entities
- C. Regulating and supervising the activities of audit firms of public interest entities
- D. Promoting compliance with accounting standards and best practices in financial reporting
Answer: B
AI Explanation
The FRCN Act 2011 empowers the Council to develop standards, regulate auditors of public interest entities, and promote compliance with financial reporting standards. Investigating money laundering is the statutory function of the Economic and Financial Crimes Commission (EFCC) and the Special Control Unit Against Money Laundering (SCUML) under the Money Laundering (Prevention and Prohibition) Act, not the FRCN.
ICAN 2024
6. Porter's Five Forces model is used to assess industry competitiveness. Which of the following scenarios in the Nigerian fast-moving consumer goods (FMCG) sector would MOST LIKELY indicate HIGH bargaining power of buyers?
- A. There are only three dominant FMCG manufacturers supplying a fragmented retail market of over 10,000 small traders
- B. A large supermarket chain purchases 45% of a manufacturer's total output and can easily switch to competing brands
- C. High capital requirements deter new entrants, limiting the number of competitors in the market
- D. Raw material suppliers are concentrated and supply a unique ingredient unavailable elsewhere
Answer: B
AI Explanation
Buyer bargaining power is high when buyers are concentrated, purchase in large volumes, and face low switching costs. Option B describes a single buyer (supermarket chain) accounting for 45% of output with easy substitution ability—classic indicators of high buyer power. Options A, C, and D describe low buyer power, high barriers to entry, and high supplier power respectively.
ICAN 2021
7. Under the Companies and Allied Matters Act (CAMA) 2020, what is the minimum number of directors required for a public company incorporated in Nigeria?
- A. One director
- B. Two directors
- C. Three directors
- D. Five directors
Answer: C
AI Explanation
Section 271 of CAMA 2020 stipulates that a public company must have a minimum of three directors. A private company requires at least one director under the same Act, reflecting the distinction between the two company types.
ICAN 2025
8. Sunrise Hotels Limited supplies both VAT-exempt and VAT-taxable services. In Q1 2024, its taxable supplies amounted to ₦60,000,000 and exempt supplies amounted to ₦40,000,000. Input VAT incurred on general overheads was ₦2,800,000. Using the partial exemption standard method, what is the recoverable input VAT?
- A. ₦2,800,000
- B. ₦1,680,000
- C. ₦1,120,000
- D. ₦2,100,000
Answer: B
AI Explanation
The partial exemption standard method apportions input VAT based on the ratio of taxable supplies to total supplies. Taxable ratio = ₦60,000,000 ÷ (₦60,000,000 + ₦40,000,000) = 60%. Recoverable input VAT = 60% × ₦2,800,000 = ₦1,680,000. The remaining ₦1,120,000 relates to exempt supplies and is irrecoverable under the VAT Act (as amended by the Finance Acts).
ICAN 2023
9. Which of the following BEST describes the concept of 'corporate social responsibility' (CSR) in the context of the Nigerian business environment?
- A. A legal obligation imposed by CAMA 2020 requiring companies to donate 5% of pre-tax profit to charity
- B. A voluntary commitment by businesses to contribute to sustainable economic development while improving the quality of life of the workforce and society
- C. A mandatory requirement under the Financial Reporting Council of Nigeria (FRCN) Act 2011 for listed companies to publish sustainability reports
- D. An obligation under the Investment and Securities Act (ISA) 2007 for public companies to establish community development funds
Answer: B
AI Explanation
CSR is fundamentally a voluntary business practice whereby companies integrate social and environmental concerns into their operations beyond legal compliance. None of the Nigerian statutes cited in the distractors impose a mandatory CSR donation percentage or fund as described; option B correctly reflects the internationally accepted and Nigerian business-practice definition of CSR.
ICAN 2024
10. Eko Plastics Limited, a manufacturer in Lagos, recorded total taxable profits of ₦85,000,000 for the year ended 31 December 2023. The company has been in operation for twelve years. What is the Companies Income Tax (CIT) liability under the Companies Income Tax Act (CITA) Cap C21 LFN 2004 (as amended)?
- A. ₦25,500,000
- B. ₦17,000,000
- C. ₦21,250,000
- D. ₦30,000,000
Answer: A
AI Explanation
Under CITA (as amended by the Finance Acts), companies with turnover above ₦100 million are taxed at 30%; however, the question specifies taxable profit of ₦85,000,000. Since the company has been in operation for over four years and the taxable profit (not turnover) is ₦85,000,000, the applicable rate for a medium/large company is 30%. CIT = ₦85,000,000 × 30% = ₦25,500,000. The company does not qualify for the small company 0% rate (turnover ≤ ₦25m) or medium company 20% rate (turnover ₦25m–₦100m) as the question context places it in the large company bracket.
ICAN 2022
11. The board of Crescent Insurance Company Limited, a public interest entity regulated by the National Insurance Commission (NAICOM), is debating whether to adopt a unitary (one-tier) or a two-tier board structure. Which of the following statements MOST accurately reflects the governance implication of a two-tier board structure?
- A. A two-tier board combines supervisory and executive functions within a single board, improving speed of decision-making
- B. A two-tier board separates the supervisory board from the management board, enhancing independence of oversight
- C. A two-tier board is mandated for all insurance companies under CAMA 2020
- D. A two-tier board eliminates the need for an audit committee as required by the FRCN Code
Answer: B
AI Explanation
A two-tier board structure separates the supervisory board (responsible for oversight and accountability) from the management board (responsible for day-to-day operations), thereby enhancing the independence of oversight. This is distinct from a unitary board, which combines both functions. Option A describes a unitary board. CAMA 2020 does not mandate a two-tier structure for all insurance companies, and a two-tier board does not eliminate audit committee requirements under the FRCN Code.
ICAN 2020
12. Sunrise Foods Limited recently merged with a smaller competitor, Dusk Snacks Nigeria Limited. Post-merger integration revealed that Sunrise Foods had a collaborative, innovation-driven culture, while Dusk Snacks operated a highly hierarchical, compliance-focused culture. According to Edgar Schein's model of organisational culture, which level of culture is MOST difficult to change during post-merger integration?
- A. Artefacts and visible symbols
- B. Espoused values and beliefs
- C. Basic underlying assumptions
- D. Formal organisational policies
Answer: C
AI Explanation
Edgar Schein's model identifies three levels of culture: artefacts (visible), espoused values (stated beliefs), and basic underlying assumptions (deeply ingrained, unconscious beliefs). Basic underlying assumptions are the most difficult to change because they are taken for granted, rarely questioned, and deeply embedded in employees' worldviews. Artefacts and espoused values are more visible and accessible to change management interventions during integration.
ICAN 2023
13. Apex Telecoms Nigeria Plc is considering decentralising its decision-making authority to regional managers across its six geopolitical zone offices. Which of the following is the MOST significant organisational risk associated with decentralisation?
- A. Reduced motivation among regional managers due to limited autonomy
- B. Slower response to local market conditions
- C. Potential inconsistency in the application of corporate policies and standards
- D. Increased burden on top management to make all operational decisions
Answer: C
AI Explanation
The most significant risk of decentralisation is that regional managers may interpret and apply corporate policies differently, leading to inconsistency in standards, quality, and brand representation across locations. Options A and B are actually disadvantages of centralisation, not decentralisation. Option D describes a burden that decentralisation is intended to relieve, making C the correct risk associated with decentralising authority.
ICAN 2020
14. Delta Agro-Allied Limited employs 2,400 staff across six geographically dispersed states in Nigeria. The Chief Human Resources Officer is evaluating the optimal span of control. If the organisation currently has 12 middle managers each supervising 200 subordinates, and management decides to reduce the span of control to 25 subordinates per manager, how many additional middle managers will be required?
- A. 84
- B. 96
- C. 84 additional managers, bringing the total to 96
- D. 72
Answer: A
AI Explanation
Total subordinates = 12 managers × 200 = 2,400 staff. At a span of control of 25, the number of managers required = 2,400 ÷ 25 = 96 managers. Additional managers needed = 96 − 12 = 84. Therefore, Delta Agro-Allied Limited requires 84 additional middle managers. Option C is a compound statement and not a clean answer choice, making A the precise and correct response.
ICAN 2021
15. Harbour Bank Plc has a deeply embedded set of unwritten norms where employees are rewarded primarily for seniority rather than performance, and whistleblowers are informally ostracised. According to Charles Handy's cultural typology, which culture BEST describes Harbour Bank Plc?
- A. Power culture
- B. Role culture
- C. Task culture
- D. Person culture
Answer: B
AI Explanation
Charles Handy's role culture is characterised by clearly defined roles, procedures, and rules, with rewards linked to position and seniority rather than individual performance. The bureaucratic norms and the suppression of dissent (ostracising whistleblowers) are consistent with a role culture where conformity to established procedures is paramount. A power culture would be dominated by a central figure, while a task culture focuses on achievement and expertise.
ICAN 2020
16. Greenfield Properties Limited, a real estate company in Lagos, has a total annual payroll of ₦480,000,000. The company operates a flat organisational structure with only three management layers. Management is considering adding two additional layers to improve coordination. Research suggests that each additional management layer increases administrative overhead by 8% of total payroll. What will be the additional annual administrative cost of adding the two management layers?
- A. ₦38,400,000
- B. ₦76,800,000
- C. ₦96,000,000
- D. ₦86,400,000
Answer: B
AI Explanation
Each additional management layer increases administrative overhead by 8% of total payroll of ₦480,000,000. Cost per layer = 8% × ₦480,000,000 = ₦38,400,000. For two additional layers = 2 × ₦38,400,000 = ₦76,800,000. Therefore, the total additional annual administrative cost is ₦76,800,000. Option A represents only one layer, and Option C incorrectly applies a 20% rate.
ICAN 2023
17. Lagoon Consulting Group restructured its operations by grouping employees from Finance, IT, and Operations into project-specific teams while retaining their functional departments. The Group Chief Executive reported both increased coordination and role conflict among employees. Which organisational structure has Lagoon Consulting Group adopted?
- A. Functional structure
- B. Network structure
- C. Matrix structure
- D. Flat structure
Answer: C
AI Explanation
A matrix structure combines functional and project-based groupings, meaning employees report to both a functional manager and a project manager simultaneously. This dual reporting relationship is the primary source of the role conflict described. The increased coordination across departments is a key advantage of the matrix structure, confirming this identification.
ICAN 2022
18. Under the Companies and Allied Matters Act (CAMA) 2020, which of the following provisions MOST directly influences the formal organisational structure of a public company incorporated in Nigeria?
- A. The requirement for a company to maintain a register of members under Section 83
- B. The mandatory separation of the roles of Chairman and Chief Executive Officer under Section 265
- C. The requirement for annual general meetings under Section 237
- D. The obligation to file annual returns under Section 417
Answer: B
AI Explanation
Section 265 of CAMA 2020 requires public companies to separate the roles of Chairman and Chief Executive Officer, directly shaping the formal governance and organisational structure at the top management level. This provision prevents concentration of power in one individual and enforces a structural check and balance. The other options relate to administrative and compliance obligations rather than the design of organisational structure.
ICAN 2021
19. Zenith Manufacturing Limited operates with clearly defined job roles, a strict chain of command, and standardised procedures. The Managing Director recently noted that employees rarely take initiative without explicit approval. Which organisational structure BEST describes Zenith Manufacturing Limited?
- A. Matrix structure
- B. Mechanistic structure
- C. Organic structure
- D. Divisional structure
Answer: B
AI Explanation
A mechanistic structure is characterised by high formalisation, centralised decision-making, a clear chain of command, and standardised procedures. The description of Zenith Manufacturing Limited — strict hierarchy, defined roles, and low employee initiative — aligns precisely with a mechanistic structure. An organic structure, by contrast, is flexible and decentralised, encouraging employee initiative.
ICAN 2022
20. The Financial Reporting Council of Nigeria (FRCN) Nigerian Code of Corporate Governance 2018 recommends that the board of a public interest entity should establish which of the following committees to reinforce accountability within the organisational structure?
- A. Audit Committee, Risk Management Committee, and Remuneration Committee
- B. Audit Committee, Marketing Committee, and Strategy Committee
- C. Finance Committee, Legal Committee, and HR Committee
- D. Investment Committee, Procurement Committee, and Ethics Committee
Answer: A
AI Explanation
The FRCN Nigerian Code of Corporate Governance 2018 specifically recommends that public interest entities establish an Audit Committee, a Risk Management Committee, and a Remuneration Committee as part of their board structure to strengthen oversight and accountability. These committees are integral to good corporate governance and directly shape the formal organisational structure at the board level. The other options include committees not specifically mandated by the Code.
ICAN 2024
21. The Board of Directors of Dangote Cement Plc is conducting a strategic review. The Chief Executive Officer argues that management should be studied as a set of universal functions applicable across all organisations regardless of size or industry. This view aligns most closely with which school of management thought?
- A. Contingency Theory
- B. Systems Theory
- C. Classical/Administrative Theory
- D. Behavioural Management Theory
Answer: C
AI Explanation
The Classical/Administrative Theory, pioneered by Henri Fayol, holds that management consists of universal functions — planning, organising, commanding, coordinating, and controlling — applicable to all types of organisations. Fayol's principles were intended to be universally applicable. Contingency Theory argues that there is no single best approach; Systems Theory views organisations as interrelated components; and Behavioural Theory focuses on human relations and motivation.
ICAN 2024
22. Alhaji Musa, the newly appointed Managing Director of Zenith Plastics Limited in Lagos, is reviewing the company's organisational structure. He notices that workers report to multiple supervisors across different functional departments. Which classical management principle is being violated in this arrangement?
- A. Division of labour
- B. Unity of command
- C. Scalar chain
- D. Esprit de corps
Answer: B
AI Explanation
Unity of command, one of Henri Fayol's 14 principles of management, stipulates that each employee should receive orders from only one superior. When workers report to multiple supervisors, this principle is violated, leading to confusion, conflicting instructions, and reduced accountability. The other options refer to different principles: division of labour concerns task specialisation, scalar chain refers to the hierarchy of authority, and esprit de corps relates to team spirit.
ICAN 2025
23. Ngozi Okafor, HR Manager at First Bank of Nigeria Plc, is designing a motivation programme. She proposes that employees who have not yet received consistent monthly salaries, safe working conditions, and job security cannot be effectively motivated by offering them opportunities for career advancement and self-actualisation. This proposal is most consistent with which management theory?
- A. Herzberg's Two-Factor Theory
- B. McGregor's Theory X and Theory Y
- C. Maslow's Hierarchy of Needs Theory
- D. Vroom's Expectancy Theory
Answer: C
AI Explanation
Maslow's Hierarchy of Needs posits that human needs are arranged in a hierarchical order — physiological, safety, social, esteem, and self-actualisation — and that lower-order needs must be substantially satisfied before higher-order needs become motivating. Salaries address physiological needs and job security addresses safety needs; until these are met, offering self-actualisation opportunities will not effectively motivate employees. The other theories do not specifically address this sequential hierarchy of needs.
ICAN 2024
24. Emeka Chukwu, the Production Manager of Innoson Vehicle Manufacturing Company, sets a production target of 500 vehicles per month for his team. At month-end, only 420 vehicles were produced. He compares actual output to the target and initiates corrective actions. Which management function is Emeka primarily performing?
- A. Planning
- B. Organising
- C. Leading
- D. Controlling
Answer: D
AI Explanation
Controlling involves establishing performance standards, measuring actual performance, comparing actual performance against standards, and taking corrective action where deviations exist. Emeka's activities — setting a target, measuring output, comparing results, and initiating corrections — are all elements of the controlling function. Planning involves setting objectives beforehand; Organising involves arranging resources; and Leading involves directing and motivating people.
ICAN 2021
25. Tunde Adeyemi manages a team of 12 software engineers at SystemSpecs Limited in Lagos. He believes his engineers are inherently self-motivated, creative, and capable of self-direction when committed to organisational objectives. He therefore adopts a participative management style. Tunde's assumptions about his employees are consistent with which management theory?
- A. Theory X of McGregor
- B. Theory Z of Ouchi
- C. Theory Y of McGregor
- D. Scientific Management of Taylor
Answer: C
AI Explanation
McGregor's Theory Y assumes that employees are inherently motivated, enjoy work, seek responsibility, exercise self-direction, and are capable of creativity when committed to organisational goals. This contrasts with Theory X, which assumes employees are lazy, dislike work, and must be coerced. Theory Z (Ouchi) focuses on long-term employment and collective decision-making, while Taylor's Scientific Management emphasises time-and-motion studies and financial incentives.
ICAN 2020
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