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ICAN Business Environment 2022 past questions and answers

This 2022 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 2022 set with instant marking.

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Sample ICAN Business Environment 2022 questions

1. A group of investors wants to operate a business that can own property and enter contracts in its own name, separate from its owners. Which form best meets this requirement?
  1. Ordinary partnership
  2. Sole proprietorship
  3. Limited liability company
  4. Unregistered business name

Answer: C. Limited liability company

A limited liability company has a legal personality separate from its members and can own assets and contract in its own name. A sole proprietorship and an ordinary partnership do not provide this same separation.

2. In a functional organisational structure, employees are grouped primarily according to their
  1. specialist activities, such as finance or marketing
  2. geographical territories
  3. products produced
  4. individual customers

Answer: A. specialist activities, such as finance or marketing

A functional structure groups work by specialist function, such as finance, operations, or marketing. Grouping by product or territory instead indicates a divisional structure.

3. A central bank raises its policy interest rate to reduce inflationary pressure. Which is the most likely short-term effect on borrowing by households and firms?
  1. Borrowing becomes cheaper and rises
  2. Borrowing costs are unchanged
  3. The money supply automatically doubles
  4. Borrowing becomes more expensive and may fall

Answer: D. Borrowing becomes more expensive and may fall

Higher policy rates tend to raise market lending rates, discouraging borrowing and spending. They do not automatically double the money supply.

4. A country's currency depreciates against its trading partners' currencies. Assuming other factors are unchanged, which outcome is most likely for an exporter invoicing in the foreign currency?
  1. Its goods become more expensive to foreign buyers
  2. Its goods may become more price-competitive abroad
  3. Its domestic production costs must fall
  4. The country's imports become cheaper in domestic currency

Answer: B. Its goods may become more price-competitive abroad

Depreciation makes domestic goods less costly in foreign-currency terms, potentially improving export competitiveness. Imports, by contrast, generally cost more in domestic currency.

5. A purchasing manager evaluates bids from suppliers, one of which is owned by the manager's close relative. What should the manager do first to protect the integrity of the decision?
  1. Disclose the relationship and follow the organisation's conflict-of-interest procedure
  2. Select the relative's firm if its bid is received first
  3. Keep the relationship private if the price is competitive
  4. Ask the supplier to submit a second bid under another name

Answer: A. Disclose the relationship and follow the organisation's conflict-of-interest procedure

Disclosure allows the organisation to manage the actual or perceived conflict, for example by having an independent person assess the bids. Concealing the relationship undermines fair procurement even if the price is competitive.

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