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IIA IIA-CIA-Part3 Exam Syllabus Topics:
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NEW QUESTION 231
Two countries have flexible e change rate systems and an active trading relationship. If incomes <List A> in country 1, everything else being equal, then the currency of country 1 will tend to <List B> relative to the currency of country 2.
- A. Option D
- B. Option B
- C. Option A
- D. Option C
Answer: D
Explanation:
If incomes in country 1 rise, consumers in country 1 will increase their imports from country
2. The resulting increase in the supply of currency 1 will result in a tendency for it to depreciate relative to the currency of country 2.
NEW QUESTION 232
Which of the following describes the free trade zone in an e-commerce environment?
- A. Zone that separates an organization's servers from outside forces.
- B. Area in which messages are scrutinized to determine if they are authorized.
- C. Area where communication and transactions occur between trusted parties.
- D. Zone where data is encrypted, users are authenticated, and user traffic is filtered.
Answer: C
NEW QUESTION 233
During the last year, an organization had an opening inventory of $300,000, purchases of $980,000, sales of $1,850,000, and a gross margin of 40 percent. What is the closing inventory if the periodic inventory system is used?
- A. $300,000
- B. $280,000
- C. $170,000
- D. $540,000
Answer: C
NEW QUESTION 234
Which of the following represents the greatest exposure to the integrity of electronic funds transfer data transmitted from a remote terminal?
- A. Poor system documentation.
- B. Network viruses.
- C. Leased telephone circuits.
- D. Poor physical access controls over the data center.
Answer: C
Explanation:
Leased telephone circuits represent a direct exposure to the risk of breached
data integrity.
They use public lines that c. an be easily identified and tapped.
NEW QUESTION 235
In a product's life cycle, the first symptom of the decline stage is a decline in the:
- A. Product's sales.
- B. Product's production cost.
- C. Firm's inventory levels.
- D. Product's prices.
Answer: A
Explanation:
The sales of most product types and brands eventually decrease permanently. This decline may be slow or rapid. This first symptom of the decline stage of a product's life cycle triggers such other effects as price cutting, narrowing of the product line, and reduction in promotion budgets.
NEW QUESTION 236
Which line segment identifies the quantity of safety stock maintained?
- A. BC.
- B. AE.
- C. AB.
- D. A
Answer: B
Explanation:
Quantities of inventory are shown along they axis. Safety stock is represented by the line
AE.
The diagram presented represents the economic circler quantity ECQ) model.
NEW QUESTION 237
Which of the following statements is true regarding the "management-by-objectives" method?
- A. Management by objectives is most helpful in organizations that nave rapid changes.
- B. Management by objectives helps organizations to keep employees motivated.
- C. Management by objectives helps organizations to distinguish clearly strategic goals from operational goals
- D. Management by objectives is most helpful in mechanistic organizations with rigidly defined tasks.
Answer: B
NEW QUESTION 238
The dollar sales volume required in the coming year to earn the same after-tax profit as the past year is:
- A. US $21,600,000
- B. US $23,400,000
- C. US $20,160,000
- D. US $26,400,000
Answer: A
Explanation:
The desired after-tax profit is US $1.188.000 the past year's amount). Given a 40% tax rate, the pretax equivalent is US $1.980.000 [$1.188.000 - 1 0 - 40)]. Pretax profit equals dollar sales unit sales x US $40). minus total fixed costs, minus total variable costs unit sales x unit variable cost). Hence, the contribution margin sales -variable costs) is equated with the sum of fixed costs and the targeted pretax profit. Unit sales S) equal 540.000. and sales dollars equal US $21,600,000 540,000 units x $40).
A company that sells its single product for US $40 per unit uses cost-volume-profit analysis in its planning. The company's after-tax profit for the past year was US $1,188,000 applying an effective tax rate of 40%. The projected costs for manufacturing and selling its single product in the coming year are listed.
NEW QUESTION 239
According to the Standards, the internal audit activity must evaluate risk exposures relating to which of the following when examining an organization's risk management process?
1. Organizational governance.
2. Organizational operations.
3. Organizational information systems.
4. Organizational structure.
- A. 1, 2, and 4 only
- B. 1 and 3 only
- C. 2 and 4 only
- D. 1, 2, and 3 only
Answer: D
NEW QUESTION 240
Evaluating performance is not done to:
- A. Determine which employees deserve salary increases.
- B. Motivate the employees.
- C. Determine the amount of nondiscriminatory benefits that each employee deserves.
- D. Assess the available human resources of the firm.
Answer: C
Explanation:
Evaluations reinforce accomplishments, help in assessing employee strengths and weaknesses, provide motivation, assist in employee development, permit the organization to assess its human resource needs, and serve as a basis for wage increases. FJon discriminatory benefits are given to everyone in the organization in equal amounts, regardless of title, pay, or achievement of objectives.
NEW QUESTION 241
The following ratios relate to an entity's financial situation compared with that of its:
What conclusion could a financial analyst validly draw from these ratios?
- A. The entity's product has a high market share, leading to higher profitability.
- B. The entity's profits are increasing over time.
- C. The entity's shares have a higher market value to carrying amount than does the rest of the industry.
- D. The entity uses more debt than does the average entity in the industry.
Answer: D
Explanation:
The use of financial leverage has a multiplier effect on the return on assets. The extended Du Pont formula illustrates this point by showing that the return on equity equals the return on assets times the grace factor, also called the equity multiplier total assets -ordinary equity). Thus, greater use of debt increases the equity multiplier and the return on equity. In this example, the equity multiplier is 1:12 15.2% ROE / 7.9% ROA), and the industry average is 1.40 12.9% ROE / 9.2% ROA). The higher quality multiplier Indicates that the entity uses more debt than the industry average.
NEW QUESTION 242
According to IIA guidance on IT auditing, which of the following would not be an area examined by the internal audit activity?
- A. Policy development.
- B. Change management.
- C. Operations processes.
- D. Access system security.
Answer: A
NEW QUESTION 243
Which of the following would most likely be found in an organization that uses a decentralized organizational structured?
- A. There is a higher reliance on organizational culture
- B. There are electronic monitoring techniques employed
- C. There are clear expectations set for employees
- D. There is a defined code for employee behavior
Answer: C
NEW QUESTION 244
Because of the large number of factors that could affect the demand for its new product, interactions among these factors, and the probabilities associated with different values of these factors, the marketing department would like to develop a computerized model for projecting demand for this product. By using a random-number procedure to generate values for the different factors, it will be able to estimate the distribution of demand for this new product. This method of estimating the distribution of demand for the new product is called
- A. Linear programming.
- B. Differential analysis.
- C. Monte Carlo simulation.
- D. Correlation analysis.
Answer: C
Explanation:
Simulation is a technique in which a probabilistic process is first modeled. The inputs to the model are then varied a large number of times to estimate the distribution of possible outcomes from the model of the variable of interest. Simulations that use a random-number procedure to generate values for the inputs are referred to as Monte Carlo simulations.
NEW QUESTION 245
The company uses a planning system that focuses first on the amount and timing of finished goods demanded and then determines the derived demand for raw materials, components, and subassemblies at each of the prior stages of production. This system is referred to as:
- A. Linear programming.
- B. Economic order quantity.
- C. Materials requirements planning.
- D. Just-in-time purchasing.
Answer: C
Explanation:
Materials requirements planning MRP) is a system that translates a production schedule into requirements for each component needed to meet the schedule. It is usually implemented in the form of a computer-based information system designed to plan and control raw materials used in production. It assumes that forecasted demand is reasonably accurate and that suppliers can deliver based upon this accurate schedule. MRP is a centralized push-through system: output based on forecasted demand is pushed through to the next department or to inventory.
NEW QUESTION 246
An entity has a majority of its customers located in states A and B. A major west coast bank has agreed to provide a lockbox system to the entity at a fixed fee of US $50,000 per year and a variable fee of US $0.50 for each payment processed by the bank. On average, the entity receives 50 payments per day, each averaging US $20,000. With the lockbox system, the entity's collection float will decrease by 2 days. The annual interest rate on money market securities is 6%. If the entity makes use of the lockbox system, what would be the net benefit to the entity? Use 365 days per year.
- A. US $50,000
- B. US $120,000
- C. US $60,875
- D. US $55.125
Answer: C
Explanation:
If payments are collected 2 days earlier. the entity can earn US $120,000 $20,000 50 payments per day 2 days .06) at a cost of US $59,125 [$50,000 + 50 payments 365 days $.50)], a gain of US $60,875.
NEW QUESTION 247
The network below describes the interrelationships of several activities necessary to complete a project. The arrows represent the activities. The numbers between the arrows indicate the number of months to complete each activity.
The shortest time to complete the project is
- A. 5 months.
- B. 8 months.
- C. 14 months.
- D. 6 months.
Answer: B
Explanation:
The critical (longest) path through the network from node (A) to node (F) is path A-C-D-F. All other paths are shorter than path A-C-D-F, so the activities along those paths can be completed before the activities along path A-C-D-F. Thus, the shortest time to complete the project is 8 months (3 + 3 + 2).
NEW QUESTION 248
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