Latest IIA IIA-CIA-Part3 Free Certification Exam Material with 344 Q&As
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NEW QUESTION # 96
The rate of gross profit on Year 2 installment sales is:
- A. 80%
- B. 50%
- C. 20%
- D. 40%
Answer: C
Explanation:
The rate of gross profit on Year 2 installment sales is 20% [(US $5,000 of Year 2 installment sales - $4,000 cost of Year 2 installment sale=,) - $5,000 of Year 2 installment sales].
An entity sells goods on an installment basis. The table below includes information about the level of installment sales, the cost of the goods sold on installment, and the cash receipts on installment sales for Year 1 through Year 3. All cash receipt amounts shown are net of any interest charges.
NEW QUESTION # 97
When assessing the adequacy of a risk mitigation strategy, an internal auditor should consider which of the following?
1. Management's tolerance for specific risks.
2. The cost versus benefit of implementing a control.
3. Whether a control can mitigate multiple risks.
4. The ability to test the effectiveness of the control.
- A. 1, 3, and 4
- B. 2, 3, and 4
- C. 1, 2, and 3
- D. 1, 2, and 4
Answer: A
NEW QUESTION # 98
A type of network that is used to support interconnections within a building is known as a:
- A. Local area network.
- B. Metropolitan area network.
- C. Wide area network.
- D. Value-added network.
Answer: A
Explanation:
A communications network consists of one or more computers and their peripheral equipment linked together. Local-area networks LANs) link together hardware and other equipment within a limited area, such as a building, so that users can share data and hardware devices.
NEW QUESTION # 99
Which of the following statements about mentoring is true?
1. Mentoring can be used effectively for increasing employee retention
2. Mentoring can be used effectively in reducing employees frustration.
3. Mentoring can be used effectively for increasing organization communication.
4. Mentoring can be used effectively as a short term activity consisting of instruction and training
- A. 1,2. 3, and 4
- B. 1. 2 and 4 only
- C. 1 2. and 3 only.
- D. 1, 3. and 4 only.
Answer: C
NEW QUESTION # 100
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 is most helpful in mechanistic organizations with rigidly defined tasks.
- C. Management by objectives helps organizations to distinguish clearly strategic goals from operational goals
- D. Management by objectives helps organizations to keep employees motivated.
Answer: D
NEW QUESTION # 101
According to IIA guidance, which of the following statements is true with regard to workstation computers that access company information stored on the network?
- A. With security risks near an all-time high workstations should not be connected to the company network
- B. Particular attention should be paid to housing workstations away from environmental hazards.
- C. Cybersecurity issues can be controlled at an enterprise level making workstation level controls redundant
- D. individual workstation computer controls are not as important as companywide server controls.
Answer: B
NEW QUESTION # 102
A corporation had profit for the year of US $101,504 and a simple capital structure consisting of the following ordinary shares outstanding:
What was the corporation's basic earnings per share rounded to the nearest cent)?
- A. US $3.26
- B. US $3.45
- C. US $3.20
- D. US $2.90
Answer: C
Explanation:
BEPS equals profit or loss attributable to ordinary equity holders divided by the weighted-average number of ordinary shares outstanding. The latter is calculated as follows:
Accordingly, BEPS is US $3.20 $101,504 profit - 31,720 shares).
NEW QUESTION # 103
When two devices in a data communications system are communicating, there must be agreement as to how both data and control information are to be packaged and interpreted. Which of the following terms is commonly used to describe this type of agreement?
- A. Communication protocol.
- B. Communication channel.
- C. Synchronous communication.
- D. Asynchronous communication.
Answer: A
Explanation:
A protocol is a set of formal rules or conventions governing communication between a sending and a receiving device. It prescribes the manner by which data are transmitted between these communications devices. In essence, a protocol is the envelope within which each message is transmitted throughout a data communications network.
NEW QUESTION # 104
An example of secured short-term financing is:
- A. Commercial paper.
- B. A warehouse receipt
- C. A revolving credit agreement.
- D. Trade credit
Answer: B
Explanation:
A document of title is usually issued by a bailee covering goods in the bailee's possession or care UCC 1-201). It represents ownership of the goods and is ordinarily needed to obtain the goods from the bailee. The two major types of documents of title are bills of lading issued by carriers) and warehouse receipts_ A warehouse receipt is issued by a person engaged in the business of storing goods for hire. Security for short-term inventory financing can be arranged if the debtor places its inventory under the control of the lender or its agent e.g., a public warehouse), and the lender holds the warehouse receipts.
NEW QUESTION # 105
According to IIA guidance, which of the following corporate social responsibility (CSR) activities is appropriate for the internal audit activity to perform?
- A. Align CSR program objectives with the organization's strategic plan.
- B. Integrate CSR activities into the organization's decision-making process.
- C. Determine whether the organization has an appropriate policy governing its CSR activities.
- D. Determine the optimal amount of resources for the organization to invest in CSR.
Answer: C
NEW QUESTION # 106
Which of the following statements best describes the frameworks set forth by the International Standards Organization?
- A. Globally accepted standards for industries and processes.
- B. Frameworks and guidance on enterprise risk management, internal control, and fraud deterrence.
- C. Practical guidance and benchmarks for all organizations that use information systems.
- D. Bridging the gaps among control requirements, technical issues, and business risks.
Answer: A
NEW QUESTION # 107
Setting the introductory price of a new product relatively high is:
- A. Penetration pricing.
- B. Pricing by intermediaries.
- C. Market-based pricing.
- D. Price skimming.
Answer: D
Explanation:
Price skimming is the practice of setting an introductory price relatively high to attract buyers who are not concerned about price and to recover research and development costs rather quickly. The opposite approach is to use penetration pricing, which involves setting a relatively low price to gain deep market penetration quickly.
NEW QUESTION # 108
Now assume the terms required the seller to deliver to the destination instead of the shipping point. What is the correct amount of inventory and freight-in relating to this purchase on the Year 1 financial statements?
- A. Option D
- B. Option C
- C. Option B
- D. Option A
Answer: D
Explanation:
Title and risk of loss passed to the buyer at the destination, and the seller incurred the erase of delivery to that point the goods did not arrive until after year-end, so they should not be included in Year 1 inventory. Freight-in should also not be recorded until Year 2.
Topic 7, Volume G
NEW QUESTION # 109
Which of the following control frameworks was acknowledged by the U.S. Securities and Exchange Commission as an appropriate model for designing internal controls under the requirements of the Sarbanes-Oxley Act of 2002?
- A. COSO
- B. COBIT
- C. GTAG
- D. eSAC
Answer: A
Explanation:
The importance and durability of the COSO Framework was reinforced when the U.S. Securities and Exchange Commission acknowledged it as an appropriate model for designing internal controls under the requirements of the Sarbanes-Oxley Act of 2002.
NEW QUESTION # 110
Which of the following statements is correct regarding corporate compensation systems and related bonuses?
1.A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control.
2.Compensation systems are not part of an organization's control system and should not be reported as such.
3.An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.
- A. 3 only
- B. 2 and 3 only
- C. 2 only
- D. 1 only
Answer: D
NEW QUESTION # 111
Under the "output" approach, gross domestic product GDP) is measured as:
- A. Non-income charges or allocations + wages + rents + interest.
- B. Consumption expenditures + investment + government purchases + expenditures by foreigners.
- C. Consumption expenditures + investment + government purchases + interest
- D. Non-income charges or allocations + wages + rents + interest + profits.
Answer: B
Explanation:
GDP is the total value of all goods and services produced in the U.S., regardless of the ownership of the means of production. GDP can be measured using an income or output expenditures) approach. The output approach measures the amount spent to purchase the year's total output. Using this approach, GDP is calculated by adding consumption expenditures by households, investment expenditures by businesses, government purchases of goods and services, and expenditures by foreigners.
NEW QUESTION # 112
Organizations mat adopt just-in-time purchasing systems often experience which of the following?
- A. A slight increase in carrying costs.
- B. A greater need for linkage with a vendor s computerized order entry system.
- C. An increase in the number of suitable suppliers
- D. A greater need for inspection of goods as the goods arrive.
Answer: B
NEW QUESTION # 113
The dollar sales volume required in the coming year to earn the same after-tax profit as the past year is:
- A. US $23,400,000
- B. US $20,160,000
- C. US $26,400,000
- D. US $21,600,000
Answer: D
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 # 114
The company has considered several alternatives for replacing the hardware required for a regional center's processing. An advantage of using a third-party cold site is that:
- A. No additional equipment would be required at the regional centers.
- B. Travel expenses would be minimized for company personnel.
- C. The replacement site could be up and running in a few hours.
- D. Personnel employed at the site would be familiar with company operations.
Answer: A
Explanation:
A cold site backup facility is a shell facility where the user can quickly install computer equipment and resume operations in the event of a disaster. The facility has all of the needed assets in place except the needed computer equipment and is vendor-dependent for timely delivery of equipment. Accordingly, an advantage of using a third-party cold site is the elimination of the need for additional equipment. An automobile and personal property insurer has decentralized its information processing to the extent that headquarters has less processing capacity than any of its regional processing centers.
These centers are responsible for initiating policies, communicating with policyholders, and adjusting claims. The company uses leased lines from a national telecommunications company. Initially, the company thought there would be little need for interregion communication, but that has not been the case. The company underestimated the number of customers that would move between regions and the number of customers with claims arising from accidents outside their regions. The company has a regional center in an earthquake-prone area and is planning how to continue processing if that center, or any other single center, were unable to perform its processing.
NEW QUESTION # 115
A manager at a publishing company received an email that appeared to be from one of her vendors with an attachment that contained malware embedded in an Excel spreadsheet . When the spreadsheet was opened, the cybercriminal was able to attack the company's network and gain access to an unpublished and highly anticipated book. Which of the following controls would be most effective to prevent such an attack?
- A. Monitoring network traffic.
- B. Using whitelists and blacklists to manage network traffic.
- C. Restricting access and blocking unauthorized access to the network
- D. Educating employees throughout the company to recognize phishing attacks.
Answer: D
NEW QUESTION # 116
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