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NEW QUESTION 119
Assuming all of the following involve material amounts, which is most likely to be classified as an extraordinary item in the income statement?
- A. A gain because of the disposal of assets associated with a discontinuing operation of a business.
- B. A loss because of adjustments of accruals on long-term contracts.
- C. None of the above.
- D. A loss because of an expropriation of assets by a foreign government.
Answer: C
Explanation:
According to IAS 1, An entity shall not present any items of income and expense as extraordinary items, either on the face of the income statement or in the notes."
NEW QUESTION 120
General sales taxes tend to be regressive with respect to income because:
- A. The tax rate is higher for person with lower income.
- B. A larger portion of a lower income person's income is subject to the tax.
- C. A smaller portion of a lower income person's income is subject to the tax.
- D. The tax claims an increasing amount of income as income rises.
Answer: B
Explanation:
A sales tax is regressive with respect to income even though the rate is the same regardless of the buyer's income. The reason is that a greater percentage of a low-income individual's income is exposed to the tax. A higher-income individual should be able to save more and therefore shield a greater percentage of his/her income from the tax.
NEW QUESTION 121
In production management, product breakdown into component parts and lead times for procuring these parts is necessary for:
- A. A critical path method (CPM) system.
- B. An economic order quantity (EOQ) system.
- C. A materials requirements planning (MRP) system.
- D. An ABC system.
Answer: C
Explanation:
Materials requirements planning (MRP) is usually considered a computer-based information system designed to plan and control raw materials used in a production setting. It assumes that estimated demand for materials is reasonably accurate and that suppliers can deliver based upon this accurate schedule. It is crucial that delivery delays be avoided because, under MRP, production delays are almost unavoidable if the materials are not on
hand. An MRP system uses a parts list, often called a bill of materials, and lead times for each type of material to obtain materials just as they are needed for planned production.
NEW QUESTION 122
Which of the following pieces of information is useful to an internal auditor who is conducting a risk assessment for an e-commerce project?
I. The business plan for the e-commerce project
II. The level of functionality required to meet the end user's needs as well as management's objectives.
III.
The results of a risk assessment performed to evaluate impact of internal and external forces RRR.
- A. II and III only.
- B. I. II, and III.
- C. I and III only.
- D. I and II only.
Answer: B
Explanation:
The IIA's SAC publication can assist the internal auditor in audit planning and risk assessment. It includes a list of e-commerce areas that should be of interest to an internal auditor who is undertaking an engagement and assessing risks. The questions for the internal auditor to consider are listed in PA 2100-6, Control and Audit Implications of E-commerce Activities. All of the information given constitutes answers to some of the questions listed.
NEW QUESTION 123
Which of the following is an established systems development methodology?
- A. COBIT
- B. Waterfall.
- C. Projects in Controlled Environments (PRINCE2).
- D. Information Technology Infrastructure Library (ITIL).
Answer: B
NEW QUESTION 124
Application control objectives do not normally include assurance that:
- A. Review and approval procedures for new systems are set by policy and adhered to.
- B. Transaction data are complete and accurate.
- C. Authorized transactions are completely processed once and only once.
- D. Processing results are received by the intended user.
Answer: A
Explanation:
Application controls provide reasonable assurance that the recording, processing, and reporting of data are properly performed. Review and approval procedures for new systems are among the general controls known as system software acquisition and maintenance controls.
NEW QUESTION 125
One of the main reasons that implementation of a total quality management (TQM) program works better through the use of teams is:
- A. Teams are more efficient and help an organization reduce its staffing.
- B. Teams are a natural vehicle for sharing ideas, which leads to process improvement.
- C. The use of teams eliminates the need for supervision, thereby allowing a company to reduce staffing.
- D. Employee motivation is always higher for team members than for individual contributors.
Answer: B
Explanation:
TQM promotes teamwork by modifying or eliminating traditional (and rigid) vertical hierarchies and instead forming flexible groups of specialists. Quality circles, cross-functional teams, and self-managed teams are typical formats. Teams are an excellent means of encouraging the sharing of ideas and removing process improvement obstacles.
NEW QUESTION 126
In a product's life cycle, the first symptom of the decline stage is a decline in the:
- A. Product's prices.
- B. Firm's inventory levels.
- C. Product's production cost.
- D. Product's sales.
Answer: D
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 127
Which one of the following examples of corporate behavior would most clearly represent a
violation of antitrust law?
- A. Two entities in the same industry agree in a telephone conversation to submit identical bids on a government contract.
- B. The members of a labor union meet and agree not to work for a specific entity unless the starting wage is at least a specified amount per hour.
- C. Two entities that are in different, unrelated industries merge.
- D. A retailer offers quantity discounts to large institutional buyers.
Answer: A
Explanation:
Antitrust law addresses restraints of trade. Some types of arrangements are considered automatic violations. These violations may include price fixing, division of markets, group boycotts, and resale price maintenance. Agreeing to submit identical bids on a government contract is a form of price fixing.
NEW QUESTION 128
Which of the following statements is false regarding the internal audit approach when a set of standards other than The IIA's Standards is applicable to a specific engagement?
- A. If there are inconsistencies between the other standards and The IIA's Standards, the internal auditor must use the more restrictive standards.
- B. The internal auditor may cite the use of other standards during audit communications.
- C. If there are inconsistencies between the other standards and The IIA's Standards, the internal auditor must use the less restrictive standards.
- D. If the other standards are government-issued, the internal auditor should apply them in conjunction with The IIA's Standards.
Answer: C
NEW QUESTION 129
What is the method of presenting a noncontrolling interest in a consolidated balance sheet?
- A. As a separate item within the deferred credits section.
- B. By means of notes to the balance sheet.
- C. As a deduction from contra to goodwill from consolidation if any.
- D. As a separate item within the equity section.
Answer: D
Explanation:
A noncontrolling is classified as an equity account and separated from the equity of majority shareholders within that section.
NEW QUESTION 130
In an analysis of alternative credit-management policies, which of the following components will cause the net present value of receivables on credit sales to increase, if everything else remains constant?
- A. An increase in the cost of capital.
- B. A longer average collection period.
- C. A tougher collections policy that reduces the bad debt loss ratio.
- D. A higher cost per unit sold.
Answer: C
NEW QUESTION 131
Your company (Company Y) has decided to enter the European market with one of its products and is now considering three advertising strategies. This market currently belongs to Company X. Company X is aware that your company is entering the market and is itself considering steps to protect its market. An analyst for your company has identified three strategies Company X might develop and has shown the payoffs for each in the tables below.
The analyst has formulated this problem as a:
- A. Game against nature.
- B. Cooperative game.
- C. Prisoner's dilemma.
- D. Zero-sum game.
Answer: D
Explanation:
Game theory is a mathematical approach to decision making when confronted with an enemy or competitor. Games are classified according to the number of players and the algebraic sum of the payoffs. In a two-player game, if the payoff is given by the loser to the winner, the algebraic sum is zero, and the game is a zero-sum game; if it is possible for both players to profit, the game is a positive-sum game. In this situation, the sum of the payoffs for each combination of strategies is zero. For example, if X takes no action and Y chooses limited advertising, X's payoff is -1 and Ys is 1.
NEW QUESTION 132
Which of the following procedures would an entity most likely include in its disaster recovery plan?
- A. Convert all data from EDI format to an internal company format.
- B. Maintain a Trojan horse program to prevent illicit activity.
- C. Store duplicate copies of files in a location away from the computer center.
- D. Develop an auxiliary power supply to provide uninterrupted electricity.
Answer: C
Explanation:
Off-site storage of duplicate copies of critical files protects them from a fire or other disaster at the computing facility. The procedure is part of an overall disaster recovery plan. 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 133
The failure to record an accrued expense at year-end will result in which of the following overstatement errors in the financial statements prepared at that date?
- A. Option A
- B. Option D
- C. Option C
- D. Option B
Answer: B
Explanation:
An accrued expense is an expense that has been incurred but not paid. The appropriate
adjusting entry to record an accrued expense will increase an expense account and increase a liability account. The failure to record an accrued expense will result in an understatement of expenses leading to an overstatement of profit. The failure to record the increase in a liability account will result in an understatement of current liabilities leading to an overstatement of working capital. There will be no effect on cash.
NEW QUESTION 134
According to Porter, which of the following is associated with fragmented industries?
- A. Strong negotiation power with suppliers.
- B. Steep experience curve.
- C. Significant scale economies.
- D. Weak entrance barriers.
Answer: D
NEW QUESTION 135
An internal auditor observed that the organization's disaster recovery solution will make use of a cold site in a town several miles away. Which of the following is likely to be a characteristic of this disaster recover/ solution?
- A. Data is synchronized in real time
- B. Recovery time is expected to be less than one week
- C. Servers are not available and need to be procured
- D. Recovery resources end data restore processes have not been defined.
Answer: C
NEW QUESTION 136
Total inventory ordering costs per year equal:
- A. US $2,400
- B. US $2,880
- C. US $1,250
- D. US $3,600
Answer: B
Explanation:
Total annual demand is 48,000 units 4,000 per month x 12). Hence, total annual ordering costs equal US $2,880 [$150 cost per order 48,000 units - 2,500 EOQ)].
NEW QUESTION 137
An internal auditor performed a review of IT outsourcing and found that the service provider was failing to meet the terms of the service level agreement. Which of the following approaches is most appropriate to address this concern?
- A. The organization should work with the service provider to review the current agreement and expectations relating to objectives, processes, and overall performance.
- B. The organization should review the skill requirements and ensure that the service provider is maintaining sufficient expertise and retaining skilled resources.
- C. The organization should proactively monitor the performance of the service provider, escalate concerns, and use penalty clauses in the contract where necessary.
- D. The organization should ensure that there is a clear management communication strategy and path for evaluating and reporting on all outsourced services concerns.
Answer: C
NEW QUESTION 138
Which of the following price adjustment strategies is designed to smooth production for the selling firm?
- A. Cash discounts.
- B. Functional discounts.
- C. Quantity discounts.
- D. Seasonal discounts.
Answer: D
Explanation:
Seasonal discounts are designed to smooth production by the selling firm. For example, a ski manufacturer offers seasonal discounts to retailers in the spring and summer to encourage early ordering.
NEW QUESTION 139
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Introduction of IIA CIA Part 3 Exam
The Certified Internal Auditor (CIA) is an advanced professional certification for internal auditors. It is a globally recognized certification and is based on the International Professional Practices Framework (IPPF) of the IIA. The CIA exam consists of three parts. Part 1 covers the foundations of internal auditing, Part 2 covers business knowledge for internal auditing, and Part 3 covers internal audit practices. This article discusses the topic matter covered in Part 3 of the CIA exam. It also provides a sample question and answer to help candidates better prepare for this exam. The IIA CIA part 3 exam dumps are also one of the most complete study guides available. You will learn all the required topics and get a full understanding of them.
The Importance Of IIA CIA Part 3 Exam For A Career In IT
Whenever you are planning to enter the IT field, you should be well aware of the fact that this field is not that easy as it might seem to be. In order to get success in this career, one must prepare with devotion and determination. It is not easy as it requires a lot of concentration and hard work. Your preparation will also determine your level of success in this field.
The first step is to take the Certified Internal Auditor (CIA) Part 3 exam. This particular exam is considered as one of the toughest exams for IT professionals to pass. So, if you want to become a successful IT professional then you have to go through this test at least once in your lifetime. IIA CIA part 3 exam dumps are one of the most reliable study guides that can help you to prepare for the exam.
If you have not yet taken the Certified Internal Auditor (CIA) part 3 exam then it is high time that you should now do so because it is very important for a successful career in IT. You will be able to get more opportunities by taking this test because there are lots of people out there who are looking for IT professionals to work for them.
This test is conducted by the International Institute of Audit and Control (IIA). It is one of the most prestigious institutes which conducts tests on.
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