Certified Internal Auditor CIA Part 3 Exam Sample Questions with Answers

Question #1

Just-in-time JIT) inventory systems have been adopted by large manufacturers to minimize the carrying costs of inventories. Identify the primary vulnerability of JIT systems.

A. omputer resources

B. aterials supply contracts

C. ork stoppages

D. mplementation time

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Correct Answer: C

Question #2

A manufacturing company is attempting to implement a just-in-time JIT) purchase policy system by negotiating with its primary suppliers to accept long-term purchase orders which result in more frequent deliveries of smaller quantities of raw materials. If the JIT purchase policy is successful in reducing the total inventory costs of the manufacturing company, which of the following combinations of cost changes would be most likely to occur?

A. ption A

B. ption C

C. ption C

D. ption D

E. ption E

F. ption F

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Correct Answer: D

Question #3

A control feature designed to negate the use of utility programs to read files that contain all authorized access user codes for the network is:

A. nternally encrypted passwords

B. password hierarchy

C. ogon passwords

D. peer-to-peer network

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Correct Answer: A

Question #4

To ensure privacy in a public key encryption system, knowledge of which of the following keys would be required to decode the received message?I). PrivateII). Public

A.

B. I

C. oth l and ll

D. either I nor II

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Correct Answer: A

Question #5

All of the following are generally included in a cost-of-quality report except:

A. arranty claims

B. esign engineering

C. upplier evaluations

D. ost contribution margin

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Correct Answer: D

Question #6

Which one of the following input validation routines is not likely to be appropriate in a real-time operation?

A. ign check

B. easonableness check

C. equence check

D. edundant data check

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Correct Answer: C

Question #7

Which of the following actions would best address a concern that data uploaded from a desktop computer may be erroneous?

A. he mainframe computer should be backed up on a regular basis

B. wo persons should be present at the desktop computer when it is uploading data

C. he mainframe computer should subject the data to the same edits and validation routines that online data entry would require

D. sers should be required to review a random sample of processed data

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Correct Answer: C

Question #8

The costs of quality that are incurred in detecting units of product that do not conform to product specifications are referred to as:

A. reventive costs

B. ppraisal costs

C. nternal failure costs

D. xternal failure costs

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Correct Answer: B

Question #9

At the introduction stage of an innovative product, the profit growth is normally slow due to:

A. xpensive sales promotion

B. igh competition

C. mass market

D. vailable alternatives

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Correct Answer: A

Question #10

Assuming a 360-day year and that CyberAge continues paying on the last day of the credit period, the entity's weighted-average annual interest rate for trade credit ignoring the effects of compounding) for these two vendors is:

A. 7

B. 5

C. 8

D. 0

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Correct Answer: B

Question #11

Quality cost indices are often used to measure and analyze the cost of maintaining a given level of quality. One example of a quality cost index, which uses a direct labor base, is computed asBased upon these costs data, the quality cost index:

A. ecreased four points from May to June

B. as unchanged from May to June

C. ncreased 10 points from May to June

D. ecreased 10 points from May to June

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Correct Answer: A

Question #12

Which of the following is a key to successful total quality management (TQM)?

A. raining quality inspectors

B. ocusing intensely on the customer

C. reating appropriate hierarchies to increase efficiency

D. stablishing a well-defined quality standard, then focusing on meeting it

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Correct Answer: B

Question #13

Which of the following networks provides the least secure means of data transmission?

A. alue-added

B. ublic-switched

C. ocal area

D. rivate

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Correct Answer: B

Question #14

An individual had taxable income of US $23,r_ir_ir' per year and paid US $8,000 in income tax. The individual's taxable income then increased to US $30,000 per year resulting in a US $10,000 income tax liability. The personal tax system being applied to this individual is:

A. rogressive

B. egressive

C. arginal

D. roportional

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Correct Answer: B

Question #15

A direct effect of imposing a protective tariff on an item for which there are both foreign and domestic producers is that domestic producers will sell, of the item while domestic consumers consume ,List B> of the item.

A. ption A

B. ption B

C. ption C

D. ption D

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Correct Answer: B

Question #16

Which of the following represents an entity's average gross receivables balance?I). Days' sales in receivables x accounts receivable turnover.II). Average daily sales x average collection period.III). Net sales/average gross receivables.

A. only

B. and II only

C. I only

D. I and III only

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Correct Answer: C

Question #17

Net domestic product is composed of the total market value of all?

A. inal goods and services produced in the economy in 1 year

B. oods and services produced in the economy in 1 year

C. inal goods and services produced in the economy in 1 year minus the capital consumption allowance

D. oods and services produced in the economy in 1 year minus the capital consumption allowance

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Correct Answer: C

Question #18

If a supervisor fails to give an employee a negative evaluation because of fear of damaging a good working relationship, this is known as the:

A. eniency error

B. egency effect

C. alo effect

D. ontrast error

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Correct Answer: A

Question #19

How is the letter x in the standard regression equation best described?

A. ndependent variable

B. ependent variable

C. intercept

D. oefficient of determination

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Correct Answer: A

Question #20

As of week 8, the Gantt chart shows that the project is:

A. omplete

B. head of schedule

C. n schedule

D. ehind schedule

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Correct Answer: B

Question #21

An entity has accounts payable of US $5 million with terms of 2% discount within 15 days, net 30 days 2115 net 30 It can borrow funds from a bank at an annual rate of 12%, or it can wait until the 30th day when it will receive revenues to cover the payment If it borrows funds on the last day of the discount period in order to obtain the discount, its total cost will be:

A. S $51,000 less

B. S $75,500 less

C. S $100,000 less

D. S $24,500 more

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Correct Answer: B

Question #22

In Year 2, a manufacturing company instituted a total quality management (TQM) program producing the following report:On the basis of this report, which one of the following statements is most likely true?

A. n increase in prevention and appraisal costs resulted in a higher quality product and therefore resulted in a decrease in failure costs

B. n increase in inspection costs was solely responsible for the decrease in quality costs

C. uality costs, such as scrap and rework, decreased by 48%

D. uality costs, such as returns and repairs under warranty, decreased by 40%

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Correct Answer: A

Question #23

If a manufacturer has established a limit on the number of defects that are tolerable in the final assembly of its product, which of the following quality control procedures should be employed?I). Inspect completed goods for compliance with established tolerances.II). Review sales returns for defects not detected during the final inspection process.III). Compare materials and machinery specifications with original product designs.IV). Establish a quality circle that includes management and subordinates to d

A. , III, and IV

B. I and III only

C. , II, and III

D. II and IV only

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Correct Answer: C

Question #24

What technique could be used to prevent the input of alphabetic characters into an all numeric identification number?

A. sequence check

B. check digit

C. record count

D. format check

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Correct Answer: D

Question #25

The primary reason for adopting TOM was to achieve:

A. reater customer satisfaction

B. educed delivery time

C. educed delivery charges

D. reater employee participation

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Correct Answer: A

Question #26

User acceptance testing is more important in an object-oriented development process than in a traditional environment because of the implications of the:

A. bsence of traditional design documents

B. ack of a tracking system for changes

C. otential for continuous monitoring

D. nheritance of properties in hierarchies

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Correct Answer: D

Question #27

Under the income approach, gross domestic product GDP) is measured as:

A. epreciation charges and indirect business taxes + Wages + Rents + Interest + Profits adjusted for net income earned abroad

B. ages + Rents + interest + Profits

C. epreciation charges and indirect business taxes + Wages + Rents - Interest + Profits

D. ages + Rents + interest - Profits adjusted for net income earned abroad

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Correct Answer: A

Question #28

Enterprise-wide resource planning ERP) software packages, such as SAP and Oracle, are all- inclusive systems that attempt to provide entity-wide information. ERP systems provide advantages to the auditor because they:

A. ave proven difficult for some firms to install

B. ypically require firms to reduce the division of duties and responsibilities found in traditional systems

C. ypically have built-in transaction logs and the ability to produce a variety of diagnostic reports

D. ave been installed by smaller firms so, to date, few auditors have encountered them

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Correct Answer: C

Question #29

Assume that additional workers are hired for the bottleneck operation to expedite setups and materials handling. The cost of the additional workers is US $50,000 per year. As a result, the annual output of the bottleneck operation will increase by 500 units. The change in operating income attributable to the increase in workers is:

A. S $50,000

B. S $36,000

C. S $ 14,000)

D. S $ 20,000)

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Correct Answer: C

Question #30

An entity purchases US $150,000 of inputs from other entities and incurs US $500,000 of labor costs in manufacturing its products. It also incurs US $100,000 of interest expense. The entity sells all of its output for US $2.5 million. Rather than paying income tax, the entity must pay a 25%value-added tax. How much tax will be due for this year's activities?

A. S $437,500

B. S $462,500

C. S $587,500

D. S $625,000

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Correct Answer: C

Question #31

Which statement best describes total quality management TOM)?

A. OM emphasizes reducing the cast of inspection

B. OM emphasizes better statistical quality control techniques

C. OM emphasizes doing each job right the first time

D. OM emphasizes encouraging crass-functional teamwork

View answer

Correct Answer: C

Question #32

Which of the following questions is best associated with the safeguards and controls risk element?

A. hat could happen that would adversely affect the organization's ability to achieve its objectives and execute its strategies?

B. hat can be done to prevent and avoid, mitigate, and detect risks and provide notification?

C. hat is the potential financial impact of the occurrence of an uncertain event?

D. ow often might an uncertain event occur?

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Correct Answer: B

Question #33

Which of the outcomes represented in the following table would result from an entity's retirement of debt with excess cash?

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: A

Question #34

If a country uses trade quotas to overcome chronic trade deficits, what would the most likely outcome be?

A. nemployment and productivity rates will rise

B. nemployment rates will rise and productivity rates will decline

C. nemployment rates will decline and productivity rates will rise

D. nemployment and productivity rates will decline

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Correct Answer: D

Question #35

Company A is a producer of citrus flavored dessert products. Its most popular product is its key, lime pies, which are made with many fine ingredients, including egg yolks. Company A also sells the egg whites that are left over from its production process. These egg whites are sold at any price that is greater than the cost of storing and delivering them.What is the pricing of the egg whites?

A. y-product pricing

B. aptive-product pricing

C. roduct-bundle pricing

D. alue pricing

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Correct Answer: A

Question #36

The data below were gathered on two different machine centers and two products.Which item below would be part of a linear programming formulation of this problem?

A. aximize: Contribution > 4A + 5B

B. ubject to: A < O

C. ubject to: 2

D. ubject to: 4A + 5B < 130

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Correct Answer: C

Question #37

The following transactions + occurred during a company's first year of operations:I). Purchased a delivery van for cashII). Borrowed money by issuance of short-term debtIII). Purchased treasury stockWhich of the items above caused a change in the amount of working capital?

A. only

B. and II only

C. I and III only

D. and III only

View answer

Correct Answer: D

Question #38

A condensed comparative balance sheet for an entity appears below:

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: D

Question #39

Which of the following represents the greatest exposure to the integrity of electronic funds transfer data transmitted from a remote terminal?

A. oor physical access controls over the data center

B. etwork viruses

C. oor system documentation

D. eased telephone circuits

View answer

Correct Answer: D

Question #40

Which statement best describes total quality management (TQM)?

A. QM emphasizes reducing the cost of inspection

B. QM emphasizes better statistical quality control techniques

C. QM emphasizes doing each job right the first time

D. QM emphasizes encouraging cross-functional teamwork

View answer

Correct Answer: C

Question #41

When using PERT (Program Evaluation Review Technique), the expected time for an activity when given an optimistic time (a), a pessimistic time (b),andamostlikelytime(m) is calculated by which one of the following formulas?

A. b - a) + 2

B. a + b) + 2

C. a + 4m+b) + 6

D. 4abm) + 6

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Correct Answer: C

Question #42

An entity has a foreign-currency-denominated trade payable, due in 60 days. To eliminate the foreign currency exchange-rate risk associated with the payable, the entity could:

A. ell foreign currency forward today

B. ait 60 days and pay the invoice by purchasing foreign currency in the spot market at that time

C. uy foreign currency forward today_

D. orrow foreign currency today, convert it to domestic currency on the spot market, and invest the funds in a domestic bank deposit until the invoice payment date

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Correct Answer: C

Question #43

When an entity reports amounts for basic and diluted earnings per share,

A. he entity should be presented with equal prominence on the face of the income statement

B. he entity need not be shown on the face of the income statement but must be disclosed in the notes to the financial statements

C. he entity need to be reported for profit or loss only

D. EPS should be presented on the face of the income statement

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Correct Answer: A

Question #44

In the standard regression equation y- a + bx, how is the letter £> best described?

A. ndependent variable

B. ependent variable

C. intercept

D. lope of the regression line

View answer

Correct Answer: D

Question #45

A bank was considering its first use of computer-aided software engineering CASE) to develop an inquiry system for account representatives to access consolidated profiles of customers' accounts.A benefit of using CASE in this situation is that:

A. o new software development tools would be needed

B. o training of programmers would be required

C. anagement of the development process would be improved

D. he need for testing would be reduced

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Correct Answer: C

Question #46

Large organizations often have their own telecommunications networks for transmitting and receiving voice, data, and images. Very small organizations, however, are unlikely to be able to make the investment required for their own networks and are more likely to use:

A. ublic switched lines

B. ast-packet switches

C. tandard electronic mail systems

D. WAN

View answer

Correct Answer: A

Question #47

What should the company focus on to achieve quality more economically?

A. ppraisal costs

B. revention costs

C. nternal failure costs

D. xternal failure costs

View answer

Correct Answer: B

Question #48

Assuming that the real rate of interest is the same in both countries, if Country A has a higher nominal interest rate than Country B, the currency of Country A will likely be selling at a:

A. orward discount relative to the currency of Country B

B. orward premium relative to the currency of Country

C. pot discount relative to the currency of Country B

D. pot premium relative to the currency of Country B

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Correct Answer: A

Question #49

The arrival time follows which probability distribution?

A. inomial

B. hi-Square

C. oisson

D. xponential

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Correct Answer: C

Question #50

An entity sells to retail stores on credit terms of 2/10 net 30. Daily sales average 150 units at a price of US $300 each. Assuming that all sales are on credit and 60% of customers take the discount and pay on day 10 while the rest of the customers pay on day 30, what is the amount of the entity's accounts receivable?

A. S $135,000

B. S $990,000

C. S $900,000

D. S $81,000

View answer

Correct Answer: D

Question #51

A bank has two drive-in lanes to serve customers:The process of making sure that the model measures what it is supposed to measure is called:

A. tatistical inference

B. ypothesis testing

C. onfidence coefficient analysis

D. alidation

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Correct Answer: D

Question #52

A desired result of the sharing of information by all functions and organizations in the supply chain is:

A. ewer rush orders

B. aximization of inventories held by suppliers, manufacturers, and retailers

C. tockouts

D. ncompatibility of the information systems of the parties

View answer

Correct Answer: A

Question #53

The expected payoff if the vendor has perfect information is:

A. S $3,900

B. S $2,200

C. S $1,360

D. S $1,960

View answer

Correct Answer: B

Question #54

The duties properly assigned to an information security officer could include all of the following except:

A. eveloping an information security policy for the organization

B. aintaining and updating the list of user passwords

C. ommenting on security controls in new applications

D. onitoring and investigating unsuccessful access attempts

View answer

Correct Answer: B

Question #55

Without prejudice to your answer to any other question, assume that cost of goods sold for the current year ended December 31 is 2,000,000. Inventory turnover on total inventory for the entity would be:

A.

B.

C.

D.

View answer

Correct Answer: C

Question #56

Which of the following terms is not used in project management?

A. ummy activity

B. atest finish

C. ptimistic time

D. umpy demand

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Correct Answer: D

Question #57

Which one of the following is not a characteristic of a negotiable certificate of deposit?Negotiable certificates of deposit

A. ave a secondary market for investors

B. re regulated by the government

C. re usually sold in denominations of a minimum of US $100,000

D. ave yields considerably greater than bankers' acceptances and commercial paper

View answer

Correct Answer: D

Question #58

Conformance is how well a product and its components meet applicable standards.According to the robust quality concept,

A. certain percentage of defective units is acceptable

B. nits are acceptable if their characteristics lie within an acceptable range of values

C. he goal is for all units to be within specifications

D. very unit should reach a target value

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Correct Answer: D

Question #59

The moving-average method of forecasting:

A. s a cross-sectional forecasting method

B. egresses the variable of interest on a related variable to develop a forecast

C. erives final forecasts by adjusting the initial forecast based on the smoothing constant

D. ncludes each new observation in the average as it becomes available and discards the oldest observation

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Correct Answer: D

Question #60

Which of the following statements is true regarding user-developed applications (UDAs)?

A. DAs are less flexible and more difficult to configure than traditional IT applications

B. pdating UDAs may lead to various errors resulting from changes or corrections

C. DAs typically are subjected to application development and change management controls

D. sing UDAs typically enhances the organization's ability to comply with regulatory factors

View answer

Correct Answer: B

Question #61

Which of the following statements describes an internal control questionnaire?

A. rovides detailed evidence regarding the substance of the control system

B. akes less of the engagement client's time to complete than other control evaluation devices

C. equires that the internal auditor be in attendance to properly administer it

D. rovides indirect evidence that might need corroboration

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Correct Answer: D

Question #62

The drive-through service at a fast-food restaurant consists of driving up to place an order, advancing to a window to pay for the order, and then advancing to another window to receive the items ordered. This type of waiting-line system is:

A. ingle channel, single phase

B. ingle channel, multiple phase

C. ultiple channel, single phase

D. ultiple channel, multiple phase

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Correct Answer: B

Question #63

The Huron Corporation purchases 60,000 headbands per year. The average purchase lead time is 20 working days, and the maximum lead time is 27 working days. Safety stock equals 1,750 units. The corporation works 240 days per year. Huron should reorder headbands when the quantity in inventory reaches:

A. ,000 units

B. ,750 units

C. ,750 units

D. ,250 units

View answer

Correct Answer: B

Question #64

Which denominator used in the return on investment ROI) formula is criticized because it combines the effects of operating decisions made at one organizational level with financing decisions made at another organizational level?

A. otal assets employed

B. quity

C. orking capital plus other assets

D. otal assets available

View answer

Correct Answer: B

Question #65

Which of the following security controls would be the most effective in preventing securitybreaches?

A. pproval of identity request

B. ccess logging

C. onitoring privileged accounts

D. udit of access rights

View answer

Correct Answer: D

Question #66

The College Honor Society sells hot pretzels at the home football games. The pretzels are sold for $1.00 each, and the cost per pretzel is $.30. Any unsold pretzels are discarded because they will be stale before the next home game.The frequency distribution of the demand for pretzels per game is presented as follows:Unit Sales VolumeProbability2.000 pretzels.103,000 pretzels.154.000 pretzels.205.000 pretzels.356.000 pretzels.20The estimated demand for pretzels at the next home football game using an expect

A.

B.

C. ,000 pretzels

D. one of the answers are correct

View answer

Correct Answer: B

Question #67

The current generation of ERP software ERP II) has added such front-office functions as:

A. nventory control

B. uman resources

C. urchasing

D. ustomer service

View answer

Correct Answer: D

Question #68

An organization's computer help-desk function is usually a responsibility of the:

A. pplications development unit

B. ystems programming unit

C. omputer operations unit

D. ser departments

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Correct Answer: C

Question #69

An assembly plant accumulates its variable and fixed manufacturing overhead costs in a single cost pool, which is then applied to work in process using a single application base.The assembly plant management wants to estimate the magnitude of the total manufacturing overhead costs for different volume levels of the application activity base using a flexible budget formula. If there is an increase in the application activity base that is within the relevant range of activity for the assembly plant, which one

A. he variable cost per unit is constant, and the total fixed costs decrease

B. he variable cost per unit is constant, and the total fixed costs increase

C. he variable cost per unit and the total fixed costs remain constant

D. he variable cost per unit increases and the total fixed costs remain constant

View answer

Correct Answer: C

Question #70

The entity should invest in Project(s) and has an optimal capital budget of million.

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: B

Question #71

Advantages of life cycle methodologies are:

A. ower overall development costs when requirements change frequently

B. bility to give users a functioning system quickly

C. educed application development time to achieve a functioning system

D. nhanced management and control of the development process

View answer

Correct Answer: D

Question #72

CASE computer-aided software engineering) is the use of the computer to aid in the development of computer-based information systems.Which of the following could not be automatically generated with CASE tools and techniques?

A. nformation requirements determination

B. rogram logic design

C. omputer program code

D. rogram documentation

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Correct Answer: A

Question #73

Management of a company is attempting to build a reputation as a world-class manufacturer of quality products.Which of the following measures would not be used by the firm to measure quality?

A. he percentage of shipments returned by customers because of poor quality

B. he number of parts shipped per day

C. he number of defective parts per million

D. he percentage of products passing quality tests the first time

View answer

Correct Answer: B

Question #74

An entity purchased a new machine for US $' III 610100 by borrowing the required funds from a bank for 180 days.What will be the direct impact of this transaction?

A. ecrease the current ratio and increase the debt ratio

B. ncrease the current ratio and decrease the debt ratio

C. ncrease the current ratio and increase the debt ratio

D. ecrease the current ratio and decrease the debt ratio

View answer

Correct Answer: A

Question #75

Some economic indicators lead the economy into a recovery or recession, and some lag it.An example of a lag variable is:

A. hronic unemployment

B. rders for consumer and producer goods

C. ousing starts

D. onsumer expectations

View answer

Correct Answer: A

Question #76

Auditors often make use of computer programs that perform routine processing functions, such as sorting and merging. These programs are made available by computer companies and others and are specifically referred to:

A. ompiler programs

B. upervisory programs

C. tility programs

D. ser programs

View answer

Correct Answer: C

Question #77

A traditional quality control process in manufacturing consists of mass inspection of goods only at the end of a production process. A major deficiency of the traditional control process is that:

A. t is expensive to do the inspections at the end of the process

B. t is not possible to rework defective items

C. t is not 100% effective

D. t does not focus on improving the entire production process

View answer

Correct Answer: A

Question #78

Six months after a disgruntled systems programmer was fired and passwords disabled, the company's mainframe computer was brought to a halt when it suddenly erased all of its own files and software. The most likely way the programmer accomplished this was by:

A. eturning to the computer center after 6 months

B. lanting a computer virus through the use of telephone access

C. aving an accomplice in the computer center

D. mplanting a virus in the operating system and executing it via a back door

View answer

Correct Answer: D

Question #79

Quality costing is similar in service and manufacturing organizations. Nevertheless, the differences between these organizations have certain implications for quality management.Thus,

A. irect labor costs are usually a higher percentage of total costs in manufacturing organizations

B. xternal failure costs are relatively greater in service organizations

C. uality improvements resulting in more efficient use of labor time are more likely to be accepted by employees in service organizations

D. oor service is less likely to result in loss of customers than a faulty product

View answer

Correct Answer: B

Question #80

The most important component of quality control is:

A. nsuring goods and services conform to the design specifications

B. atisfying upper management

C. onforming with ISO-9000 specifications

D. etermining the appropriate timing of inspections

View answer

Correct Answer: A

Question #81

If an entity has a higher dividend-payout ratio. then. if all else is equal, it will have a:

A. igher marginal cost of capital

B. ower marginal cost of capital

C. igher investment opportunity schedule

D. ower investment opportunity schedule

View answer

Correct Answer: A

Question #82

The basic formula for the Black-Schools Option Pricing Model essentially refs is The difference between the expected present value of the final stock price and the present value of the exercise price.An entity wishes to price a call option written on a nondividend-paying stock using the Black- Scholes Option Pricing Model. The current stock price is US $50, the exercise price is US $48. The risk-free interest rate is 5.0%, the option expires in 1 year, and the cumulative probabilities used to calculate the

A. S $6

B. S $4

C. S $4

D. S $2

View answer

Correct Answer: A

Question #83

Good planning will help an organization restore computer operations after a processing outage.Good recovery planning should ensure that:

A. ackup/restart procedures have been built into job streams and programs

B. hange control procedures cannot be bypassed by operating personnel

C. lanned changes in equipment capacities are compatible with projected workloads

D. ervice level agreements with owners of applications are documented

View answer

Correct Answer: A

Question #84

Which of the following statements is true with respect to value engineering?I). Value engineering is a means of reaching targeted cost levels.II). Value engineering is the Japanese concept that emphasizes continuous improvement in all phases of company activities through numerous minor changes.III). Value engineering requires distinguishing between cost incurrence and locked-in costs, with an emphasis on controlling costs at the design stage.

A. tems I and II only

B. tems I and III only

C. tems II and III only

D. tems I, II, and III

View answer

Correct Answer: B

Question #85

Total quality management in a manufacturing environment is best exemplified by:

A. dentifying and reworking production defects before sale

B. esigning the product to minimize defects

C. erforming inspections to isolate defects as early as possible

D. aking machine adjustments periodically to reduce defects

View answer

Correct Answer: B

Question #86

In a database system, locking of data helps preserve data integrity by permitting transactions to have control of all the data needed to complete the transactions. However, implementing a locking procedure could lead to:

A. nconsistent processing

B. ollback failures

C. nrecoverable transactions

D. eadly embraces retrieval contention

View answer

Correct Answer: D

Question #87

The marketing department of a company is deciding on the price to charge for a key product.In setting this price, marketing needs to consider the price that a major competitor will charge for a similar product because the competitor's price will affect the demand for the company's product. Similarly, in setting its price, the competitor will consider what the company will charge.What is an appropriate mathematical technique for analyzing such a decision?

A. ame theory

B. robability theory

C. inear programming

D. ensitivity analysis

View answer

Correct Answer: A

Question #88

Program documentation is a control designed primarily to ensure that:

A. rogrammers have access to production programs

B. rograms do not make mathematical errors

C. rograms are kept up to date and perform as intended

D. o one has made use of the computer hardware for personal reasons

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Correct Answer: C

Question #89

Heniser Pet Foods manufactures two products, X. and Y. The unit contribution margins forProducts X. and Y are US $30 and US $50, respectively. Each product uses Materials A and

A. roduct uses 6 pounds of Material A and 12 pounds of Material B

B. 46 units of and 0 units of Y

C. units of X and 100 units of Y

D. 20 units of and 40 units of Y

E. 0 units of X

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Correct Answer: C

Question #90

The expected value of perfect information is the:

A. ame as the expected profit under certainty

B. um of the conditional profit loss) for the best event of each act times the probability of each event occurring

C. ifference between the expected profit under certainty and the expected opportunity loss

D. ifference between the expected profit under certainty and the expected monetary value of the best act under uncertainty:

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Correct Answer: D

Question #91

When managing cash and short-term investments, a corporate treasurer is primarily concerned with:

A. aximizing rate of return

B. inimizing taxes

C. nvesting in government bonds since they have no default risk

D. iquidity and safety

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Correct Answer: D

Question #92

The internal auditor of a bank has developed a multiple regression model that has been used for a number of years to estimate the amount of interest income from commercial loans. During the current year, the auditor applies the model and discovers that the r2 value has decreased dramatically, but the model otherwise seems to be working.Which of the following conclusions is justified by the change?

A. hanging to a cross-sectional regression analysis should cause r2to increase

B. egression analysis is no longer an appropriate technique to estimate interest income

C. ome new factors not included in the model are causing interest income to change

D. linear regression analysis would increase the model's reliability

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Correct Answer: C

Question #93

Which of the following computer hardware devices allows for an immediate update of merchandise inventory in a retail environment?

A. nventory control terminal

B. onitor

C. ideo display terminal

D. oint-of-sale terminal

View answer

Correct Answer: D

Question #94

Quality cost indices are often used to measure and analyze the cost of maintaining a given level of quality. One example of a quality cost index, which uses a direct labor base, is computed as:Based upon these cost data, the quality cost index:

A. ecreased four points from May to June

B. as unchanged from May to June

C. ncreased 10 points from May to June

D. ecreased 10 points from May to June

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Correct Answer: A

Question #95

Which of the following is considered to be a server in a local area network LAN)?

A. he cabling that physically interconnects the nodes of the LAN

B. device that stores program and data files for users of the LAN

C. device that connects the LAN to other networks

D. workstation that is dedicated to a single user on the LAN

View answer

Correct Answer: B

Question #96

The feasible solution region is bounded by the lines connecting points:

A. , 4, 6, and 7

B. , 5, 6, and 8

C. , 4, 5 6, and 8

D. , 5, 6, and 7

View answer

Correct Answer: A

Question #97

In an effort to increase business efficiencies and improve customer service offered to its majortrading partners, management of a manufacturing and distribution company established a securenetwork, which provides a secure channel for electronic data interchange between the company andits partners.Which of the following network types is illustrated by this scenario?

A. value-added network

B. local area network

C. metropolitan area network

D. wide area network

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Correct Answer: A

Question #98

If electronic funds transfer EFT) is used to pay vendor invoices, which of the following computer- assisted audit procedures would an auditor use to determine if any payments were made twice?I). Testing of EFT transactions for reasonableness.II). Identification of EFT transactions to the same vendor for the same dollar amount.III). Extraction of EFT transactions with unauthorized vendor codes.IV). Searching for EFT transactions with duplicate purchase order numbers.

A. and II only

B. and IV only

C. I and Ill only

D. II and IV only

View answer

Correct Answer: B

Question #99

Misstatements in a batch computer system caused by incorrect programs or data may not be detected immediately because:

A. rrors in some transactions may cause rejection of other transactions in the batch

B. he identification of errors in input data typically is not part of the program

C. here are time delays in processing transactions in a batch system

D. he processing of transactions in a batch system is not uniform

View answer

Correct Answer: C

Question #100

Which of the following correctly describes the introduction of a government tax credit on investments?

A. orporate investments will have higher net present values, all else equal, than without the tax credit

B. ax credits on investments are designed to restrain inflation

C. ax credits on investments increase investment costs, and all else equal, reduce the level of corporate investment

D. ax credits on investments are taxes that are typically levied on individual projects rather than on groups of projects

View answer

Correct Answer: A

Question #101

If a central bank wishes to implement an expansionary monetary policy, which one of the following actions would it take?

A. aise the reserve requirement and the rate at which member banks may borrow from the central bank

B. urchase additional government securities and lower the rate at which member banks may borrow from the central bank

C. educe the reserve requirement and raise the rate at which member banks may borrow from the central bank

D. aise the rate at which member banks may borrow from the central bank and sell government securities

View answer

Correct Answer: B

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