Certified Internal Auditor Part 3 Mock Exam, Questions and Answers

Question #1

The arrival time follows which probability distribution?

A. inomial

B. hi-Square

C. oisson

D. xponential

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Correct Answer: C

Question #2

A company updates its accounts receivable master file weekly and retains the master files and corresponding update transactions for the most recent 2-week period.The purpose of this practice is to

A. erify run-to-run control totals for receivables

B. atch internal labels to avoid writing on the wrong volume

C. ermit reconstruction of the master file if needed

D. alidate groups of update transactions for each version

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Correct Answer: C

Question #3

An entity must select from among several methods of financing arrangements when meeting its capital requirements. To acquire additional growth capital while attempting to maximize earnings per share, an entity should normally

A. ttempt to increase both debt and equity in equal proportions, which presences a stable capital structure and maintains investor confidence

B. elect debt over equity initially, even though increased debt is accompanied by interest costs and a degree of risk

C. elect equity over debt initially, which minimizes risk and avoids interest costs

D. iscontinue dividends and use current cash flow, which avoids the cost and risk of increased debt and the dilution of EPS through increased equity

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Correct Answer: B

Question #4

Which of the following operating procedures increases an organization's exposure to computer viruses?

A. ncryption of data files

B. requent backup of files

C. ownloading public-domain software from websites

D. nstalling original copies of purchased software on hard disk drives

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Correct Answer: C

Question #5

Two major retail companies, both publicly traded and operating in the same geographic area, have recently merged. The companies are approximately the same size and have audit departments. Company A has little EDI experience. Company B has invested heavily in information technology and has EDI connections with its major vendors.Which of the following is the least important risk factor considering the ability to integrate the two companies' computer systems?

A. he number of programmers and systems analysts employed by each company

B. he extent of EDI connections with vendors

C. he compatibility of existing operating systems and database structures

D. he size of company databases and the number of database servers used

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Correct Answer: A

Question #6

Managerial performance may be measured in many ways. For example, an internal nonfinancial measure is:

A. arket share

B. elivery performance

C. ustomer satisfaction

D. anufacturing lead time

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Correct Answer: D

Question #7

Zero-coupon bonds:

A. ell for a small fraction of their face value because their yield is much lower than the market rate

B. ncrease in value each year as they approach maturity, providing the owner with the total payoff at maturity

C. re redeemable in measures of a commodity such as barrels of oil, tons of coal, or ounces of rare metal (e

D. re high-interest-rate, high-risk, unsecured bonds that have been used extensively to finance leveraged buyouts

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Correct Answer: B

Question #8

Under a total quality management TOM) approach:

A. easurement occurs throughout the process, and errors are caught and corrected at the source

B. uality control is performed by highly trained inspectors at the end of the production process

C. pper management assumes the primary responsibility for the quality of the products and services

D. large number of suppliers are used in order to obtain the lowest possible prices

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Correct Answer: A

Question #9

Activity scheduling information for the installation of a new computer system is given belowThe earliest completion time for the project is:

A. -C

B. -E

C. -D-E

D. -D-C

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Correct Answer: C

Question #10

An increase in excise taxes will generate elastic.

A. ption A

B. ption B

C. ption C

D. ption D

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Correct Answer: B

Question #11

Which one of the following groups would be the primary beneficiary of a tariff?

A. omestic producers of

B. omestic producers of goods protected by the tariff

C. omestic consumers of goods protected by the tariff

D. oreign producers of goods protected by the tariff

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Correct Answer: B

Question #12

Which one of the following groups would be the primary beneficiary of a tariff?

A. omestic producers of

B. omestic producers of goods protected by the tariff

C. omestic consumers of goods protected by the tariff

D. oreign producers of goods protected by the tariff

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Correct Answer: B

Question #13

Which of the following is a characteristic of total quality management (TQM)?

A. anagement by objectives

B. n-the-job training by other workers

C. uality by final inspection

D. ducation and self-improvement

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Correct Answer: D

Question #14

Using a telecommunications provider affects in-house networks. To prepare for changes resulting from enhanced external network services, management should

A. ptimize in-house networks to avoid bottlenecks that would limit the benefits offered by the telecommunications provider

B. lan for rapid implementation of new capabilities in anticipation of ready acceptance of the new technology

C. ownsize the company's disaster recovery plan to recognize the increasing role of the telecommunications provider

D. nhance the in-house network management to minimize dependence on the telecommunications provider for network management

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Correct Answer: A

Question #15

Which of the following statements is not true regarding ISO 9000 standards?

A. ompliance with the standards is voluntary

B. he ISO 9000 standards are revised every 5 years to account for technological and market developments

C. he objective of ISO 9000 standards is to ensure high quality products and services

D. SO 9000 is a set of generic standards for establishing and maintaining a quality system within a company

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Correct Answer: C

Question #16

A call option on an ordinary share is more valuable when there is a lower:

A. arket value of the underlying share

B. xercise price on the option

C. ime to maturity on the option

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Correct Answer: B

Question #17

In a review of an EDI application using a third-party service provider, the auditor should:I). Ensure encryption keys meet ISO standardsII). Determine whether an independent review of the service provider's operation has been conducted.III). Verify that only public-switched data networks are used by the service providerIV). Verify that the service provider's contracts include necessary clauses, such as the right to audit

A. and ll

B. and IV

C. I and III

D. I and IV

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Correct Answer: D

Question #18

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 #19

The immediate goal of a theory of constraints (TOC) analysis is to:

A. aximize the efficiency of the entire production process

B. inimize direct materials cost

C. aximize contribution margin through the constraint

D. mooth production flow to eliminate backup in the system

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Correct Answer: C

Question #20

The sales manager for a builder of custom yachts developed the following conditional table for annual production and sales.According to the table, how many yachts should be built?

A. 0

B. 0

C. 0

D. 0

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Correct Answer: C

Question #21

The necessary elements of a contract include:

A. ome form of writing, equal consideration, and legal capacity

B. ormal execution, definite terms, and a valid offer and acceptance

C. ffer and acceptance, consideration, legal capacity, and mutual assent

D. ilateral promises, legal capacity, and legality of purpose

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Correct Answer: C

Question #22

An organization sells a product for which demand is uncertain. Management would like to ensure that there is sufficient inventory on hand during periods of high demand so that it does not lose sales and customers). To do so, the organization should:

A. eep a safety stock

B. se a just-in-time inventory system

C. mploy a materials requirements planning system

D. eep a master production schedule

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Correct Answer: A

Question #23

A manufacturer can sell its single product for US $660. Below are the cost data for the product:Direct materials US$170Direct labor 225Manufacturing overhead 90The relevant margin amount when beginning a theory of constraints (TOC) analysis is:

A. S$490

B. S$345

C. S$265

D. S$175

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Correct Answer: A

Question #24

If a company is customer-centered, its customers are defined as:

A. nly people external to the company who have purchased something from the company

B. nly people internal to the company who directly use its product

C. nyone external to the company and those internal who rely an its product to get their jab done

D. verybody external to the company who is currently doing, or may in the future do, business with the company

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Correct Answer: C

Question #25

Which of the following represents an internal control weakness in a computer-based system?

A. omputer programmers write and revise programs designed by analysts

B. he end users are responsible for reconciling reports and other output

C. he computer librarian maintains custody and record keeping for computer application programs

D. omputer operators have access to operator instructions and the authority to change programs

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Correct Answer: D

Question #26

A major justification for investments in computer-integrated manufacturing CIM) projects is:

A. eduction in the costs of spoilage, reworked units, and scrap

B. ower Carr ring amount and depreciation expense for factory equipment

C. ncreased working capital

D. tabilization of market share

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Correct Answer: A

Question #27

If a corporation holds a forward contract for the delivery of government bonds in 6 months and, during those 6 months, interest rates decline, at the end of the 6 months the value of the forward contract will have:

A. ecreased

B. ncreased

C. emained constant

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Correct Answer: B

Question #28

During which of the following phases of contracting does the organization analyze whether themarket is aligned with organizational objectives?

A. nitiation phase

B. idding phase

C. evelopment phase

D. egotiation phase

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Correct Answer: C

Question #29

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

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Correct Answer: B

Question #30

An entity produces a country A and sells some of its output in country B. Selling prices are identical in the two countries. The corporate tax rates are 40% in country A and 20% in country B. Assuming that the entity does not increase or decrease production, it should sales in country B and set as a transfer price as possible, in order to minimize global taxes.

A. ption A

B. ption B

C. ption C

D. ption D

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Correct Answer: B

Question #31

A bank is designing an on-the-job training program for its branch managers. The bank would like to design the program so that participants can complete it as quickly as possible. The training program requires that certain activities be completed before others. For example, a participant cannot make credit loan decisions without first having obtained experience in the loan department. An appropriate scheduling technique for this training program is:

A. ERT/CPM

B. inear programming

C. ueuing theory

D. ensitivity analysis

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Correct Answer: A

Question #32

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. synchronous communication

B. ynchronous communication

C. ommunication channel

D. ommunication protocol

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Correct Answer: D

Question #33

An entity has US $400 of current assets, composed of US $200 of cash, US $100 of accounts receivable, and US $100 of inventory. The entity has US $200 of long-term debt, US $100 of accounts payable, and US $75 of notes payable. The notes payable are due in 6 months. The acid-test ratio, to two decimal places, is:

A.

B.

C.

D.

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Correct Answer: C

Question #34

An entity is arranging debt financing for the purchase of a new piece of equipment that has a 5- year expected useful life.Which of the following alternative financing arrangements has the lowest effective annual percentage rate if each has a quoted nominal rate of 9.5%?

A. 5-year term loan with interest compounded annually

B. 10-year term loan with interest compounded semiannually

C. 5-year term loan with interest compounded quarterly

View answer

Correct Answer: A

Question #35

A chief executive officer CEO) believes that a major competitor may be planning a new campaign. The CEO sends a questionnaire to key personnel asking for original thinking concerning what the new campaign may be. The CEO selects the best possibilities then sends another questionnaire asking for the most likely option. The process employed by the CEO is called the

A. east squares technique

B. elphi technique

C. aximum likelihood technique

D. ptimizing of expected payoffs

View answer

Correct Answer: B

Question #36

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. synchronous communication

B. ynchronous communication

C. ommunication channel

D. ommunication protocol

View answer

Correct Answer: D

Question #37

A company manufactures banana hooks for retail sale. The bill of materials for this item and the parts inventory for each material required are as follows:

A. ption A

B. ption B

C. ption C

D. ption D

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Correct Answer: B

Question #38

A contractual arrangement that gives the owner the right to buy or sell an asset at a fixed price at any moment in time before or on a specified date is a(n):

A. uropean option

B. oreign option

C. uture option

D. merican option

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Correct Answer: D

Question #39

Passwords far personal computer software programs are designed to prevent:

A. naccurate processing of data

B. nauthorized access to the computer

C. ncomplete updating of data files

D. nauthorized use of the software

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Correct Answer: D

Question #40

A bond that matures after one year has a face value of $250,000 and a coupon of $30,000. If themarket price of the bond is $265,000, which of the following would be the market interest rate?

A. ess than 12 percent

B. 2 percent

C. etween 12

D. ore than 12

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Correct Answer: A

Question #41

Which of the following statements most likely represents a disadvantage for an entity that keeps data files on a server rather than on a manual system?

A. ttention is focused on the accuracy of the programming process rather than errors in individual transactions

B. t is usually easier for unauthorized persons to access and alter the files

C. andom error associated with processing similar transactions in different ways is usually greater

D. t is usually more difficult to compare recorded accountability with the physical count of assets

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Correct Answer: B

Question #42

After implementing EDI with suppliers, a company discovered a dramatic increase in the prices it paid the single supplier of some special materials for its primary product line. After consulting with the supplier, the company determined that the supplier had assumed the risk of not having inventory and raised its prices accordingly since the company was the only buyer for the special materials. The best approach for managing inventory in this situation is for the company to:

A. ive the supplier more information about expected use of the materials

B. emand that the supplier reduce the prices of the materials

C. ind another supplier to replace the one charging higher prices

D. hange its product line so the special materials are no longer needed

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Correct Answer: A

Question #43

An example of an internal nonfinancial benchmark is:

A. he labor rate of comparably skilled employees at a major competitor's plant

B. he average actual cost per pound of a specific product at the company's most efficient plant

C. US $50,000 limit on the cost of employee training programs at each of the company's plants

D. he percentage of customer orders delivered on time at the company's most efficient plant

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Correct Answer: D

Question #44

The number of shares the entity had outstanding for the year, for the purpose of computing basic earnings per share (BEPS), is:

A. 5,000

B. 0,000

C. 6,000

D. 9,000

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Correct Answer: C

Question #45

Queuing models are concerned with balancing the cost of waiting in the queue with the:

A. ost of providing service

B. umber of customers in the queue

C. verage waiting time in the queue

D. sage rate for the service being rendered

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Correct Answer: A

Question #46

Which one of the following is least likely to be recommended by the auditor when an EDI-EFT system is being designed?

A. he identity of the individual approving an electronic document should be stored as a data field

B. isaster recovery plans should be established

C. ata security procedures should be written to prevent changes to data by unauthorized individuals

D. emote access to electronic data should be denied

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Correct Answer: D

Question #47

Each stock out of a product sold by Company I-: costs US $1,750 per occurrence. The carrying cost per unit of inventory is US $5 per year, and the company orders 1,500 units of product 24 times a year at a cost of US $100 per order. The probability of a stock out at various levels of safety stock is.What is the optimal safety stock level for the company?

A. units

B. 00 units

C. 00 units

D. 00 units

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Correct Answer: D

Question #48

Which of the following computerized control procedures would be most effective in ensuring that data uploaded from desktop computers to a serer are complete and that no additional data are added?

A. elf-checking digits to ensure that only authorized part numbers are added to the database

B. atch control totals, including control totals and hash totals

C. asswords that effectively limit access to only those authorized to upload the data to the mainframe computer

D. ield-level edit controls that test each field for alphanumerical integrity

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Correct Answer: B

Question #49

A division uses a regression in which monthly advertising expenditures are used to predict monthly product sales (both in millions of US dollars). The results show a regression coefficient for the independent variable equal to 0.8. This coefficient value indicates that:

A. he average monthly advertising expenditure in the sample is US $800,000

B. hen monthly advertising is at its average level, product sales will be US $800,000

C. n average, every additional dollar of advertising results in US $

D. dvertising is not a good predictor of sales because the coefficient is so small

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Correct Answer: C

Question #50

Assume that the average collection period is 25 days. After the credit policy is well established, what is the expected average accounts receivable balance for the entity at any moment in time, assuming a 365-day year?

A. S $684

B. S $1,808

C. S $27,123

D. S $45,205

View answer

Correct Answer: D

Question #51

An entity is arranging debt financing for the purchase of a new piece of equipment that has a 5- year expected useful life.Which of the following alternative financing arrangements has the lowest effective annual percentage rate if each has a quoted nominal rate of 9.5%?

A. 5-year term loan with interest compounded annually

B. 10-year term loan with interest compounded semiannually

C. 5-year term loan with interest compounded quarterly

View answer

Correct Answer: A

Question #52

All other things held constant, external capital requirements are lower for entities with which one of the following characteristics?

A. ower retention ratios

B. igher sales growth rates

C. ower capital intensity ratios

D. ower profit margins

View answer

Correct Answer: C

Question #53

An organization's computer system should have an intrusion detection system IDS if it has external connections An AIDs

A. ust monitor every call on the system as it occurs

B. ay examine only packets with certain signatures

C. ses only knowledge-based detection

D. ses only behavior-based detection

View answer

Correct Answer: B

Question #54

Which of the following security controls might prevent unauthorized access to sensitive data via an unattended workstation directly connected to a mainframe?

A. se of a screen saver

B. se of passwords to identify users

C. ncryption of data files

D. utomatic log-off of inactive users

View answer

Correct Answer: D

Question #55

An organization has collected data on the complaints made by personal computer users and has categorized the complaints.The chart displays the:

A. rithmetic mean of each computer complaint

B. elative frequency of each computer complaint

C. edian of each computer complaint

D. bsolute frequency of each computer complaint

View answer

Correct Answer: D

Question #56

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 #57

A manager discovers by chance that a newly hired employee has strong beliefs that are very different from the manager's and from those of most of the other employees. The manager's best course of action would be to:

A. acilitate the reassignment of the new hire as quickly as possible before this situation becomes disruptive

B. sk the rest of the team for their reaction and act according to the group consensus

C. ake no action unless the new hire's behavior is likely to cause harm to the organization

D. ry to counsel the new hire into more reasonable beliefs

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Correct Answer: C

Question #58

Why would an entity maintain a compensating cash balance?

A. o make routine payments and collections

B. o pay for banking services

C. o provide a reserve in case of unforeseen fluctuations in cash flows

D. o take advantage of bargain purchase opportunities that may arise

View answer

Correct Answer: B

Question #59

The best source of evidence to determine if ex-employees continue to have access to a company's computer systems is:

A. iscussing the password removal process with the information security officer

B. eviewing computer logs of access attempts

C. econciling current payroll lists with database access lists

D. eviewing access control software to determine whether the most current version is implemented

View answer

Correct Answer: C

Question #60

Because the VAN did not provide the internal auditor with access to its system, that portion of the engagement work program was not completed.Which one of the following should not be done by the internal auditor?

A. nclude the scope limitation in the final engagement communication

B. ewrite the work program to eliminate the step

C. btain the approval of the chief audit executive

D. ocument the VAN's actions in the working papers

View answer

Correct Answer: B

Question #61

A company} is formulating its plans for the coming year, including the preparation of its cash budget. Historically, 30% of the company's sales are cash sales. The remaining 70% are credit sales with the following collection pattern.For the month of April, the total cash receipts from sales and collections on account would be:

A. S $3,729,968

B. S $3,781,600

C. S $4,025,200

D. S $4,408,000

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Correct Answer: B

Question #62

The encryption technique that requires two keys, a public key that is available to anyone for encrypting messages and a private key that is known only to the recipient for decrypting messages, is:

A. ivest, Shamir, and Adelman RSA)

B. ata encryption standard DES)

C. odulator-demodulator

D. cypher lock

View answer

Correct Answer: A

Question #63

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

View answer

Correct Answer: C

Question #64

An entity obtained a short-term bank loan of US $250,000 at an annual interest rate of 6%. As a condition of the loan, the entity is required to maintain a compensating balance of US $50,000 in its checking account. The entity's checking account earns interest at an annual rate of 2 %. Ordinarily, the entity maintains a balance of US $25,000 in its checking account for transaction purposes.What is the effective interest rate of the loan?

A.

B.

C.

View answer

Correct Answer: A

Question #65

A benefit of using computer-aided software engineering CASE) technology is that it can ensure that:

A. o obsolete data fields occur in files

B. sers become committed to new systems

C. ll programs are optimized for efficiency

D. ata integrity rules are applied consistently

View answer

Correct Answer: D

Question #66

An organization has a compensation system for its managers based on a management-objectives MBO) approach. The essential premise of MBO is that:

A. ompensation should be based on qualitative factors

B. mployees should be concerned with routine matters, and managers should attend to exceptions

C. mployees should participate in setting objectives

D. anagers should establish objectives for their employees

View answer

Correct Answer: C

Question #67

Management has implemented such controls as firewalls, password management, independent reconciliation, and audit trails. These controls should be reviewed and evaluated by the internal auditor when doing testing for which key e-commerce audit area?

A. raud

B. orruption of data

C. usiness interruptions

D. uthentication

View answer

Correct Answer: D

Question #68

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 Volume Probability2,000 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 a d

A. ,000 pretzels

B. ,400 pretzels

C.

D. ,000 pretzels

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Correct Answer: C

Question #69

A tight monetary policy is frequently cited as an important policy instrument for fighting inflation. Keynesian n:mists believe that one of the possible undesirable side effects of such a policy is:

A. educed business investment due to higher interest rates

B. educed business investment due to lower interest rates

C. ncreased business investment due to decreased government spending

D. ncreased business investment because of reduced confidence in business

View answer

Correct Answer: A

Question #70

Which of the following risks is not greater in an electronic funds transfer EFT environment than in a manual system using paper transactions?

A. nauthorized access and activity

B. uplicate transaction processing

C. igher cost per transaction

D. nadequate backup and recovery capabilities

View answer

Correct Answer: C

Question #71

Which of the following is likely to be a benefit of electronic data interchange EDI)?

A. ncreased transmission speed of actual documents

B. mproved business relationships with trading partners

C. ecreased liability related to protection of proprietary business data

D. ecreased requirements for backup and contingency planning

View answer

Correct Answer: B

Question #72

Which statement best describes the emphasis of total quality management (TQM)?

A. educing the cost of inspection

B. mplementing better statistical quality control techniques

C. oing each job right the first time

D. ncouraging cross-functional teamwork

View answer

Correct Answer: C

Question #73

Lamar became homeless at a very young age and was taken in by Aunt and Uncle. Many years later, Lamar became a detective in the city police department.When Aunt disappeared and was not heard from for a month, the case was assigned to Lamar. Uncle also came to Lamar and asked him to promise to find Aunt in return for the years of support. Lamar agreed to Uncle's request.Which of the following is true?

A. amar's contractual duty to find Aunt is based on past consideration

B. amar has no contractual duty to find Aunt

C. f Uncle had also promised Lamar US $1,000 for finding Aunt, he would be liable when Lamar found her

D. amar will be liable for breach of contract if he does not find Aunt

View answer

Correct Answer: B

Question #74

In which stage of an entity's development is it most likely to seek and obtain external equity financing in the form of venture capital?

A. ormation

B. apid growth

C. rowth to maturity

View answer

Correct Answer: B

Question #75

The Internet consists of a series of networks that include:

A. ateways to allow personal computers to connect to mainframe computers

B. ridges to direct messages through the optimum data path

C. epeaters to physically connect separate local area networks LANs

D. outers to strengthen data signals between distant computers

View answer

Correct Answer: A

Question #76

The best evidence that contingency planning is effective is to have:

A. o processing interruptions during the past year

B. omprehensive documentation of the plan

C. ign off on the plan by the internal audit activity

D. uccessful testing of the plan

View answer

Correct Answer: D

Question #77

A plumbing company, a wholesale distributor, supplies plumbing contractors and retailers throughout the Northeast on a next-day delivery basis. The company has a centrally located warehouse to accept receipts of plumbing supplies. The warehouse has a single dock to accept and unload railroad freight cars during the night. It takes 5 hours to unload each freight car. The company's prior records indicate that the number of freight cars that arrive in the course of a night range from zero to five or more, with

A. nteger programming

B. inear programming

C. onte Carlo simulation

D. egression analysis

View answer

Correct Answer: C

Question #78

If a call option is out-of-the-money, the:

A. ption has expired

B. alue of the underlying asset is less than the exercise price

C. ption no longer exists

D. ption has become a put option

View answer

Correct Answer: B

Question #79

Use of unlicensed software in an organization:I). Increases the risk of introducing viruses into the organizationII). Is not a serious exposure if only low-cost software is involvedIII). Can be detected by software checking routines that run from a network server

A. only

B. and II only

C. , II, and III

D. and III only

View answer

Correct Answer: D

Question #80

A short-term bank loan will have a higher effective financing cost if it has which combination of characteristics?

A. 10% compensating balance and regular interest

B. 10% compensating balance and discount interest

C. 20% compensating balance and regular interest

D. 20% compensating balance and discount interest

View answer

Correct Answer: D

Question #81

The allocation of general overhead costs to operating departments can be least justified in determining:

A. ncome of a product or functional unit

B. osts for making management's decisions

C. osts for the federal government's cost-plus contracts

D. ncome tax payable

View answer

Correct Answer: B

Question #82

A Gantt chart:

A. hows the critical path for a project

B. s used for determining an optimal product mix

C. hows only the activities along the critical path of a network

D. oes not necessarily show the critical path through a network

View answer

Correct Answer: D

Question #83

Which of the following methods of employee evaluation is best used when employees are heavily involved in teamwork?

A. 60-degree performance appraisal

B. ttribution method

C. ritical incident technique

D. ehaviorally anchored rating scales BARS)

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Correct Answer: A

Question #84

All else being equal, an entity with a higher dividend-payout ratio will have a debt-to- assets ratio and a

A. ption A

B. ption B

C. ption C

D. ption D

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Correct Answer: B

Question #85

ABC Company is a clothing retailer. Greg is an employee of ABC Company and has recently purchased a leather jacket from ABC Company's website. This activity is:

A. n e-commerce activity characterized as B2C

B. n e-commerce activity characterized as B2E

C. n e-commerce activity characterized as B2B

D. ot an e-commerce activity because Greg is an employee of ABC Company

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Correct Answer: A

Question #86

A firm must decide the mix of production of Product X and Product Y. There are only two resources used in the two products, resources A and B. Data related to the two products is given in the following table:What is the appropriate objective function to maximize profit?

A. X + 7Y

B. X+Y

C. X + 6Y

D. X + 8Y

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Correct Answer: C

Question #87

The management and employees of a large household goods moving company believe that it if became nationally known as adhering to total quality management and continuous improvement, one result would be an increase in the company's profits and market share.What should the company focus onto achieve quality more economically?

A. ppraisal costs

B. revention costs

C. nternal failure costs

D. xternal failure costs

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Correct Answer: B

Question #88

A company is deciding whether to purchase an automated machine to manufacture one of its products. Expected net cash flows from this decision depend on several factors, interactions among those factors, and the probabilities associated with different levels of those factors.The method that the company should use to evaluate the distribution of net cash flows from this decision and changes in net cash flows resulting from changes in levels of various factors is:

A. imulation and sensitivity analysis

B. inear programming

C. orrelation analysis

D. ifferential analysis

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Correct Answer: A

Question #89

On what basis is value-added tax collected?

A. he difference between the value of an entity's sales and the value of its purchases from other domestic entities

B. he difference between the selling price of a real estate property and the amount the entity originally paid for the property

C. he value of an entity's sales to related companies

D. he profit earned on an entity's sales

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Correct Answer: A

Question #90

A control that a company can use to detect forged EDI messages is to:

A. cknowledge all messages initiated externally with confirming messages

B. ermit only authorized employees to have access to transmission facilities

C. elay action on orders until a second order is received for the same goods

D. rite all incoming messages to a write-once/read-many device for archiving

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Correct Answer: A

Question #91

A cost-volume-profit model developed in a dynamic environment determined that the estimated parameters used may vary between limits. Subsequent testing of the model with respect to all possible values of the estimated parameters is termed:

A. sensitivity analysis

B. tatistical estimation

C. tatistical hypothesis testing

D. time-series study

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Correct Answer: A

Question #92

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

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Correct Answer: B

Question #93

Company A is a retailer operating in several cities. The individual store managers deposit daily collections at a local bank in a non-interest bearing checking account. Twice per week, the local bank issues a depository transfer check DTC) to the central bank at headquarters. The controller of the company is considering using a wire transfer instead.The additional cost of each transfer would be US $25. collections would be accelerated by 2 days, and the annual interest rate paid by the central bank is 7.2%

A. t would never be economically feasible

B. S $125,000 or above

C. ny amount greater than US $173

D. ny amount greater than US $62,500

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Correct Answer: D

Question #94

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 I

B. I and III only

C. , II, and III

D. II and IV only

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Correct Answer: C

Question #95

Which of the following statements about voice communications is true?

A. odern voice recognition input have large vocabularies and short training periods

B. voice output device converts speech into digital data

C. ell phones and PCS services use the same frequency radio waves

D. agers can alert users to the receipt of messages but cannot transmit text

View answer

Correct Answer: A

Question #96

When performing an e-commerce engagement, the greatest two concerns about the internal audit activity are:

A. ndependence and competency

B. apacity and objectivity

C. ompetency and objectivity

D. apacity and competency

View answer

Correct Answer: D

Question #97

The most common computer-related problem confronting organizations is:

A. ardware malfunction

B. nput errors and omissions

C. isruption to computer processing caused by natural disasters

D. raud

View answer

Correct Answer: B

Question #98

The details of the audit program used to audit e-commerce activities in specific organizations will vary depending on all but which of the following factors?

A. ndustry

B. rganizational culture

C. ountry

D. egal and business models

View answer

Correct Answer: B

Question #99

A call option on an ordinary share is more valuable when there is a lower:

A. arket value of the underlying share

B. xercise price on the option

C. ime to maturity on the option

View answer

Correct Answer: B

Question #100

The use of message encryption software:

A. uarantees the secrecy of data

B. equires manual distribution of keys

C. ncreases system overhead

D. educes the need for periodic password changes

View answer

Correct Answer: C

Question #101

The marketing department's proposal was finally accepted, and the marketing employees attended a class in using the report writer. Soon, the marketing analysts found that it was easier to download the data and manipulate it on their own desktop computers in spreadsheets than to perform all the data manipulation on the server. One analyst became highly skilled at downloading and wrote downloading command sequences for the other employees.When the analyst left the company for a better job, the department had

A. ocumentation

B. ata backup

C. rogram testing

D. nti-virus software

View answer

Correct Answer: A

Question #102

An electronic meeting conducted between several parties at remote sites is referred to as:

A. eleprocessing

B. nteractive processing

C. elecommuting

D. eleconferencing

View answer

Correct Answer: D

Question #103

Convertible bonds and bonds issued with warrants differ in that:

A. onvertible bonds have lower coupon rates than straight bonds, while bonds issued with warrants have higher coupon rates than straight bonds

B. onvertible bonds have higher coupon rates than straight bonds, while bonds issued with warrants have lower coupon rates than straight bonds

C. onvertible bonds remain outstanding after the bondholder exercises the right to become an ordinary shareholder, while bonds that are issued with warrants do not

D. onds that are issued with warrants remain outstanding after the bondholder exercises the right to become an ordinary shareholder, while convertible bonds do not

View answer

Correct Answer: D

Question #104

Fulford Company applies the target pricing and costing approach. The following information about costs and revenues of Fulford's product are available for the year just ended:Fulford plans to increase unit sales to 80,000 by reducing the product's unit price to US $320.If Fulford desires a unit target operating income of 12CYo, by what amount must it reduce the full cost per unit?

A. S $32

B. S $38

C. S $70

D. S $80

View answer

Correct Answer: C

Question #105

A company stocks, maintains, and distributes inventory. The company decides to add to the safety stock and expedite delivery for several product lines on a trial basis. For the selected product lines the company will experience:

A. n increase in some costs but no change in the service level

B. change in the service level

C. n increase in ordering, carrying, and delivery costs

D. ecrease in ordering, carrying, and delivery costs

View answer

Correct Answer: B

Question #106

The graph depicts the domestic supply of and demand for a product that is also sold in the domestic market by foreign producers. The domestic producers are protected by a tariff of the amount Pt minus Pw. Bt is the domestic price including the tariff, and Rw is the world price for the product. The effect of the tariff is to:

A. educe the domestic price from ORw to ORt

B. educe foreign sales in the domestic market from ac to bc

C. ncrease domestic production from Ob to Cc

D. ncrease domestic production from Oa to Ob

View answer

Correct Answer: D

Question #107

Company F produces and sells two products. Product A costs US $10 per unit and Product B costs US $5 per unit. Product A is selling very well, but sales of Product B are low. In order to increase sales of Product B, Company F has begun setting a price of US $13 for one of each.What is the pricing method?

A. roduct-bundle pricing

B. y-product pricing

C. alue pricing

D. ollusive pricing

View answer

Correct Answer: A

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