CIA Part 3 Exam Practice Questions, Free Sample Questions 2025

Question #1

A company in the process of analyzing inventory safety stock levels is having difficulty because demand vanes widely from one week to the next. However, it has been discovered that demand occurs according to a probability distribution.Which of the following is a stochastic model that the company could use in this situation?

A. arkov process

B. inear programming

C. egression analysis

D. ritical path network analysis

View answer

Correct Answer: A

Question #2

While auditing a marketing department, the internal auditor discovered that the product life cycle model was used to structure the marketing mix Under such a philosophy, the price charged on a consistent basis for a specific product would probably be lowest during which life cycle stage?

A. ntroduction stage

B. rowth stage

C. aturity stage

D. ecline stage

View answer

Correct Answer: C

Question #3

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

View answer

Correct Answer: D

Question #4

A company often revises its production processes. The changes may entail revisions to processing programs. Ensuring that changes have a minimal impact on processing and result in minimal risk to the system is a function of:

A. ecurity administration

B. hange control

C. roblem tracking

D. roblem-escalation procedures

View answer

Correct Answer: B

Question #5

Which must be part of any risk model involving inventory valuation?

A. roduct warranty policies

B. endor pricing policies

C. nventory shrinkage expense

D. nnual sales forecasts

View answer

Correct Answer: C

Question #6

The following forms of short-term borrowing are available to an entity:Floating lienFactoringRevolving creditChattel mortgages Bankers' acceptances . Lines of creditCommercial paperThe forms of short-term borrowing that are unsecured credit are:

A. loating lien, revolving credit, chattel mortgage, and commercial paper

B. actoring, chattel mortgage, bankers' acceptances, and line of credit

C. loating lien, chattel mortgage, bankers' acceptances, and line of credit

D. evolving credit, bankers' acceptances, line of credit, and commercial paper

View answer

Correct Answer: D

Question #7

When a manager generalizes from the evaluation of one or a few traits to the employee's total performance, she has made:

A. judgmental evaluation

B. n evaluation subject to the halo effect

C. projection

D. n objective evaluation

View answer

Correct Answer: B

Question #8

An internal auditor was performing an operational audit of the purchasing and accounts payable system. The audit objective was to identify changes in processes that would improve efficiency and effectiveness.Which of the following statements support the auditor's recommendation that electronic data interchange EDI) be implemented within a company?I). There is a small number of transactions.II). There is a time-sensitive just-in-time purchase environment.III). There is a large volume of custom purchases.IV).

A. only

B. I and IV only

C. and Ill

D. I, Ill, and IV

View answer

Correct Answer: B

Question #9

Which of the following financial statement analyses is most useful in determining whether the various expenses of a given entity are higher or lower than industry averages?

A. orizontal

B. ertical

C. ctivity ratio

D. efensive-interval ratio

View answer

Correct Answer: B

Question #10

A shortest-route algorithm is used in network models to:

A. dentify bottlenecks in a network and hence identify the longest path

B. inimize total travel time from one site to each of the other sites in a transportation system

C. aximize throughput in networks with distinct entry source node) and exit sink node) points

D. dentify the set of connecting branches having the shortest combined length

View answer

Correct Answer: B

Question #11

The responsibilities of a data administrator include monitoring:

A. he database industry

B. he performance of the database

C. atabase security

D. ackup of the system

View answer

Correct Answer: A

Question #12

An internal auditor for a large automotive parts retailer wishes to perform a risk analysis and wants to use an appropriate statistical tool to help identify stores that would be out of line compared to the majority of stores. The most appropriate statistical tool to use is

A. inear time series analysis

B. ross-sectional regression analysis

C. ross tabulations with chi-square analysis of significance

D. ime series multiple regression analysis to identify changes in individual stores overtime

View answer

Correct Answer: B

Question #13

Image processing systems have the potential to reduce the volume of paper circulated throughout an organization. To reduce the likelihood of users relying on the wrong images, management should ensure that appropriate controls exist to maintain the:

A. egibility of image data

B. ccessibility of image data

C. ntegrity of index data

D. nitial sequence of index data

View answer

Correct Answer: C

Question #14

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 #15

Product-quality-related costs are part of a total quality control program. A product-quality related cost incurred in detecting individual products that do not conform to specifications is an example of a n)

A. revention cost

B. ppraisal cost

C. xternal failure cost

D. pportunity cost

View answer

Correct Answer: B

Question #16

When film is sold for use with a camera, this is an example of which of the following product mix pricing strategies?

A. y-product pricing

B. ptional product pricing

C. aptive product pricing

D. roduct bundle pricing

View answer

Correct Answer: C

Question #17

The auditor determined that the risks associated with the EDI purchases were less than the risks associated with the purchases made through the traditional system.Which one of the following factors best supports this prioritization of risks?

A. here are three vendors connected through EDI

B. bout half of the materials are purchased through EDI

C. he internal auditors were involved with systems development and testing of the EDI software

D. he external auditor did not examine EDI purchase controls during the annual financial audit

View answer

Correct Answer: C

Question #18

COBIT is:

A. set of guidelines to assist in implementing adequate controls over IT processes

B. set of risks and responses to technology challenges

C. he update of the previous Systems Auditability and Control reports

D. ublished by the Committee of Sponsoring Organizations

View answer

Correct Answer: A

Question #19

The funds-needed line does not pass through the origin unless the entity has a:

A. ne-hundred percent dividend payout policy

B. ero percent dividend payout policy

C. ne-hundred percent sales growth rate

D. ero percent sales growth rate

View answer

Correct Answer: A

Question #20

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 #21

Which of the following is false with respect to client-server networks?

A. client-server network divides processing of an application between a client machine on a network and a server

B. n a client-server network, many applications reside on the client computer

C. he server customarily manages peripheral hardware and control

D. client-server network can cope with only 12 or fewer clients at a time

View answer

Correct Answer: D

Question #22

Which of the following would provide the least security for sensitive data stored on a notebook computer?

A. ncrypting data files on the notebook computer

B. sing password protection for the screen-saver program on the notebook computer

C. sing a notebook computer with a removable hard disk drive

D. ocking the notebook computer in a case when not in use

View answer

Correct Answer: B

Question #23

The economic order quantity is the size of the order that minimizes total inventory costs which include ordering and holding carrying) costs. It can be calculated using the formulaIf Q = order size in units, D = annual demand in units, p = cost per purchase order, s = carrying cost per year for one unit of inventory. If the annual demand decreases by 369/o the optimal order size will:

A. ecrease by 20%

B. ncrease by 20°!a

C. ncrease by 6%

D. ecrease by 6%

View answer

Correct Answer: A

Question #24

In preparing the annual profit plan for the coming year.Based upon the data derived from the regression analysis, 420 maintenance hours in a month would mean the maintenance costs (rounded to the nearest US dollar) would be budgeted at:

A. S$3,780

B. S$3,600

C. S$3,790

D. S$3,746

View answer

Correct Answer: D

Question #25

The average collection period for an entity measures the number of days:

A. fter a typical credit sale is made until the entity receives the payment

B. or a typical check to "clear" through the banking system

C. eyond the end of the credit period before a typical customer payment is received

D. efore a typical account becomes delinquent

View answer

Correct Answer: A

Question #26

The investment opportunity schedule IOS) shows, in rank order, how much money the entity would invest at different rates of return. Such schedules can be drawn only for a set of projects that:

A. ave the same investment cost

B. re mutually exclusive

C. ave the same net present value

D. re independent

View answer

Correct Answer: D

Question #27

An audit manager has just returned from an executive training program and has suggested that the audit department develop a mathematical model to help identify factors that may be causing changes in the cost of production. According to the manager, the model should recognize that the company currently has three separate production cost) ': enters.Which of the following approaches would best provide the analysis suggested by the audit manager?

A. evelop a classical variables sampling estimate of cost of production per department, with the sample stratified by the dollar value of each product produced

B. evelop a -gear ratio analysis of the cost of production compared to the cost of raw inventory across the three departments

C. evelop a multiple regression analysis of production costs, including such variables as raw material inventory costs, number of employees in the department, and overtime pay

D. evelop a linear regression analysis relating the cost of production to the cost of goods sold

View answer

Correct Answer: C

Question #28

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

View answer

Correct Answer: C

Question #29

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

View answer

Correct Answer: C

Question #30

A company in the process of analyzing inventory safety stock levels is having difficulty because demand vanes widely from one week to the next. However, it has been discovered that demand occurs according to a probability distribution.Which of the following is a stochastic model that the company could use in this situation?

A. arkov process

B. inear programming

C. egression analysis

D. ritical path network analysis

View answer

Correct Answer: A

Question #31

Government subsidies of the domestic production of military weapons is an example of what rationale for government intervention in trade?

A. nfant industry concept

B. aintenance of essential industries

C. aintenance of extension of spheres of influence

D. rotecting the national identity

View answer

Correct Answer: B

Question #32

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 on its product to get their job done

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

View answer

Correct Answer: C

Question #33

A pricing strategy that sells combinations of products at a price lower than the combined prices of the individual items is:

A. redatory pricing

B. oing-rate pricing

C. roduct-bundle pricing

D. aptive-product pricing

View answer

Correct Answer: C

Question #34

What are revenue tariffs designed to do?

A. evelop new export opportunities

B. rovide the government with tax revenues

C. estrict the amount of a commodity that can be imported in a given period

D. ncourage foreign companies to limit the amount of their exports to a particular country

View answer

Correct Answer: B

Question #35

If, in addition to the estimated profits, management of the bank assesses the probabilities of high, medium, and low demands to be 0.3, 0.4, and 0.3 respectively, what is the expected opportunity loss from selecting location of L4?

A.

B.

C.

D.

View answer

Correct Answer: A

Question #36

All of the following are alternative marketable securities suitable for investment except:

A.

B. urodollars

C. ommercial paper

D. onvertible bonds

View answer

Correct Answer: D

Question #37

Which of the following pricing policies involves the selling company setting freight charges to customers at the actual average freight cost?

A. reight absorption pricing

B. niform delivered pricing

C. one pricing

D. OB-origin pricing

View answer

Correct Answer: B

Question #38

Which of the following statements accurately describes the impact that automation has on the controls normally present in a manual system?

A. ransaction trails are more extensive in a computer-based system than in a manual system because there is always a one-for-one correspondence between data entry and output

B. esponsibility for custody of information assets is more concentrated in user departments in a computer- based system than it is in a manual system

C. ontrols must be more explicit in a computer-based system because many processing points that present opportunities for human judgment in a manual system are eliminated

D. he quality of documentation becomes less critical in a computer-based system than it is in a manual system because data records are stored in machine-readable files

View answer

Correct Answer: C

Question #39

The four categories of costs associated with product quality costs are:

A. xternal failure, internal failure, prevention, and carrying

B. xternal failure, internal failure, prevention, and appraisal

C. xternal failure, internal failure, training, and appraisal

D. arranty, product liability, training, and appraisal

View answer

Correct Answer: B

Question #40

A German importer of English clothing has contracted to pay an amount fixed in British pounds 3 months from now. lithe importer worries that the euro may depreciate sharply against the British pound in the interim, it would be well advised to:

A. uy pounds in the forward exchange market

B. ell pounds in the forward exchange market

C. uy euros in the futures market

D. ell euros in the futures market

View answer

Correct Answer: A

Question #41

One of the elements included in the economic order quantity EOQ) formula is:

A. afety stock

B. early demand

C. elling price of item

D. ead time for delivery

View answer

Correct Answer: B

Question #42

A small client recently put its cash disbursements system on a server. About which of the following internal control features would an auditor most likely be concerned?

A. rogramming of the applications are in Visual Basic rather than Java

B. he server is operated by employees who have cash custody responsibilities

C. nly one employee has the password to gain access to the cash disbursement system

D. here are restrictions on the amount of data that can be stored and on the length of time that data can be stored

View answer

Correct Answer: B

Question #43

Minimizing the likelihood of unauthorized editing of production programs, job control language, and operating system software best be accomplished by:

A. atabase access reviews

B. ompliance reviews

C. hange control procedures

D. etwork security audits

View answer

Correct Answer: C

Question #44

The management and employees of a large household goods moving company decided to adopt total quality management (TQM) and continuous improvement (CI). The company believes that if it became nationally known as adhering to TQM and CI, one result would be an increase in the company's profits and market share.The primary reason for adopting TQM was to achieve

A. reater customer satisfaction

B. educed delivery time

C. educed delivery charges

D. reater employee participation

View answer

Correct Answer: A

Question #45

A systems development approach used to quickly produce a model of user interfaces, user interactions with the system, and process logic is called:

A. eural networking

B. rototyping

C. eengineering

D. pplication generation

View answer

Correct Answer: B

Question #46

Company P, which produces computers, uses a target pricing and costing approach. The following is Company P's costs and revenues for the year just ended:Company P plans to increase sales of computers to 15,000 in the next year by reducing the unit price to US $1,250. If Company P wishes to achieve a unit target operating income of 10%, by what amount must it reduce the full cost per unit?

A. S $100

B. S $125

C. S $225

D. S $250

View answer

Correct Answer: C

Question #47

In an order-entry system in which manually-prepared source documents are entered online for immediate processing, which of the following is an example of an appropriate input-output control?

A. assword authorization procedure

B. heck-digit validation procedure

C. ash total verification

D. ackup and recovery procedures

View answer

Correct Answer: B

Question #48

A type of network that is used to support interconnections within a building is known as a:

A. ocal area network

B. ide area network

C. etropolitan area network

D. alue-added network

View answer

Correct Answer: A

Question #49

A checkpoint restart procedure is primarily designed to recover from:

A. rogramming errors

B. ata input errors

C. omputer operator errors

D. ardware failures

View answer

Correct Answer: D

Question #50

The marginal cost of capital MCC) curve for this entity rises price, first when the entity has raised US $75 million and again when US $175 million of new funds has been raised. These increases in the MCC are caused by:

A. ncreases in the returns on the additional investments undertaken

B. ecreases in the returns on the additional investments undertaken

C. ecreases in the cost of at least one of the financing sources

D. ncreases in the cost of at least one of the financing sources

View answer

Correct Answer: D

Question #51

Which of the following issues would be of most concern to an auditor relating to an organization's Internet security policy?

A. uditor documentation

B. ystem efficiency

C. ata integrity

D. ejected and suspense item controls

View answer

Correct Answer: C

Question #52

A decision not to participate in e-commerce should be carefully analyzed, documented, and approved by whom?

A. he chief audit executive

B. he chief executive officer

C. he governing board

D. he audit committee

View answer

Correct Answer: C

Question #53

Below are data concerning the hours spent by a manufacturer's two products in its two processes.The constraint is:

A. roduct

B. roduct B in Assembly

C. he assembly activity

D. annot be determined from the information given

View answer

Correct Answer: C

Question #54

The EOQ economic order quantity) model calculates the cost-minimizing quantity of a product to order, based an a constant annual demand, carrying costs per unit per annum, and cost per order. For example, the EOQ is approximately 447 units if the annual demand is 10,000 units, carrying costs are US $1 per item per annum, and the cost of placing an order is US $10.What will the EOQ be if the demand falls to 5,000 units per annum and the carrying and ordering costs remain at US $1 and US $10, respectively?

A. 16

B. 47

C. 83

D. 00

View answer

Correct Answer: A

Question #55

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

View answer

Correct Answer: B

Question #56

To be more responsive to its customers, a bank wants a system that will permit account representatives to consolidate information about all the a-r-punts belonging to individual customers. Bank management is willing to experiment with different approach approaches because the requirements are evolving rapidly. The best development approach for this system is:

A. rototyping

B. ystem development life cycle model

C. tructured analysis and design technique

D. ierarchy-input-process-output

View answer

Correct Answer: A

Question #57

The process of adding resources to shorten selected activity times on the critical path in project scheduling is called:

A. rashing

B. he Delphi technique

C. BC analysis

D. branch-and-bound solution

View answer

Correct Answer: A

Question #58

A catalog company has been experiencing an increasing incidence of problems in which the wrong products have been shipped to the customer. Most of the customer orders come in over the telephone, and an operator enters the data into the order system immediately.Which of the following control procedures, if properly implemented, would address the problem?I). Have the computer automatically assign a sequential order number to each customer order.II). Implement a self-checking digit algorithm for each product n

A. I only

B. , II, and Ill

C. I and Ill only

D. and II only

View answer

Correct Answer: C

Question #59

Unauthorized alteration of online records can be prevented by employing:

A. ey verification

B. omputer sequence checks

C. omputer matching

D. atabase access controls

View answer

Correct Answer: D

Question #60

In an inventory system on a database management system DBMS), one stored record contains part number, part name, part color, and part weight. These individual items are called:

A. ields

B. tored files

C. ytes

D. ccurrences

View answer

Correct Answer: A

Question #61

A client installed the most sophisticated controls using biometric attributes of employees to gain access to their computer system. This technology most likely replaced which of the following controls?

A. se of security specialists

B. easonableness tests

C. asswords

D. irus protection software

View answer

Correct Answer: C

Question #62

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 #63

Focusing on customers, promoting innovation, learning new philosophies, driving out fear, and providing extensive training are all elements of a major change in organizations. These elements are aimed primarily at:

A. opying leading organizations to better compete with them

B. ocusing on the total quality of products and services

C. eing efficient and effective at the same time, in order to indirectly affect profits

D. anaging costs of products and services better, in order to become the low-cost provider

View answer

Correct Answer: B

Question #64

The accountant who prepared a spreadsheet model for workload forecasting left the company, and the accountant's successor was unable to understand how to use the spreadsheet. The best control for preventing such situations from occurring is to ensure that:

A. se of end-user computing resources is monitored

B. nd-user computing efforts are consistent with strategic plans

C. ocumentation standards exist and are followed

D. dequate backups are made for spreadsheet models

View answer

Correct Answer: C

Question #65

The Plan-Do-Check-Act PDC}A) cycle is a quality tool devised by\ALE. Denning. How isPDC A best described

A. "management by fact" approach to continuous improvement

B. n ongoing evaluation of the practices of best-in-class organizations

C. he translation of customer requirements into design requirements

D. he responsibility of every employee, work group, department, or supplier to inspect the work

View answer

Correct Answer: A

Question #66

Attacks on computer networks may take many forms.Which of the following uses the computers of innocent parties infected with Trojan horse programs?

A. distributed denial-of-service attack

B. man-in-the-middle attack

C. brute-force attack

D. password-cracking attack

View answer

Correct Answer: A

Question #67

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 #68

In a traditional manufacturing operation, direct costs would normally include:

A. achine repairs in an automobile factory

B. lectricity in an electronics plant

C. ood in a furniture factory

D. ommissions paid to sales personnel

View answer

Correct Answer: C

Question #69

While auditing a marketing department, the internal auditor discovered that the product life cycle model was used to structure the marketing mix. The manager has asked the auditor for advice about increasing advertising of various products. During which stage of the life cycle would it be appropriate to advertise that the entity's product is the lowest price and best quality of all competitors?

A. ntroduction stage

B. rowth stage

C. aturity stage

D. ecline stage

View answer

Correct Answer: C

Question #70

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

View answer

Correct Answer: A

Question #71

An account executive has just designed a Monte Carlo model to estimate the costs of a particular type of project. Validating the model could include all except:

A. hecking for errors in the computer programming

B. hecking that assumed probability distributions are reasonable

C. omparing test results with previously validated models

D. pplying the model

View answer

Correct Answer: D

Question #72

A disadvantage of separating performance evaluations from compensation-increase decisions is that:

A. ot enough emphasis is placed on short-run performance

B. inancial rewards may lose their motivational effect

C. mployees may not be motivated by good appraisals

D. he employee's performance evaluation does not consider the financial status of the company overall

View answer

Correct Answer: C

Question #73

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 #74

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

A. revention costs

B. ppraisal costs

C. ework costs

D. ailure costs

View answer

Correct Answer: B

Question #75

In the computation of DEPS, which of the following are potential ordinary shares?

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: C

Question #76

Which of the following measures create the most restrictive barrier to exporting to a country?

A. ariffs

B. uotas

C. mbargoes

D. xchange controls

View answer

Correct Answer: C

Question #77

To remove the effect of seasonal variation from a time series, original data should be:

A. ncreased by the seasonal factor

B. educed by the seasonal factor

C. ultiplied by the seasonal factor

D. ivided by the seasonal factor

View answer

Correct Answer: D

Question #78

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 fallowing statements is most likely true?

A. n increase in conformance costs resulted in a higher quality product and therefore resulted in a decrease in nonconformance 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°/O

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

View answer

Correct Answer: A

Question #79

In regression analysis, which of the following correlation coefficients represents the strongest relationship between the independent and dependent variables?

A.

B.

C.

D.

View answer

Correct Answer: C

Question #80

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 technical 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 an entity

View answer

Correct Answer: C

Question #81

Which line segment represents the reorder lead time?

A. B

B. E

C. F

D. C

View answer

Correct Answer: D

Question #82

A company's product has an expected 4-year life cycle from research, development, and design through its withdrawal from the market. Budgeted costs are:The company plans to produce 200,000 units and price the product at 125°!a of the wholelife unit cost. Thus, the budgeted unit selling price is:

A. S $15

B. S $31

C. S $36

D. S $45

View answer

Correct Answer: D

Question #83

Which of the following is not true about simu-lation models that use Monte Carlo processes?

A. hey are deterministic in nature

B. hey may involve sampling

C. hey mathematically estimate what actual performance would be

D. hey emulate stochastic systems

View answer

Correct Answer: A

Question #84

Annual inventory holding costs equal:

A. S $750

B. S $1,250

C. S $1,750

D. S $2,250

View answer

Correct Answer: C

Question #85

A forward contract involves:

A. commitment today to purchase a product on a specific future date at a price to be determined some time in the future

B. commitment today to purchase a product some time during the current day at its present price

C. commitment today to purchase a product on a specific future date at a price determined today

D. commitment today to purchase a product only when its price increases above its current exercise price

View answer

Correct Answer: C

Question #86

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 #87

Rejection of unauthorized modifications to application systems could be accomplished through the use of:

A. rogrammed checks

B. atch controls

C. mplementation controls

D. ne-for-one checking

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Correct Answer: C

Question #88

The Entity has dividend-payout ratio of:

A. 9

B. 8

C. 0

D. 0

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Correct Answer: D

Question #89

Which of the following designations refers to taxes that will not necessarily take a larger absolute amount of income as income rises?

A. rogressive

B. roportional

C. egressive

D. egenerative

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Correct Answer: C

Question #90

The process of adding resources to shorten selected activity times on the critical path in project scheduling is called:

A. rashing

B. he Delphi technique

C. BC analysis

D. branch-and-bound solution

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Correct Answer: A

Question #91

Value-added taxes are levied on:

A. nterest income received by individual owners of publicly traded bonds

B. ividend in me received by corporations owning shares of other corporations

C. he value of an entity's assets

D. he difference between an entity's sales and its purchases from other entities

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Correct Answer: D

Question #92

A mail-order retailer of low-cost novelty items is receiving an increasing number of complaints from customers about the wrong merchandise being shipped. The order code for items has the format The major category is ww, xx is the minor category, yy identifies the item, and zz identifies the catalog. In many cases, the wrong merchandise was sent because adjacent characters in the order code had been transposed. The best control for decreasing the number of orders with the wrong merchandise is to:

A. equire customers to specify the name for each item they order

B. dd check-digits to the order codes and verify them for each order

C. eparate the parts of the order code with hyphens to make the characters easier to read

D. se a master file reference for all order codes to verify the existence of items

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Correct Answer: B

Question #93

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 #94

In an order-entry system in which manually-prepared source documents are entered online for immediate processing, which of the following is an example of an appropriate input-output control?

A. assword authorization procedure

B. heck-digit validation procedure

C. ash total verification

D. ackup and recovery procedures

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Correct Answer: B

Question #95

When an entity finances each asset with a financial instrument of the same approximate maturity as the life of the asset, it is applying:

A. orking capital management

B. eturn maximization

C. inancial leverage

D. hedging approach

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Correct Answer: D

Question #96

Under the balanced scorecard concept, employee satisfaction and retention are measures used under which of the following perspectives?

A. ustomer

B. nternal business

C. earning and growth

D. inancial

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Correct Answer: C

Question #97

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. ll and IV only

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Correct Answer: C

Question #98

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 #99

If the bank uses the maximax criterion for selecting the location of the branch, it will select:

A. 1

B. 2

C. 3

D. 5

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Correct Answer: D

Question #100

Which of the following would not be appropriate to consider in the physical design of a data center?

A. valuation of potential risks from railroad lines and highways

B. se of biometric access systems

C. esign of authorization tables for operating system access

D. nclusion of an uninterruptible power supply system and surge protection

View answer

Correct Answer: C

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