CIA Part 3 Exam Questions, Free Certified Internal Auditor Practice Questions

Question #1

An entity has 100.000 outstanding ordinary shares with a market value of US $20 per share. Dividends of US $2 per share were paid in the current year, and the entity has a dividend-payout ratio of 40%. The price-to-earnings ratio of the entity is:

A. 5

B.

C. 0

D. 0

View answer

Correct Answer: B

Question #2

Which of the following control frameworks groups IT business assurance objectives into the five categories of availability, capability, functionality, protectibility, and accountability?

A. OBIT

B. OSO

C. SAC

D. TAG

View answer

Correct Answer: C

Question #3

Which of the following hiring procedures provides the most control over the accuracy of information submitted on an employment application?

A. pplicants are required to submit unofficial copies of their transcripts along with the application as verification of their educational credentials

B. he hiring organization calls the last place of employment for each finalist to verify the employment length and position held

C. etters of recommendation that attest to the applicants character must be mailed directly to the hiring organization rather than being submitted by the applicant

D. pplicants are required to sign a statement that the information on the application is true and correct as a confirmation of its truth

View answer

Correct Answer: B

Question #4

The best plan for responding to quickly changing information requirements is to foster:

A. reater online access to information systems

B. ompetitive pressures for enhanced functions in systems

C. loser linkage between organizational strategy and information

D. ore widespread use of automated controls

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Correct Answer: C

Question #5

Because of competitive pressures to be more responsive to their customers, some organizations have connected their internal personal computer networks through a host computer to outside networks. A risk of this practice is that:

A. iruses may gain entry to one or more company systems

B. ploaded files may not be properly edited and validated

C. ata downloaded to the personal computers may not be sufficiently timely

D. oftware maintenance on the personal computers may become more costly

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Correct Answer: A

Question #6

A corporation was a party to the following transactions during November and December of the current year.Which of these transactions is most likely to be defined as a derivative?

A. urchased 1,000 shares of ordinary stock of a public corporation based on the assumption that the stock will increase in value

B. urchased a term life insurance policy on the entity's chief executive officer to protect the entity from the effects of an untimely demise of this officer

C. greed to cosign the note of its 100%-owned subsidiary to protect the lender from the possibility that the subsidiary might default on the loan

D. ased on its forecasted need to purchase 300,000 bushels of wheat in 3 months, entered into a 3-month forward contract to purchase 300,000 bushels of wheat to protect itself from changes in wheat prices during the period

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Correct Answer: D

Question #7

Consider the following computer applications:(a) At a catalog sales firm, as phone orders are entered into their computer, both inventory and credit are immediately checked.(b) A manufacturer's computer sends the coming week's production schedule and parts orders to a supplier's computer.Which statement below is true for these applications?

A. oth applications are examples of electronic data interchange EDI

B. oth applications are examples of online real-time pr easing OLRT

C. he first application is an example of EDI and the second an example of OLRT

D. he first application is an example of OLRT and the second an example of EDI

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Correct Answer: D

Question #8

An IT manager has only enough resources to install either a new payroll system or a new data security system, but not both.Which of the following actions is most appropriate?

A. iving priority to the security system

B. eaving the decision to the IT manager

C. ncreasing IT staff output in order for both systems to be installed

D. aving the information systems steering committee set the priority

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Correct Answer: D

Question #9

Which of the following control frameworks groups IT business assurance objectives into the five categories of availability, capability, functionality, protectibility, and accountability?

A. OBIT

B. OSO

C. SAC

D. TAG

View answer

Correct Answer: C

Question #10

An organization installed antivirus software on all its personal computers. The software was designed to prevent initial infections, stop replication attempts, detect infections after their occurrence, mark affected system components, and remove viruses from infected components. The major risk in relying on antivirus software is that antivirus software may:

A. ot detect certain viruses

B. ake software installation overly complex

C. nterfere with system operations

D. onsume too many system resources

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Correct Answer: A

Question #11

In its first year of operations, an entity had US $50,000 of fixed operating costs. It sold 10,000 units at a US $10 unit price and incurred variable costs of US $4 per unit. If all pnc es and costs will be the same in the second year and sales are projected to rise to 25,000 units, what will the degree of operating leverage the extent to which fixed costs are used in the entity's operations) be in the second yc _u?

A. 25

B. 50

C.

D.

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Correct Answer: B

Question #12

Which of the following access setups is appropriate in a computer environment?

A. es No No No

B. es No No Yes

C. o Yes Yes No

D. o Yes Yes Yes

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Correct Answer: A

Question #13

Two countries have flexible e change rate systems and an active trading relationship. If incomes in country 1, everything else being equal, then the currency of country 1 will tend to relative to the currency of country 2.

A. ption A

B. ption B

C. ption C

D. ption D

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Correct Answer: C

Question #14

Companies now can use electronic transfers to conduct regular business transactions.Which of the following terms best describes a system in which an agreement is made between two or more parties to electronically transfer purchase orders, sales orders, invoices, and/or other financial documents?

A. lectronic mail email

B. lectronic funds transfer EFT

C. lectronic data interchange EDI

D. lectronic data processing EDP

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Correct Answer: C

Question #15

A regression equation:

A. stimates the dependent variables

B. ncompasses factors outside the relevant range

C. s based on objective and constraint functions

D. stimates the independent variable

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Correct Answer: A

Question #16

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

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Correct Answer: D

Question #17

A major disadvantage of the life cycle approach to system development is that it is not well-suited for projects that are:

A. tructured

B. arge

C. omplex

D. nstructured

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Correct Answer: D

Question #18

The time that car 4 will have to wait to be:

A. -2 minutes

B. minutes

C. minutes

D. + minutes

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Correct Answer: C

Question #19

The online data entry control called performatting is:

A. program initiated prior to regular input to discover errors in data before entry so that the errors can be corrected

B. check to determine if all data items for a transaction have been entered by the person entering the data

C. aeries of requests for required input data that requires an acceptable response to each request before a subsequent request is made

D. he display of a document with blanks for data items to be entered by the person entering the data

View answer

Correct Answer: D

Question #20

A company with many branch stores has decided to use its best-performing store as a benchmark organization for the purpose of analyzing the accuracy and reliability of branch store financial reporting.Which one of the following is the most likely measure to be included in a financial benchmark?

A. igh turnover of employees

B. igh level of employee participation in setting budgets

C. igh amount of bad debt write-offs

D. igh number of suppliers

View answer

Correct Answer: C

Question #21

Which of the following risks is more likely to be encountered in an end-user computing EUC) environment as compared with a centralized environment?

A. nability to afford adequate uninterruptible power supply systems

B. ser input screens without a graphical user interface GUI)

C. pplications that are difficult to integrate with other information systems

D. ack of adequate utility programs

View answer

Correct Answer: C

Question #22

Most large-scale computer systems maintain at least three program libraries: production library for running programs); source code library maintains original source coding); and test library for programs which are being changed).Which of the following statements is correct regarding the implementation of sound controls over computer program libraries?

A. nly programmers should have access to the production library

B. sers should have access to the test library to determine whether all changes are properly made

C. nly the program librarian should be allowed to make changes to the production library

D. he computer operator should have access to both the production library and the source code library to assist in diagnosing computer crashes

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Correct Answer: C

Question #23

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

View answer

Correct Answer: B

Question #24

After using the report writer for several months, the marketing analysts gained confidence in using it but the marketing department manager became concerned.Whenever analysts revised reports they had written earlier, the coding errors kept reappearing in their command sequences. The manager was sure that all the analysts knew what the errors were and how to avoid them. The most likely cause of the reappearance of the same coding errors is inadequate:

A. ackups

B. hange control

C. ccess control

D. esting

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Correct Answer: B

Question #25

A post office serves customers in a single line at one service window. During peak periods, the rate of arrivals has a Poisson distribution with an average of 100 customers per hour and service times that are exponentially distributed with an average of 60 seconds per customer. From this, one can conclude that the:

A. ueue will expand to infinity

B. erver will be idle one-sixth of the time

C. verage rate is 100 customers per hour

D. verage customer waiting time is 2

View answer

Correct Answer: A

Question #26

The current generation of ERP software ERP II) may include an advanced planning and scheduling system that:

A. etermines the location of retail outlets

B. onnects the organization with other members of a joint venture

C. ontrols the flow of a manufacturer's materials and components through the supply chain

D. ermits tracking of orders by customers

View answer

Correct Answer: C

Question #27

An entity has total asset turnover of 3.5 times and a total debt to total assets ratio of 70%.If the entity has total debt of US $1,000,000, it has a sales level of:

A. S $5,000,000

B. S $2,450,000

C. S $408,163

D. S $200,000

View answer

Correct Answer: A

Question #28

The order costs associated with inventory management include:

A. nsurance costs, purchasing costs, shipping costs, and obsolescence

B. bsolescence, setup costs, quantity discounts lost, and storage costs

C. uantity discounts lost, storage costs, handling costs, and interest on capital invested

D. urchasing costs, shipping costs, setup costs, and quantity discounts lost

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Correct Answer: D

Question #29

The following data on variables x and y was collected from June to October:The correlation coefficient between variables x and is nearest to:

A.

B. 1

C.

D.

View answer

Correct Answer: B

Question #30

In a large organization, the biggest risk in not having an adequately staffed information center help desk is:

A. ncreased difficulty in performing application audits

B. nadequate documentation for application systems

C. ncreased likelihood of use of unauthorized program code

D. ersistent errors in user interaction with systems

View answer

Correct Answer: D

Question #31

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 #32

If the central bank of a country raises interest rates sharply, the country's currency will likely:

A. ncrease in relative value

B. emain unchanged in value

C. ecrease in relative value

D. ecrease sharply in value at first and then return to its initial value

View answer

Correct Answer: A

Question #33

Which of the following is true about the impact of price inflation on financial ratio analysis?

A. nflation impacts only those ratios computed from balance sheet accounts

B. nflation impacts financial ratio analysis for one entity over time, but not comparative analysis of entities of different ages

C. nflation impacts financial ratio analysis for one entity overtime, as well as comparative analysis of entities of different ages

D. nflation impacts comparative analysis of entities of different ages, but not financial ratio analysis for one entity over time

View answer

Correct Answer: C

Question #34

What coefficient of correlation results from the following data?

A.

B. 1

C. 1

D. annot be determined from the data given

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Correct Answer: B

Question #35

An investment company is attempting to allocate its available funds between two investment alternatives, stocks and bonds, which differ in terms of expected return and risk. The company would like to minimize its risk while earning an expected return of at least 10% and investing no more than 70% in either of the investment alternatives. An appropriate technique for allocating its funds between stocks and bonds is:

A. inear programming

B. apital budgeting

C. ifferential analysis

D. ueuing theory

View answer

Correct Answer: A

Question #36

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 #37

The entity has an accounts receivable balance of:

A. S $12

B. S $26

C. S $36

D. S $66

View answer

Correct Answer: B

Question #38

An appropriate technique for planning and controlling manufacturing inventories, such as raw materials, components, and subassemblies whose demand depends on the level of production is:

A. aterials requirements planning

B. egression analysis

C. apital budgeting

D. inear programming

View answer

Correct Answer: A

Question #39

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

View answer

Correct Answer: C

Question #40

An inventory clerk, using a computer terminal, views the following on screen part number, part description, quantity on hand, quantity on order, order quantity, and reorder point for a particular inventory item. Collectively, these data make up a:

A. ield

B. ile

C. atabase

D. ecord

View answer

Correct Answer: D

Question #41

Managers at a consumer products company purchased personal computer software from only recognized vendors and prohibited employees from installing nonauthorized software on their personal computers. To minimize the likelihood of computer viruses infecting any of its systems, the company should also:

A. estore infected systems with authorized versions

B. ecompile infected programs from source code backups

C. nstitute program change control procedures

D. est all new software on a stand-alone personal computer

View answer

Correct Answer: D

Question #42

For the year just ended the entity has times-interest-earned of:

A.

B.

C.

D.

View answer

Correct Answer: C

Question #43

Total inventory ordering costs per year equal:

A. S $1,250

B. S $2,400

C. S $2,880

D. S $3,600

View answer

Correct Answer: C

Question #44

Which of the following is the elementary unit of data storage used to represent individual attributes of an entity?

A. atabase

B. ata field

C. ile

D. ecord

View answer

Correct Answer: B

Question #45

The value of the domestic currency in relation to foreign currencies is:

A. etermined directly by the price of gold because the value of the domestic currency is tied to the price of gold

B. et by the domestic government in consultation with foreign governments

C. et along with the value of other currencies held by the International Monetary Fund

D. etermined by the forces of supply and demand on the foreign exchange markets

View answer

Correct Answer: D

Question #46

Value engineering is:

A. policy of seeking continuous improvement in all phases of company{ activities

B. method of determining prices based on a cost determination

C. n element of a marketing mix strategy

D. systematic approach to assessing all aspects of cost buildup for a product

View answer

Correct Answer: D

Question #47

One of the main reasons total quality management (TQM) can be used as a strategic weapon is that:

A. he cumulative improvement from a company's TQM efforts cannot readily be copied by competitors

B. ntroducing new products can lure customers away from competitors

C. educed costs associated with better quality can support higher shareholder dividends

D. QM provides a comprehensive planning process for a business

View answer

Correct Answer: A

Question #48

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

View answer

Correct Answer: A

Question #49

The difference between the required rate of return on a given risky investment and that of a risk- free investment with the same expected return is the:

A. isk premium

B. oefficient of variation

C. tandard error of measurement

D. eta coefficient

View answer

Correct Answer: A

Question #50

COBIT is targeted at all of the following except:

A. anagement

B. sers

C. hareholders

D. uditors

View answer

Correct Answer: C

Question #51

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 #52

If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll computer application?

A. ours worked

B. otal debits and total credits

C. et pay

D. epartment numbers

View answer

Correct Answer: D

Question #53

Company F applies a target pricing and costing approach. The following information about costs and revenues of Company F's product are available for the year just ended:Company F plans to increase unit sales to 80,000 by reducing the product's unit price to US $320. If Company F desires a unit target operating income of 12%, 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 #54

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

View answer

Correct Answer: C

Question #55

An international nonprofit organization finances medical research. The majority of its revenue and support comes from fundraising activities, investments, and specific grants from an initial sponsoring corporation. The organization has been in operation over 15 years and has a small internal audit department. The organization has just finished a major fundraising drive that raised US $500 million for the current fiscal period.The following are selected data from recent financial statements (US dollar figure

A. imple linear regression that compares investment income changes over the past 5 years to determine the nature of the changes

B. atio analysis that compares changes in the investment portfolio on a monthly basis

C. rend analysis that compares the changes in investment income as a percentage of total assets and of investment assets over the past 5 years

D. ultiple regression analysis that includes independent variables related to the nature of the investment portfolio and market conditions

View answer

Correct Answer: D

Question #56

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 #57

A growing entity is assessing current working capital requirements. Ana rage of 58 days is required to convert raw materials into finished goods and to sell them. Then an average of 32 days is required to collect on receivables. If the average time the entity takes to pay for its raw materials is 15 days after they are received, the total cash conversion cycle is

A. 1 days

B. 1 days

C. 5 days

D. 0 days

View answer

Correct Answer: C

Question #58

A company allows each of its departments to develop its own system for evaluating performance. How should the personnel director communicate appraisal information to a new employee?

A. resenting anything that is pertinent to the listener's situation

B. roviding an overview of all systems within the company

C. escribing how her own performance is evaluated

D. iscussing each department's evaluation system in detail

View answer

Correct Answer: A

Question #59

Which of the following provides the best justification for reducing trade barriers among nations?

A. he military self-sufficiency argument

B. iversification for stability argument

C. he infant industry argument

D. ncreased total world output argument

View answer

Correct Answer: D

Question #60

In a traditional ERP system, the receipt of a customer order may result in:I). Customer tracking of the order's progressII). Automatic replenishment of inventory by a supplierIII). Hiring or reassigning of employeesIV). Automatic adjustment of output schedules

A. , II, and IV only

B. and Ill only

C. ll and IV only

D. , II, III, and IV

View answer

Correct Answer: C

Question #61

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

View answer

Correct Answer: C

Question #62

Which of the following should not be the responsibility of a database administrator?

A. esign the content and organization of the database

B. evelop applications to access the database

C. rotect the database and its software

D. onitor and improve the efficiency of the database

View answer

Correct Answer: B

Question #63

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 #64

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

View answer

Correct Answer: B

Question #65

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) centers.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 3-year 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 #66

The following account balances represent the December 31 balance sheet of an entity. The quick ratio for this year is:

A.

B.

C.

D.

View answer

Correct Answer: C

Question #67

Which of the following is not true about simu-lation models?

A. hey are deterministic in nature

B. he may involve sampling

C. hey mathematically estimate what actual performance would be

D. hey emulate stochastic systems

View answer

Correct Answer: A

Question #68

Change control typically includes procedures for separate libraries for production programs and for test versions of programs. The reason for this practice is to:

A. romote efficiency of system development

B. egregate incompatible duties

C. acilitate user input on proposed changes

D. ermit unrestricted a access to programs

View answer

Correct Answer: B

Question #69

The emergence of electronic data interchange EDI) as standard operating practice increases the risk of:

A. nauthorized third-party access to systems

B. ystematic programming errors

C. nadequate knowledge bases

D. nsuccessful system use

View answer

Correct Answer: A

Question #70

An entity has 100.000 outstanding ordinary shares with a market value of US $20 per share. Dividends of US $2 per share were paid in the current year, and the entity has a dividend-payout ratio of 40%. The price-to-earnings ratio of the entity is:

A. 5

B.

C. 0

D. 0

View answer

Correct Answer: B

Question #71

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

View answer

Correct Answer: A

Question #72

The total exports of Vietnam are US $20,000,000 worth of rice to Greece, and the total exports of Greece are US $18, 11,111100 worth of olives to Vietnam. The terms of trade are:

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: A

Question #73

The arrival times in a waiting-line (queuing) model follow which probability distribution?

A. inomial

B. hi-square

C. oisson

D. xponential

View answer

Correct Answer: C

Question #74

A firm is attempting to estimate its allowance for doubtful accounts. The probabilities of these doubtful accounts follow a transition process over time. They evolve from their starting value to a changed value. As such, the most effective technique to analyze the problem is:

A. arkov chain analysis

B. conometric theory

C. onte Carlo analysis

D. ynamic programming

View answer

Correct Answer: A

Question #75

An entity's receivables collection period is equal to the:

A. nventory conversion period

B. ash conversion cycle

C. ay's sales outstanding

D. nventory divided by average daily sales

View answer

Correct Answer: C

Question #76

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 company'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 #77

When using PERT Program Evaluation Review Technique), the expected time for an activity when given an optimistic time A), a pessimistic time B), and a most likely time m) is calculated by which one of the following formulas?

A. \xad a) =2

B. + b) =2

C. + 4m +b) =6

D. abm) =6

View answer

Correct Answer: C

Question #78

The high cost of short-term financing has recently caused an entity to reevaluate the terms of credit it extends to its customers. The current policy is 1/10, net 60. If customers can borrow at the prime rate, at what prime rate must the entity change its terms of credit in order to avoid an undesirable extension in its collection of receivables?

A. %

B. %

C. %

D. %

View answer

Correct Answer: D

Question #79

If implementing EDI with suppliers permitted more frequent orders and more frequent communication about them, a company could be more effective by using EDI to:

A. educe costs by reducing raw materials inventory

B. nsure that it always maintained a 25-day buffer stock

C. rack materials through production to completed orders

D. chedule production to reduce the number of setups required

View answer

Correct Answer: A

Question #80

A tax is regressive if:

A. ndividuals with higher incomes pay a higher percentage of their income in tax

B. he burden for payment falls disproportionately on lower-income persons

C. ndividuals pay a constant percentage in taxes, regardless of income level

D. ndividuals with lower incomes pay a lower percentage of their income in tax

View answer

Correct Answer: B

Question #81

Which of the following statements is true concerning internal control in an electronic data interchange (EDI) system?

A. reventive controls generally are more important than detective controls in EDI systems

B. ontrol objectives for EDI systems generally are different from the objectives for other information systems

C. nternal controls in EDI systems rarely permit control risk to be assessed at below the maximum

D. nternal controls related to the segregation of duties generally are the most important controls in EDI systems

View answer

Correct Answer: A

Question #82

In which of the following organizational structures does total quality management TOM) work best?

A. ierarchal

B. eams of people from the same specialty

C. eams of people from different specialties

D. pecialists working individually

View answer

Correct Answer: C

Question #83

The internal auditor found that the purchasing department has a policy of setting all purchasing lead times to the highest number of days experienced within each product subassembly}, even though some subassemblies required 3 or more months to complete. To address the objective of reducing inventory holding costs related to this policy, the internal auditor should focus on:

A. eviewing production requirements for a sample of products to determine at which point in the production process materials and subassemblies are needed

B. valuating whether product-line assignments were rotated among the members of the purchasing department

C. dentifying signature approval authority} among members of the purchasing department in relation to any computer system controls

D. esting those products having the highest sales to determine the average number of days that the completed products were held in inventory

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Correct Answer: A

Question #84

Listed below are selected line items from the cost-of-quality report for Company B forWhat is Company B's total prevention and appraisal cost for last month?

A. S $786

B. S $1,154

C. S $1,940

D. S $2,665

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Correct Answer: C

Question #85

Which of the following observations concerning quality control is most accurate?

A. rocess quality control is used when examining the quality of goads or services that already exist

B. rocess quality control is used to prevent defects, and product quality control is used primarily to identify defects after the fact

C. roduct quality control is designed to balance the marketability of higher quality against the cast of attaining higher quality

D. roduct quality control is more important than process quality control

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Correct Answer: B

Question #86

When the economic order quantity EOQ) decision model is employed, the List A are being offset or balanced

A. ption A

B. ption B

C. ption C

D. ption D

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Correct Answer: A

Question #87

A post office serves customers in a single line at one service window. During peals periods, the rate of arrivals has a Poisson distribution with an average of 100 customers per hour and service times that are exponentially distributed with an average of 0 seconds per customer.From this, one can conclude that the:

A. ueue will expand to infinity

B. erver' will be idle one-sixth of the time

C. verage rate is 100 customers per hour

D. verage customer waiting time is minutes

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Correct Answer: A

Question #88

Which of the following would Batchelder most likely use as a hash total?

A. G HK80

B.

C. 04

D. 10

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Correct Answer: D

Question #89

A company using EDI tracked the functional acknowledgments from trading partners and issue warning messages if acknowledgments did not occur within a reasonable length of time.What risk was the company attempting to address by this practice?

A. ransactions that have not originated from a legitimate trading partner may be inserted into the EDI network

B. ransmission of EDI transactions to trading partners may sometimes fail

C. here may be disagreement between the parties as to whether the EDI transactions form a legal contract

D. DI data may not be accurately and completely processed by the EDI software

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Correct Answer: B

Question #90

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

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Correct Answer: B

Question #91

Which of the following is usually a benefit of using electronic funds transfer EFT) for international cash transactions?

A. mprovement of the audit trail for cash receipts and disbursements

B. reation of self-monitoring access controls

C. eduction of the frequency of data entry errors

D. ff-site storage of source documents for cash transactions

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Correct Answer: C

Question #92

For the year just ended the entity has times-interest-earned of:

A.

B.

C.

D.

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Correct Answer: C

Question #93

The correlation coefficient that indicates the weakest linear association between two variables is:

A. 0

B. 0

C.

D.

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Correct Answer: B

Question #94

The following ratios relate to an entity's financial situation compared with that of its:What conclusion could a financial analyst validly draw from these ratios?

A. he entity's product has a high market share, leading to higher profitability

B. he entity uses more debt than does the average entity in the industry

C. he entity's profits are increasing over time

D. he entity's shares have a higher market value to carrying amount than does the rest of the industry

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Correct Answer: B

Question #95

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

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Correct Answer: B

Question #96

The best preventive measure against a computer virus is to:

A. ompare software in use with authorized versions of the software

B. xecute virus exterminator programs periodically on the system

C. llow only authorized software from known sources to be used on the system

D. repare and test a plan for recovering from the incidence of a virus

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Correct Answer: C

Question #97

A regression equation:

A. stimates the dependent variables

B. ncompasses factors outside the relevant range

C. s based on objective and constraint functions

D. stimates the independent variable

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Correct Answer: A

Question #98

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 #99

The use of teams in total quality management (TQM) is important because:

A. ell-managed teams can be highly creative and are able to address complex problems better than individuals can

B. eams are quicker to make decisions, thereby helping to reduce cycle time

C. mployee motivation is higher for team members than for individual contributors

D. he use of teams eliminates the need for supervision, thereby allowing a company to become leaner and more profitable

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Correct Answer: A

Question #100

Which of the following is not true about the advantages of adopting ISO 9000 standards?

A. doption of ISO 9000 standards may allow the company to sell products in foreign markets

B. SO registration makes customers more comfortable with the supplier's products and services

C. SO 9000 allows companies to understand who internal customers and users are without sharing private information

D. SO registration may help companies discover internal process and quality improvements

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Correct Answer: C

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