Latest CIA Part 3 Exam Questions and Answers 2024, Certified Internal Auditor

Question #1

When a multinational entity decides to sell its products abroad, one of the risks it faces is that the government of the foreign market charges the entity with dumping. Dumping occurs when:

A. he same product sells at different prices in different countries

B. n entity charges less than it costs to make the product to enter or win a market

C. ower quality versions of the product are sold abroad so as to be affordable

D. ransfer prices are set artificially high so as to minimize tax payments

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Correct Answer: B

Question #2

Which of the following creates a valid contract between the parties?

A. reward was posted for the capture of Tom Jones_ Maypole Burden, the county sheriff, captured Jones and claimed the reward

B. lim Polestone promised to give Mabel Abbot a wedding present

C. nxious Father promised to pay Albert Niceguy US $4,000 to take his daughter to the annual Mulestone Dance

D. estival Fanny was drowning in her hot tub

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Correct Answer: C

Question #3

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 #4

In a personal tax system, an individual's marginal tax rate is normally the average tax rate.

A. ption A

B. ption B

C. ption C

D. ption D

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Correct Answer: A

Question #5

Which of the following is an economic rationale for government intervention in trade?

A. aintaining spheres of influence

B. rotecting infant industries

C. reserving national identity

D. ealing with friendly countries

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Correct Answer: B

Question #6

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 #7

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

A. y-product pricing

B. aptive-product pricing

C. roduct-bundle pricing

D. alue pricing

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Correct Answer: A

Question #8

Which of the following channel structures have the best means of managing channel conflict?I). ConventionalII). VerticalIII). HorizontalIV). Multichannel

A. and II

B. I, III, and IV

C. , III, and IV

D. I and III

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Correct Answer: B

Question #9

Under a total quality management (TQM) 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 #10

An investment company is attempting to allocate its available funds between two investment alternatives, equities 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 equities and bonds is:

A. inear programming

B. apital budgeting

C. ifferential analysis

D. ueuing theory

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Correct Answer: A

Question #11

What is the expected average collection period for the entity?

A. 0 days

B. 5 days

C. 0 days

D. 0 days

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Correct Answer: C

Question #12

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 #13

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

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Correct Answer: A

Question #14

The average labor cost per unit for the first batch produced by a new process is US $120. The cumulative average labor cost after the second batch is US $72 per product. Using a batch size of 100 and assuming the learning curve continues, the total labor cost of four batches will be:

A. S$4,320

B. S$10,368

C. S$2,592

D. S$17,280

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Correct Answer: D

Question #15

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

A. ingle channel, single phase

B. ingle channel, multiple phase

C. ultiple channel, single phase

D. ultiple channel, multiple phase

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Correct Answer: B

Question #16

The time that car 3 will have to wait to be serviced:

A. -2 minutes

B. minutes

C. minutes

D. + minutes

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Correct Answer: C

Question #17

One of the main reasons that implementation of a total quality management (TQM) program works better through the use of teams is:

A. eams are more efficient and help an organization reduce its staffing

B. mployee motivation is always higher for team members than for individual contributors

C. eams are a natural vehicle for sharing ideas, which leads to process improvement

D. he use of teams eliminates the need for supervision, thereby allowing a company to reduce staffing

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Correct Answer: C

Question #18

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

A. ompiler programs

B. upervisory programs

C. tility programs

D. ser programs

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Correct Answer: C

Question #19

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

A. nconsistent processing

B. ollback failures

C. nrecoverable transactions

D. eadly embraces retrieval contention

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Correct Answer: D

Question #20

A manufacturer uses a materials requirements planning 1RP) system to track inventory, orders, and raw material requirements. A preliminary audit assessment indicates that the organization's inventory is understated. Using audit software, what conditions should the auditor search for in the MRP database to support this hypothesis?I). Item cost set at zero.II). Negative quantities on hand.III). Order quantity exceeding requirements.IV). Inventory lead times exceeding delivery schedule.

A. and II only

B. and I only

C. I and I only

D. II and I only

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Correct Answer: A

Question #21

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

A. ewer rush orders

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

C. tockouts

D. ncompatibility of the information systems of the parties

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Correct Answer: A

Question #22

The efficient markets theory implies that securities prices are:

A. ot a good estimate of future cash flows

B. air and a reflection of all publicly available information

C. ot the best benchmark for corporate financial decisions

D. lways less than their fair value

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Correct Answer: B

Question #23

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

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Correct Answer: C

Question #24

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

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Correct Answer: D

Question #25

An entity has a majority of its customers located in states A and B. A major west coast bank has agreed to provide a lockbox system to the entity at a fixed fee of US $50,000 per year and a variable fee of US $0.50 for each payment processed by the bank. On average, the entity receives 50 payments per day, each averaging US $20,000. With the lockbox system, the entity's collection float will decrease by 2 days. The annual interest rate on money market securities is 6%. If the entity makes use of the lockbox

A. S $55

B. S $60,875

C. S $50,000

D. S $120,000

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Correct Answer: B

Question #26

Earnings-per-share data must be reported on the face of the income statement for:

A. ption A

B. ption B

C. ption C

D. ption D

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Correct Answer: B

Question #27

Which of the following types of controls is not described in the IT Governance Institute's Control Objectives for information and Related Technology COBIT)?

A. eneral controls

B. xchange controls

C. rocess controls

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Correct Answer: B

Question #28

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

A. ublic switched lines

B. ast-packet switches

C. tandard electronic mail systems

D. WAN

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Correct Answer: A

Question #29

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

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

B. xternal failure costs are relatively greater in service organizations

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

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

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Correct Answer: B

Question #30

Batch processing:

A. s not used by most businesses because it reduces the audit trail

B. llows users to inquire about groups of information contained in the system

C. ccumulates transaction records into groups for processing against the master file on a delayed basis

D. an only be performed on a centralized basis

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Correct Answer: C

Question #31

A device used to connect dissimilar networks is a:

A. ateway

B. ridge

C. outer

D. iring concentrator

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Correct Answer: A

Question #32

Omen Company is a manufacturer of men's shirts. It distributes weekly sales reports to each sales manager. The quantity 2R5 appeared in the quantity sold column for one of the items on the weekly sales report for one of the sales managers. The most likely explanation for what has occurred is that the:

A. utput quantity has been stated in hexadecimal numbers

B. omputer has malfunctioned during execution

C. rinter has malfunctioned and the "R" should have been a decimal point

D. rogram did not contain a data checking routine for input data

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Correct Answer: D

Question #33

Which of the following is a likely result of outsourcing?

A. ncreased dependence on suppliers

B. ncreased importance of market strategy

C. ecreased sensitivity to government regulation

D. ecreased focus on costs

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Correct Answer: D

Question #34

General sales taxes tend to be regressive with respect to income because:

A. larger portion of a lower income person's income is subject to the tax

B. smaller portion of a lower income person's income is subject to the tax

C. he tax rate is higher for person with lower income

D. he tax claims an increasing amount of income as income rises

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Correct Answer: A

Question #35

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 #36

Which new issues, associated with rapidly advancing computer technology, create new risk exposures for organizations?

A. hanges in organizational reporting requirements and controls over computer abuse

B. ontrols over library tape procedures

C. omplexity of operating systems and controls over privacy of data

D. hanges in organizational behavior

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Correct Answer: C

Question #37

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 #38

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

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Correct Answer: B

Question #39

A seller's price is below an appropriate measure of casts. Moreover, the seller has a reasonable prospect of recovering the resulting loss in the future through higher prices or a greater market share. Accordingly, the seller has engaged in:

A. ollusive pricing

B. umping

C. redatory pricing

D. rice discrimination

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Correct Answer: C

Question #40

Tools that should be in place to ensure data integrity include III:I). Monitoring softwareII). Change controlsIII). Trend analysisIV). IV Automatic timeout

A. and III only

B. I, III, and IV only

C. , III, and IV only

D. , II, III, and IV

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Correct Answer: D

Question #41

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°

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Correct Answer: A

Question #42

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

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Correct Answer: D

Question #43

Which of the following refers to taxes that do not necessarily take a larger absolute share of an increase in income?

A. rogressive

B. roportional

C. egressive

D. lat

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Correct Answer: C

Question #44

What risk element is management seeking to identify by asking the following question:What could happen that would adversely affect the organization's ability to achieve its objectives and execute its strategies?

A. ingle loss exposure value

B. afeguards and controls

C. hreat events

D. requency

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Correct Answer: C

Question #45

The market value of an entity's outstanding ordinary shares will be higher, everything else equal, if investors:

A. ave a lower required return on equity

B. xpect lower dividend growth

C. ave longer expected holding periods

D. ave shorter expected holding periods

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Correct Answer: A

Question #46

Which of the following is a computer program that appears to be legitimate but performs some illicit activity when it is run?

A. oax virus

B. eb crawler

C. rojan horse

D. iller application

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Correct Answer: C

Question #47

If a high percentage of an entity's total costs is fixed, the entity's operating leverage will be:

A. igh

B. ow

C. nchangedD Unable to be determined

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Correct Answer: A

Question #48

Which of the following statements about desktop computers, servers, and mainframe computers is true?

A. esktop computers usually more than servers but less than mainframes

B. ecause of the increase, desktop computers, there will be little need for mainframes in the near future

C. ervers must be programmed directly in machine language while mainframes use higher-level language

D. he cost per transaction to process on each type of computer has decreased in recent years

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Correct Answer: D

Question #49

Based upon the data derived from the regression analysis, 420 maintenance hours in a month would mean the maintenance costs rounded to the nearest U dollar) would be budgeted at

A. $3,780

B. $3,600

C. $3,790

D. $3,746

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Correct Answer: D

Question #50

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 and 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

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Correct Answer: B

Question #51

Spoofing is one type of online activity used to launch malicious attacks. Spoofing is:

A. rying large numbers of letter and number combinations to access a network

B. aves dropping on information sent by a user to the host computer of a website

C. ccessing packets flowing through a network

D. dentity misrepresentation in cyberspace

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Correct Answer: D

Question #52

Using the information collected, the organization should focus on:

A. he total number of personal computer complaints that occurred

B. he number of computer complaints associated with CD-ROM problems and new software usage

C. he number of computer complaints associated with the lack of user knowledge and hardware problems

D. he cost to alleviate all computer complaints

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Correct Answer: C

Question #53

Faced with 3 years of steadily decreasing profits despite increased sales and a growing economy,which of the following is the healthiest course of action for a chief executive officer to take?

A. et a turnaround goal of significantly increasing profits within 2 months

B. educe staff by 10% in every unit

C. lassify all job functions as either a) adding value in the eyes of the customer such as production and sales) or b) not adding value in the eyes of the customer such as accounting and human resources)_ Reduce staff in the non-value-adding functions by 20%

D. mplement a plan to encourage innovation at all levels

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Correct Answer: D

Question #54

Of the following, the greatest advantage of a database server) architecture is:

A. ata redundancy can be reduced

B. onversion to a database system is inexpensive and can be accomplished quickly

C. ultiple occurrences of data items are useful for consistency checking

D. ackup and recovery procedures are minimized

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Correct Answer: A

Question #55

All of the following are potential security issues for e-commerce except:

A. orrect identification of transacting parties

B. roliferation of computer viruses

C. etermining who may rightfully make transaction decisions

D. erification of payment data

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Correct Answer: B

Question #56

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

A. S $50,000

B. S $36,000

C. S $ 14,000)

D. S $ 20,000)

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Correct Answer: C

Question #57

A company, which has many branch stares, has decided to use its best-performing stare as a benchmark organization far the purpose of analyzing the accuracy and reliability of branch stare financial reporting.Which one of the fallowing 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

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Correct Answer: C

Question #58

Which of the following is a tariff?

A. icensing requirements

B. onsumption taxes on imported goods

C. nreasonable standards pertaining to product quality and safety

D. omestic content rules

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Correct Answer: B

Question #59

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

A. otal assets employed

B. quity

C. orking capital plus other assets

D. otal assets available

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Correct Answer: B

Question #60

The bullwhip, or whiplash, effect on inventories begins when retailers face uncertain demand from consumers caused by randomness in buying habits. It can be avoided by:

A. he need to purchase or manufacture goods in cost-efficient batches

B. hanges in price that may encourage purchases in anticipation of future increases

C. hortages that may lead to rationing by suppliers or manufacturers and hoarding by manufacturers or retailers

D. haring of information and coordination among the organizations in the supply chain

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Correct Answer: D

Question #61

The most direct way to prepare a cash budget for a manufacturing entity is to include:

A. rojected sales, credit terms, and net income

B. rojected net income, depreciation, and goodwill amortization

C. rojected purchases, percentages of purchases paid, and net income

D. rojected sales and purchases, percentages of collections, and terms of payments

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Correct Answer: D

Question #62

An entity plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and will reduce the ratio of credit sales to total revenue from 70% to 60%. The entity estimates that projected sales will be 5% less if the proposed new credit policy is implemented. If projected sales for the coming year are US $50 million, calculate the dollar impact on accounts receivable of this proposed change in credit policy. Assume a 360-day year.

A. S $3,817,445 decrease

B. S $6,500,000 decrease

C. S $3,333,334 decrease

D. S $18,749,778 increase

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Correct Answer: C

Question #63

The two main variables that contribute to increases in real gross domestic product GDP derived from labor inputs are labor productivity and:

A. he potential labor force

B. he inflation rate

C. uality of output

D. otal worker hours

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Correct Answer: D

Question #64

During interviews with the inventory management personnel, an internal auditor learned that salespersons often order inventory for stock without receiving the approval of the vice president of sales. Also, detail testing showed that there are no written approvals on purchase orders for replacement parts. The detail testing is a good example of

A. ndirect evidence

B. ircumstantial evidence

C. orroborative evidence

D. ubjective evidence

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Correct Answer: C

Question #65

An evaluator is rating 100 employees on a bell curve. She is instructed to label five employees "extraordinary" and five employees "unsatisfactory." The evaluator also is instructed to label 10 employees "above average" and 10 employees "below average." All of the other employees will be in the "average" category.Which of the following is the major drawback of using this method?

A. he process of using the method is too time consuming

B. n employee's evaluation will depend on who the evaluator is

C. ifferent evaluators have different standards

D. he evaluator must place some employees in the lowest and highest tails of a bell-shaped curve

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Correct Answer: D

Question #66

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 #67

The decision rule that selects the strategy with the highest utility payoff if the worst state of nature occurs is the:

A. inimize regret rule

B. aximize utility rule

C. aximinrule

D. aximaxrule

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Correct Answer: C

Question #68

Questions about which of the following can legally be asked in recruiting interviews?

A. ge

B. umber of children

C. ind of military discharge

D. riminal record but only for security clearance purposes)

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Correct Answer: D

Question #69

Management's enthusiasm for computer security seems to vary with changes in the environment, particularly the occurrence of other computer disasters.Which of the following concepts should be addressed when making a comprehensive recommendation regarding the costs and benefits of computer security?I). Potential loss if security is not implementedII). Probability of occurrencesIII). Cost and effectiveness of the implementation and operation of computer security

A. only

B. and II only

C. II only

D. , II, and III

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Correct Answer: D

Question #70

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.

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Correct Answer: B

Question #71

Which of the following is usually a benefit of transmitting transactions in an electronic data interchange (EDI) environment?

A. compressed business cycle with lower year-end receivables balances

B. reduced need to test computer controls related to sales and collections transactions

C. n increased opportunity to apply statistical sampling techniques to account balances

D. o need to rely on third-parry service providers to ensure security

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Correct Answer: A

Question #72

A common mistake in valuing the entity to be acquired in a business combination is:

A. sing market values in the valuation

B. ncluding incremental cash flows in the valuation

C. sing the acquirer's discount rate when valuing the incremental cash flows

D. ncluding all related transaction costs associated with an acquisition

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Correct Answer: C

Question #73

Much of the internal auditor's work involves accumulation of engagement information. A duplicate of a contract rather than the original is an example of what kind of evidence?

A. econdary

B. ircumstantial

C. earsay

D. pinion

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Correct Answer: A

Question #74

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

A. S $51,000 less

B. S $75,500 less

C. S $100,000 less

D. S $24,500 more

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Correct Answer: B

Question #75

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

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Correct Answer: A

Question #76

The following are the January 1 and June 30 balance sheets of an entity/From January 1 to June 30, the net works no capital:

A. ecreased by US $1 million

B. tayed the s

C. ncreased by US $1 million

D. ncreased by US $2 million

View answer

Correct Answer: C

Question #77

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

View answer

Correct Answer: A

Question #78

The sale of final goods is the gross domestic product, and the sale of intermediate goods is the gross domestic product.

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: B

Question #79

Query facilities for a database system would most likely include all of the following except:

A. raphical output capability

B. ata dictionary access

C. data validity checker

D. query-by-example interface

View answer

Correct Answer: C

Question #80

A contract dispute has arisen between an organization and a major supplier. To resolve the dispute, the most competent evidence is:

A. ral testimony of contracting parties

B. he original contract

C. ctions by parties to the contract

D. letter from the supplier's attorney

View answer

Correct Answer: B

Question #81

On a balanced scorecard, which of the following is not a customer measure?

A. arket share

B. conomic value added

C. ervice response time

D. arranty expense

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Correct Answer: B

Question #82

Which of the following procedures would an entity most likely include in its disaster recovery plan?

A. onvert all data from EDI format to an internal company format

B. aintain a Trojan horse program to prevent illicit activity

C. evelop an auxiliary power supply to provide uninterrupted electricity

D. tore duplicate copies of files in a location away from the computer center

View answer

Correct Answer: D

Question #83

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

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Correct Answer: A

Question #84

The credit instrument known as a banker's acceptance:

A. alls for immediate payment upon delivery of the shipping documents to the bank's customer and acceptance of Hoods by the bank

B. nvolves an invoice being signed by the banker upon receipt of goods, after which both the banker and the seller record the transaction on their respective books

C. s a time draft payable on a specified date and guaranteed by the bank

D. s a method of sales financing in which the bank retains title to the goods until the buyer has completed payment

View answer

Correct Answer: C

Question #85

On a balanced scorecard, which of the following is not a customer measure?

A. arket share

B. conomic value added

C. ervice response time

D. arranty expense

View answer

Correct Answer: B

Question #86

Which of the following is not an appropriate time series forecasting technique?

A. east squares

B. xponential smoothing

C. he Delphi technique

D. oving averages

View answer

Correct Answer: C

Question #87

Regardless of whether a company develops, buys, leases, or pays for the use of the software for EDI transmissions, internal audit should be responsible for evaluating whether the software:

A. as developed in a controlled environment

B. s backed up adequately to permit recovery

C. as acquired with adequate review by legal counsel

D. eets business objectives

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Correct Answer: D

Question #88

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

A. ndependent Variable

B. ependent Variable

C. onstant coefficient

D. oefficient of determination

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Correct Answer: A

Question #89

In the Gantt chart below, shaded bars represent completed portions of activities, bars depicted with broken lines represent uncompleted portions, and blank bars represent activities notyet begun.As of week 8, the Gantt chart shows that the project is:

A. omplete

B. head of schedule

C. n schedule

D. ehind schedule

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Correct Answer: C

Question #90

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

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Correct Answer: C

Question #91

Through the use of decision models, managers thoroughly analyze many alternatives and decide on the best alternative for the company. Often the actual results achieved from a particular decision are not what was expected when the decision was made In addition, an alternative that was not selected would have actually been the best decision for the company. The appropriate technique to analyze the alternatives by using expected inputs and altering them before a decision is made is:

A. xpected value analysis

B. inear programming

C. rogram evaluation review technique (PERT)

D. ensitivity analysis

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Correct Answer: D

Question #92

A value-added tax is collected on the basis of:

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 it

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 #93

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

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

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

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

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

View answer

Correct Answer: C

Question #94

In production management, product breakdown into component parts and lead times for procuring these parts is necessary for:

A. critical path method CPM) system

B. materials requirements planning MRP) system

C. n economic order quantity EOQ) system

D. n ABC system

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Correct Answer: B

Question #95

A checkpoint restart procedure is primarily designed to recover from:

A. rogramming errors

B. ata input errors

C. omputer operator errors

D. ardware failures

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Correct Answer: D

Question #96

An entity obtaining short-term financing with trade credit will pay a higher percentage financing cost, everything else being equal, when the:

A. iscount percentage is lower

B. tems purchased have a higher price

C. tems purchased have a lower price

D. upplier offers a longer discount period

View answer

Correct Answer: D

Question #97

If a corporation's disaster recovery plan requires fast recovery with little or no downtime, which of the following backup sites should it choose?

A. ot site

B. arm site

C. old site

D. uick site

View answer

Correct Answer: A

Question #98

Which of the following criteria would be most useful to a sales department manager in evaluating the performance of the manager's customer-service group?

A. he customer is always right

B. ustomer complaints should be processed promptly

C. mployees should maintain a positive attitude when dealing with customers

D. ll customer inquiries should be answered within 7 days of receipt

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Correct Answer: D

Question #99

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 #100

Users making database queries often need to combine several tables to get the information they want. One approach to combining tables is:

A. oining

B. erging

C. rojecting

D. ointing

View answer

Correct Answer: A

Question #101

Physical distribution is the moving of finished products to:

A. etail outlets

B. hipping point

C. onsumers

D. arehouses

View answer

Correct Answer: C

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