Latest CIA Part 3 Exam Questions & Answers 2024, Sample Questions

Question #1

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 #2

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

A. dentifying and reworking production defects before sale

B. esigning the product to minimize defects

C. erforming inspections to isolate defects as early as possible

D. aking machine adjustments periodically to reduce defects

View answer

Correct Answer: B

Question #3

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

A. , III, and I

B. I and III only

C. , II, and III

D. II and IV only

View answer

Correct Answer: C

Question #4

A taxpayer who earns US $50,000 during the year and pays a 15% tax rate on the first US$30,000 of income and a 30% tax rate on all earnings over US $30,000 has a(n):

A. arginal tax rate of 15%

B. arginal tax rate of 21%

C. verage tax rate of 21%

D. verage tax rate of 22

View answer

Correct Answer: C

Question #5

A bank has changed from a system in which lines are formed in front of each teller to a one-line, multiple-server system.When a teller is free, the person at the head of the line goes to that teller.Implementing the new system will:

A. ecrease the bank's wage expenses because the new system uses fewer tellers

B. ecrease time customers spend in the line

C. ncrease accuracy in teller reconciliations at the end of the day because fewer customers are served by each teller

D. mprove on-the-job training for tellers because each will perform different duties

View answer

Correct Answer: B

Question #6

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 #7

What is the number of production runs per year of computer chairs that would minimize the sum of carrying and setup costs for the coming year?

A.

B.

C.

D.

View answer

Correct Answer: D

Question #8

Listed below are costs of quality that a manufacturing company has incurred throughout its operations.The U.S. dollar amount of the costs of quality classified as prevention costs for the manufacturing firm would be:

A. S$643,000

B. S$701,000

C. S$736,000

D. S$768,000

View answer

Correct Answer: B

Question #9

Which implemented control would best assist in meeting the control objective that a system have the capability to hold users accountable for functions performed?

A. rogrammed cutoff

B. edundant hardware

C. ctivity

D. ransaction error logging

View answer

Correct Answer: C

Question #10

Which of the following is a false statement about cost-based pricing?

A. ast-based price should cover casts and provide the desired return an investment

B. commonly used cost-plus pricing formula is to all a markup percentage to the total cost

C. ariable casts may not be used as the basis for casts

D. cost-plus price equals the cost plus a markup

View answer

Correct Answer: C

Question #11

In a theory of constraints (TOC) analysis, the bottleneck operation (the constraint) corresponds to which part of the drum-buffer-rope model?

A. rum

B. uffer

C. ope

D. o part of TOC analysis corresponds to the drum-buffer-rope model

View answer

Correct Answer: B

Question #12

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

View answer

Correct Answer: B

Question #13

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 #14

Control objectives regarding effectiveness and efficiency, reliability, and compliance are the basis of which control framework?

A. TAG

B. SAC

C. OBIT

D. OSO

View answer

Correct Answer: D

Question #15

A decrease in inventory order costs will

A. ecrease the economic order quantity

B. ncrease the reorder point

C. ncrease the economic order quantity

D. ecrease the holding cost percentage

View answer

Correct Answer: A

Question #16

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

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: B

Question #17

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

View answer

Correct Answer: D

Question #18

An investor has been given several financial ratios for an entity but none of the financial reports.Which combination of ratios can be used to derive return on equity?

A. arket-to-book-value ratio and total-debt-to-total-assets ratio

B. rice-to-earnings ratio, earnings per share, and profit margin

C. rice-to-earnings ratio and return-on-assets ratio

D. rofit margin, total assets turnover, and equity multiplier

View answer

Correct Answer: D

Question #19

What is RST's acid-test or quick ratio at the end of Year 6?

A.

B.

C.

D.

View answer

Correct Answer: C

Question #20

When making a cost-time trade-off in PERT analysis, the first activity that should be crashed is the activity:

A. ith the largest amount of slack

B. ith the lowest unit crash cost

C. n the critical path with the maximum possible time reduction

D. n the critical path with the lowest unit crash cost

View answer

Correct Answer: D

Question #21

Company B's bank requires a compensating balance of 20% on a US $100.000 loan. If the stated interest on the loan is 7%, what is the effective cost of the loan?

A.

B.

C.

D.

View answer

Correct Answer: D

Question #22

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

A. 0

B. 0

C.

D.

View answer

Correct Answer: B

Question #23

The cost of statistical quality control in a product quality cost system is categorized as a(n):

A. nternal failure cost

B. raining cost

C. xternal failure cost

D. ppraisal cost

View answer

Correct Answer: D

Question #24

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

View answer

Correct Answer: B

Question #25

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

A. ncome of a product or functional unit

B. osts for making management's decisions

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

D. ncome tax payable

View answer

Correct Answer: B

Question #26

Sales representatives for a manufacturing company are reimbursed for 100% of their cellular telephone bills. Cellular telephone costs vary significantly from representative to representative and from month to month, complicating the budgeting and forecasting processes. Management has requested that the internal auditors develop a method for controlling these costs.Which of the following would most appropriately be included in the scope of the consulting project?

A. ontrol self-assessment involving sales representatives

B. enchmarking with other cellular telephone users

C. usiness process review of procurement and payables routines

D. erformance measurement and design of the budgeting and forecasting processes

View answer

Correct Answer: C

Question #27

What are the possible characteristics of a client-server configuration in a current ERP system?I). Thin clients, local area network, single serverII). Fat clients, wide area network, multiple serversIII). Fat clients, connection via Internet, and single server

A. , II, and III

B. I and Ill only

C. I only

D. only

View answer

Correct Answer: A

Question #28

An entity experienced sales of US $5 billion, profit before interest and taxes of US $200 million, profit before taxes of US $100 million, and profit of US $70 million. Based on this information and the entity's balance sheet information in Exhibit A. the return on equity ROE is: \

A.

B.

C. 3

D. 4%

View answer

Correct Answer: A

Question #29

A nation has a progressive tax structure with income tax brackets that are not indexed to inflation. An individual taxpayer experiences an income increase just equal to the general inflation rate moves into a higher tax bracket. The individual taxpayer will then experience -List A- nominal taxes payable and- List B- real taxes payable.

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: A

Question #30

Based on a comparison of RST's quick ratios in Year 5 and Year 6, what is a likely conclusion?

A. ST has improved its management of long-term investments in Year 6

B. ST has written off obsolete inventory in Year 6

C. ST's ability to meet short-term financing needs has declined since Year 5

D. ST's ability to meet short-term financing needs has improved since Year 5

View answer

Correct Answer: C

Question #31

Violation of which assumption underlying regression analysis is prevalent in time series analysis?

A. ariance of error term is constant

B. rror terms are independent

C. istribution of error terms is normal

D. xpected value of error term equals zero

View answer

Correct Answer: B

Question #32

An organization must manage its flows of raw materials, components, finished goods, services, or information through intermediaries to ultimate consumers. These flows may occur across the functions in an organization's:

A. upply chain

B. alue chain

C. ogistic chain

D. ntegrated chain

View answer

Correct Answer: B

Question #33

In a product's life cycle, the first symptom of the decline stage is a decline in the:

A. irm's inventory levels

B. roduct's sales

C. roduct's production cost

D. roduct's prices

View answer

Correct Answer: B

Question #34

Which group of ratios would be useful in evaluating the effectiveness of working capital management?

A. rofit margin, acid-test ratio, and return on assets

B. cid-test ratio, inventory turnover ratio, and average collection period ratio

C. nventory turnover ratio, times interest earned, and debt-to-equity ratio

D. cid-test ratio, current ratio, and return on equity

View answer

Correct Answer: B

Question #35

With regard to inventory management, an increase in the frequency of ordering will normally:

A. educe the total ordering costs

B. ave no impact an total ordering costs

C. educe total carrying costs

D. ave no impact on total carrying costs

View answer

Correct Answer: C

Question #36

A firm buys like-new computer equipment from bankrupt companies and resells it in foreign markets at prices significantly below those charged by competitors. The firm is:

A. ngaged in dumping

B. ngaged in price discrimination

C. perating in a gray market

D. perating in a black market

View answer

Correct Answer: C

Question #37

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

View answer

Correct Answer: D

Question #38

Control objectives regarding effectiveness and efficiency, reliability, and compliance are the basis of which control framework?

A. TAG

B. SAC

C. OBIT

D. OSO

View answer

Correct Answer: D

Question #39

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

View answer

Correct Answer: C

Question #40

The owner of a newly established janitorial entity is deciding what type of checking to open. The entity is planning to keep a US $500 minimum balance in the account for emergencies and plans to write roughly 80 checks per month. The bank charges US $10 per month plus a US $0.10 per check charge for a standard business checking account with no minimum balance. The entity also has the option of a premium business checking account that requires a US $2,500 minimum balance but has no monthly fees or per check

A. tandard account, because the savings is US $34 per year

B. remium account, because the savings is US $34 per year

C. tandard account, because the savings is US $16 per year

D. remium account, because 'the savings is US $16 per year

View answer

Correct Answer: D

Question #41

A company experiences both variable usage rates and variable lead times for its inventory items. The probability distributions for both usage and lead times are known. A technique the company could use for determining the optimal safety stock levels for an inventory item is:

A. ueuing theory

B. inear programming

C. ecision tree analysis

D. onte Carlo simulation

View answer

Correct Answer: D

Question #42

Application control objectives do not normally include assurance that:

A. uthorized transactions are completely processed once and only once

B. ransaction data are complete and accurate

C. eview and approval procedures for new systems are set by policy and adhered to

D. rocessing results are received by the intended user

View answer

Correct Answer: C

Question #43

Prices vary directly with capacity usage under:

A. ollusive pricing

B. eak-load pricing

C. arket-based pricing

D. ost-based pricing

View answer

Correct Answer: B

Question #44

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

A. eveloping an information security policy for the organization

B. aintaining and updating the list of user passwords

C. ommenting on security controls in new applications

D. onitoring and investigating unsuccessful access attempts

View answer

Correct Answer: B

Question #45

In computing the loss per share of ordinary shares, cumulative preference dividends not earned should be:

A. educted from the loss for the year

B. dded to the loss for the year

C. educted from income in the year paid

D. dded to income in the year paid

View answer

Correct Answer: B

Question #46

Which of the following is the best program for the protection of a company's vital information resources from computer viruses?

A. tringent corporate hiring policies for staff working with computerized functions_

B. xistence of a software program for virus prevention

C. rudent management policies and procedures instituted in conjunction with technological safeguards

D. hysical protection devices in use for hardware, software, and library facilities

View answer

Correct Answer: C

Question #47

An inventory planning method that minimizes inventories by arranging to have raw materials and subcomponents arrive immediately preceding their use is called:

A. safety stock planning system

B. n economic order quantity model

C. just-in-time inventory system

D. master budgeting system

View answer

Correct Answer: C

Question #48

The carrying costs associated with inventory management include:

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

B. torage costs, handling costs, capital invested, and obsolescence

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

D. bsolescence, setup costs, capital invested, and purchasing costs

View answer

Correct Answer: B

Question #49

A Gantt chart:

A. hows the critical path for a project

B. s used for determining an optimal product mix

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

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

View answer

Correct Answer: D

Question #50

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

A. ame theory

B. robability theory

C. inear programming

D. ensitivity analysis

View answer

Correct Answer: A

Question #51

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

A. ame theory

B. robability theory

C. inear programming

D. ensitivity analysis

View answer

Correct Answer: A

Question #52

A corporation has received proposals from several banks to establish a lockbox system to speed up receipts. The corporation receives an average of 700 checks per day averaging US $1,800 each, and its cost of short-term funds is 7% per year. Assuming that all proposals will produce equivalent processing results and using a 360-day year, which one of the following proposals is optimal for the corporation?

A. US $0_50 fee per check

B. flat fee of US $125,000 per year

C. fee of 0

D. compensating balance of US $1,750,000

View answer

Correct Answer: D

Question #53

The two broad groupings of information systems control activities are general controls and application controls. General controls include controls:

A. elating to the correction and resubmission of faulty data

B. or developing, modifying, and maintaining computer programs

C. esigned to assure that only authorized users receive output from processing

D. esigned to ensure that all data submitted for processing have been properly authorized

View answer

Correct Answer: B

Question #54

A corporation had profit for the year of US $101,504 and a simple capital structure consisting of the following ordinary shares outstanding:What was the corporation's basic earnings per share rounded to the nearest cent)?

A. S $2

B. S $3

C. S $3

D. S $3

View answer

Correct Answer: B

Question #55

With regard to e-commerce, risk is best defined as the uncertainty of an event that could:

A. ave a negative impact on the achievement of objectives

B. ositively impact management's ability to safeguard organizational assets

C. ave a positive impact on the achievement of objectives

D. ave an impact on the effective and efficient use of an organization's resources

View answer

Correct Answer: A

Question #56

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 #57

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. ine artime 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 over time

View answer

Correct Answer: B

Question #58

The economic order quantity Q is the size of the order that minimizes total inventory costs.These costs, which are composed of ordering and holding costs, can be computed using the following expression:If the organization decides to order 4.000 units at a time rather than 2.000 units by hour much will its total inventory costs change?

A. S $500 increase

B. S $1,000 increase

C. S $1,000 decrease

D. S $900 increase

View answer

Correct Answer: A

Question #59

Sales representatives for a manufacturing company are reimbursed for 100% of their cellular telephone bills. Cellular telephone costs vary significantly from representative to representative and from month to month, complicating the budgeting and forecasting processes. Management has requested that the internal auditors develop a method for controlling these costs.Which of the following would most appropriately be included in the scope of the consulting project?

A. ontrol self-assessment involving sales representatives

B. enchmarking with other cellular telephone users

C. usiness process review of procurement and payables routines

D. erformance measurement and design of the budgeting and forecasting processes

View answer

Correct Answer: C

Question #60

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

View answer

Correct Answer: B

Question #61

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

A. ecrease the current ratio and increase the debt ratio

B. ncrease the current ratio and decrease the debt ratio

C. ncrease the current ratio and increase the debt ratio

D. ecrease the current ratio and decrease the debt ratio

View answer

Correct Answer: A

Question #62

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

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

B. change in the service level

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

D. ecrease in ordering, carrying, and delivery costs

View answer

Correct Answer: B

Question #63

A controller became aware that a competitor appeared to have access to the company's pricing information. The internal auditor determined that the leak of information was occurring during the electronic transmission of data from branch offices to the head office.Which of the following controls would be most effective in preventing the leak of information?

A. synchronous transmission

B. ncryption

C. se of fiber-optic transmission lines

D. se of passwords

View answer

Correct Answer: B

Question #64

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

A. , III, and IV

B. I and III only

C. , II, and III

D. II and IV only

View answer

Correct Answer: C

Question #65

A client is concerned that a power outage or disaster could impair the computer hardware's ability to function as designed. The client desires off-site backup hardware facilities that are fully configured and ready to operate within several hours. The client most likely should consider a:

A. old site

B. ool site

C. arm site

D. ot site

View answer

Correct Answer: D

Question #66

Assume that each day an entity writes and receives checks totaling US $10,000. If it takes5 days for the checks to clear and be deducted from the entity's account and only 4 days for the deposits to clear, what is the float?

A. S $10,000

B. S TO

C. S $(10,000)

D. S $50,000

View answer

Correct Answer: A

Question #67

On a balanced scorecard, which is more of an internal process measure than an external based measure?

A. ycle time

B. rofitability

C. ustomer satisfaction

D. arket share

View answer

Correct Answer: A

Question #68

All of the following are methods for distributing a relational database across multiple servers except:

A. napshot making a copy of the database for distribution

B. eplication creating and maintaining replica copies at multiple locations

C. ormalization separating the database into logical tables for easier user processing

D. ragmentation separating the database into parts and distributing where they are needed

View answer

Correct Answer: C

Question #69

Intensive distribution is most likely to be used for:

A. hopping goods

B. pecialty goods

C. onvenience goods

D. nsought goods

View answer

Correct Answer: C

Question #70

The estimated demand for pretzels at the next home football game using a deterministic approach based on the most likely outcome is:

A. ,000 pretzels

B. ,400 pretzels

C. ,000 pretzels

D. ,000 pretzels

View answer

Correct Answer: C

Question #71

To avoid invalid data input, a bank added an extra number at the end of each account number and subjected the new number to an algorithm. This technique is known as:

A. equence check

B. check digit

C. ross-footing

D. ield check

View answer

Correct Answer: B

Question #72

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 #73

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

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

B. ay examine only packets with certain signatures

C. ses only knowledge-based detection

D. ses only behavior-based detection

View answer

Correct Answer: B

Question #74

An insurance firm that follows the systems development life cycle concept for all major information system projects is preparing to star[ a feasibility study for a proposed underwriting system. Some of the primary factors the feasibility study should include are:

A. ossible vendors for the system and their reputation for quality

B. xposure to computer viruses and other intrusions

C. ethods of implementation, such as parallel or cut-over

D. echnology and related costs

View answer

Correct Answer: D

Question #75

A balanced scorecard is primarily concerned with:

A. taff

B. tructure

C. trategy

D. ystems

View answer

Correct Answer: C

Question #76

During the growth stage of a product's life cycle,

A. he quality of products is poor

B. ew product models and features are introduced

C. here is little difference between competing products

D. he quality of the products becomes more variable and products are less differentiated

View answer

Correct Answer: B

Question #77

A file-oriented approach to data storage requires a primary record key for each file.Which of the following is a primary record key?

A. he vendor number in an accounts payable master file

B. he vendor number in a closed purchase order transaction file

C. he vendor number in an open purchase order master file

D. ll of the answers are correct

View answer

Correct Answer: A

Question #78

Which of the following is a major element of the ISO 9000 quality management system standards?

A. he principle that improved employee satisfaction will lead to increased productivity

B. he attitude and actions of the board and management regarding the significance of control within the organization

C. he assessment of the risk that objectives are not achieved

D. requirement for organizations to monitor information on customer satisfaction as a measure of performance

View answer

Correct Answer: D

Question #79

Compared with prototyping, life cycle methodologies are appropriate for problems involving:

A. igh user understanding of tasks and large project size

B. ow user understanding of tasks and small project size

C. ow user understanding of tasks and uncertainty of requirements

D. ncertainty of requirements and large project size

View answer

Correct Answer: A

Question #80

Is PERT analysis a control tool or a planning tool?

A. ption A

B. ption C

C. ption C

D. ption D

View answer

Correct Answer: B

Question #81

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

View answer

Correct Answer: D

Question #82

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

View answer

Correct Answer: B

Question #83

At year-end, the entity has a book value per share of:

A. S $10

B. S $15

C. S $21

D. S $25

View answer

Correct Answer: D

Question #84

A large fishing operation has information on the interval, time, and probabilities of shrimp schools staying beneath their fishing boats. In order to use this information to predict when and where to send their boats, which of the following techniques should be used?

A. imulation

B. east squares

C. ueuing theory

D. xponential smoothing

View answer

Correct Answer: A

Question #85

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

A. eleprocessing

B. nteractive processing

C. elecommunicating

D. eleconferencing

View answer

Correct Answer: D

Question #86

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

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

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

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

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

View answer

Correct Answer: C

Question #87

A corporation has received proposals from several banks to establish a lockbox system to speed up receipts. The corporation receives an average of 700 checks per day averaging US $1,800 each, and its cost of short-term funds is 7% per year. Assuming that all proposals will produce equivalent processing results and using a 360-day year, which one of the following proposals is optimal for the corporation?

A. US $0_50 fee per check

B. flat fee of US $125,000 per year

C. fee of 0

D. compensating balance of US $1,750,000

View answer

Correct Answer: D

Question #88

The purchase of treasury shares with an entity's surplus cash:

A. ncreases an entity's financial leverage

B. ncreases an entity's equity

C. ncreases an entity's interest coverage ratio

D. ilutes an entity's earnings per share

View answer

Correct Answer: A

Question #89

The best approach for minimizing the likelihood of software incompatibilities leading to unintelligible messages is for a company and its customers to:

A. cquire their software from the same software vendor

B. gree to synchronize their updating of EDI-related software

C. gree to use the same software in the same ways indefinitely

D. ach write their own version of the EDI-related software

View answer

Correct Answer: B

Question #90

An enterprise-wide resource planning ERP) system integrates the organization's computerized subsystems and may also provide links to external parties. An advantage of ERP is that:

A. he reengineering needed for its implementation should improve business processes

B. ustomizing the software to suit the unique needs of the organization will facilitate upgrades

C. t can be installed by organizations of all sizes

D. he comprehensiveness of the system reduces resistance to change

View answer

Correct Answer: A

Question #91

Before authorizing payment of an EDI invoice, the computer automatically compares the invoice with the purchase order and receiving report data.When the system was being developed, the auditor reviewed the payment authorization program and made recommendations.Which one of the following was most likely recommended by the auditor for the situation in which the quantity invoiced is greater than the quantity received?

A. repare an exception report

B. ay the amount billed and adjust the inventory for the difference

C. eturn the invoice to the vendor

D. uthorize payment of the full invoice, but maintain an open purchase order record for the missing goods

View answer

Correct Answer: A

Question #92

A situation in which companies conspire to restrict output and set artificially high prices is known as:

A. ollusive pricing

B. redatory pricing

C. rice discrimination

D. arket-based pricing

View answer

Correct Answer: A

Question #93

Which of the following is an objective of logical security controls for information systems?

A. o ensure complete and accurate recording of data

B. o ensure complete and accurate processing of data

C. o restrict access to specific data and resources

D. o provide an audit trail of the results of processing

View answer

Correct Answer: C

Question #94

If the government of a country uses its foreign currency reserves to

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: B

Question #95

In the output or "expenditures" approach to measuring a country's gross domestic product, which of the following calculations is used?

A. onsumption + Investment + Government purchases + Expenditures by foreigners

B. onsumption + Investment + Government purchases - Expenditures by foreigners

C. onsumption+ Investment - Government purchases - Expenditures by foreigners

D. onsumption + Investment - Government purchases - Expenditures by foreigners

View answer

Correct Answer: A

Question #96

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

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

B. amar has no contractual duty to find Aunt

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

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

View answer

Correct Answer: B

Question #97

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 #98

Shown below is a forecast of sales for the first 4 months of the year all amounts are in thousands of dollars).On average, 50% of credit sales are paid for in the month of sale, 30% in the month following the sale, and the remainder is paid 2 months after the month of sale. Assuming there are no bad debts, what is the expected cash inflow in March?

A. S $138,000

B. S $122,000

C. S $119,000

D. S $108,000

View answer

Correct Answer: D

Question #99

The entity has a profit margin of:

A.

B. 3

C. 4

D. 6

View answer

Correct Answer: A

Question #100

Each day, after all processing is finished, a bank performs a backup of its online deposit files and retains it for 7 days. Copies of each day's transaction files are not retained. This approach is:

A. alid, in that having a week's worth of backups permits recovery even if one backup is unreadable

B. isky, in that restoring from the most recent backup file would omit subsequent transactions

C. alid, in that it minimizes the complexity of backup/recovery procedures if the online file has to be restored

D. isky, in that no checkpoint restart information is kept with the backup files

View answer

Correct Answer: B

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