Certified Internal IIA-CIA-Part3 Dumps | Updated Nov 27, 2021 - Pass4guide
Master 2021 Latest The Questions Certified Internal and Pass IIA-CIA-Part3 Real Exam!
IIA IIA-CIA-Part3 Exam Syllabus Topics:
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NEW QUESTION 139
Which adjusting entry should be used at year-end to account for interest expense on the long-term debt?
- A. Interest expense US $50,000 Interest payable US $50,000
- B. Interest payable US $100,000 Interest expense US $100,000
- C. Interest expense US $50,000 Cash US $50,000
- D. Interest expense US $100,000 Interest payable US $100,000
Answer: A
Explanation:
The debt was issued on July 1 and has been outstanding for only 6 months. Interest expense equals the face amount of the debt multiplied by the interest rate and the fraction of the year the debt was outstanding [US $1.000.000 x 10% x6 - 12) = US $50,000].
Because interest is payable on July1 6 months' interest is accrued and expensed in the current period. The payable is also recognized in the current period. Thus, the adjusting entry should be
Interest expense US $50,000 Interest payable US $50.000
Copper Co. had the pre-closing trial balance at December 31 shown below. Additional information: The balance of opening inventory was US $140,000. The long-term debt pays interest at a rate of 10% per annum, payable every 12 months. The debt was issued on July 1 of the current year and originally had 5 years to maturity. The assets classified as property, plant, and equipment have a 10-year estimated useful life and were 1 year old at the start of the current year Straight-line depreciation is used.
NEW QUESTION 140
The percentage of sales method, rather than the percentage of receivables method, would be used to estimate uncollectible accounts if an organization seeks to:
- A. Eliminate the need for an allowance for doubtful accounts.
- B. Use a method that approximates the matching principle.
- C. Use an aging schedule to more closely estimate uncollectible accounts.
- D. Emphasize the accuracy of the net realizable value of the receivables on the balance sheet.
Answer: B
NEW QUESTION 141
An organization is projecting sales of 100,000 units, at a unit price of $12. Unit variable costs are $7. If fixed costs are $350,000, what is the projected total contribution margin?
- A. $500,000
- B. $350,000
- C. $1,200,000
- D. $850,000
Answer: A
Explanation:
Explanation
NEW QUESTION 142
Good planning will help an organization restore computer operations after a processing outage. Good recovery planning should ensure that:
- A. Planned changes in equipment capacities are compatible with projected workloads.
- B. Backup/restart procedures have been built into job streams and programs.
- C. Change control procedures cannot be bypassed by operating personnel.
- D. Service level agreements with owners of applications are documented.
Answer: B
Explanation:
The disaster plan should embrace data center recovery, critical application recovery, and network recovery. It should be updated and current with regard to recent test results and new applications, equipment, and network configurations. The plan should also ensure that backup facilities are still able to process critical applications and that end-user responsibility is established. Another essential component of a disaster recovery plan is that backup/restart procedures have been anticipated and provided for in the application systems.
NEW QUESTION 143
Which of the following borrowing options is an unsecured loan?
- A. Pledged accounts receivable.
- B. Asset-based financing.
- C. An issue of commercial paper.
- D. Second-mortgage financing from a bank.
Answer: C
NEW QUESTION 144
The failure to record an accrued expense at year-end will result in which of the following overstatement errors in the financial statements prepared at that date?
- A. Option A
- B. Option C
- C. Option B
- D. Option D
Answer: D
Explanation:
An accrued expense is an expense that has been incurred but not paid. The appropriate
adjusting entry to record an accrued expense will increase an expense account and increase a liability account. The failure to record an accrued expense will result in an understatement of expenses leading to an overstatement of profit. The failure to record the increase in a liability account will result in an understatement of current liabilities leading to an overstatement of working capital. There will be no effect on cash.
NEW QUESTION 145
According to IIA guidance on IT auditing, which of the following would not be an area examined by the internal audit activity?
- A. Access system security.
- B. Policy development.
- C. Operations processes.
- D. Change management.
Answer: B
NEW QUESTION 146
Exchange rates are determined by:
- A. Each industrial country's government.
- B. The International Monetary Fund.
- C. Supply and demand in the foreign currency market.
- D. Exporters and importers of manufactured goods.
Answer: C
Explanation:
Although currencies can be supported by various means for short periods, the primary determinant of exchange, rates is the supply of and demand for the various currencies. Under current international agreements, exchange rates are allowed to "float_" During periods of extreme fluctuations, however, governments and control banks may intervene to maintain stability in the market.
NEW QUESTION 147
A manufacturer has been approached by a new customer who wants to place a one-time order for a component similar to one that the manufacturer makes for another customer. Existing sales will not be affected by acceptance of this order. The manufacturer has a policy of setting its targeted selling price at 60% over full manufacturing cost. The manufacturing costs and the targeted selling price for the existing product are presented below.
The manufacturer has excess capacity to produce the quantity of the component desired by the new customer. The direct materials used in the component for the new customer would cost the manufacturer US $0.25 less than the component currently being made.
The variable selling expenses packaging and shipping) would be the same, or US $0.90
per unit. Under those, circumstances, the minimum unit price at which the manufacturer would accept the special order is one exceeding.
- A. US $14.00
- B. US $14.80
- C. US $8.35
- D. US $9.25
Answer: D
Explanation:
Because the manufacturer has excess capacity and existing sales will be unaffected, the minimum price the manufacturer should be willing to accept is anything above the total variable cost of the unit US $2.05 + $3.60 + $2.70 + $0.90 = US $9.25) an amount that includes the variable manufacturing cost and the variable selling expenses. The fixed costs are not relevant.
NEW QUESTION 148
The following transactions + occurred during a company's first year of operations:
I. Purchased a delivery van for cash
II. Borrowed money by issuance of short-term debt
III. Purchased treasury stock
Which of the items above caused a change in the amount of working capital?
- A. I and II only
- B. II and III only
- C. I and III only
- D. I only
Answer: C
Explanation:
Working capital is computed by deducting total current liabilities from total current assets.
The purchase of a delivery van for cash reduces current assets and has no effect on current liabilities. The borrowing of cash by incurring short-term debt increases current assets by the same amount as it increases current liabilities, hence, it will have no effect on working capital. The purchase of treasury stock decreases current assets but has no effect on current liabilities. Thus, the purchases of the van and treasury stock affect working capital.
NEW QUESTION 149
Which of the following statements regarding program change management is not correct?
- A. The goal of the change management process is to sustain and improve organizational operations.
- B. All changes should be tested in a non-production environment before migrating to the production environment.
- C. In order to protect the production environment, changes must be managed in a repeatable, defined, and predictable manner.
- D. The degree of risk associated with a proposed change determines if the change request requires authorization.
Answer: D
NEW QUESTION 150
Which of the following e-commerce audit protocol items relates to the area of fraud?
- A. Inadequacies in interfacing between e-commerce and financial management systems.
- B. Examination of service level agreements between buyer, supplier, and certification authority.
- C. Segregation of duties.
- D. Denial of orders placed or received, goods received, or payments made.
Answer: D
Explanation:
With regard to the e-commerce audit protocol in the area of fraud, the internal auditor should be alert for the following conditions:
Unauthorized movement of money e.g., transfers to jurisdictions where the recovery of funds would be difficult).
Duplication of payments.
Denial of orders placed or received, goods received, or payments made.
Exception reports and procedures, and effectiveness of the follow up.
Digital signatures: Are they used for all transactions Who authorizes them Who has access to them Protections against viruses and hacking activities history file use of tools).
Access rights Are they reviewed regularly Are they promptly revised when staff members are changed?
History of interception of transactions by unauthorized persons.
NEW QUESTION 151
Which of the following is an example of a key systems development control typically found in the in-house development of an application system?
- A. A record is maintained to track the process of data from input, to output, to storage.
- B. Logical access controls monitor application usage and generate audit trails.
- C. The development process is designed to prevent, detect, and correct errors that may occur.
- D. Business users' requirements are documented, and their achievement is monitored.
Answer: A
NEW QUESTION 152
A company is deciding whether to purchase an automated machine to manufacture one of its products. Expected net cash flows from this decision depend on several factors, interactions among those factors, and the probabilities associated with different levels of those factors.
The method that the company should use to evaluate the distribution of net cash flows from this decision and changes in net cash flows resulting from changes in levels of various factors is:
- A. Differential analysis.
- B. Simulation and sensitivity analysis.
- C. Linear programming.
- D. Correlation analysis.
Answer: B
Explanation:
Simulation is a technique used to describe the behavior of a real-world system over time.
This technique usually employs a computer program to perform the simulation
computations.
Sensitivity analysis examines how outcomes change as the model parameters change.
NEW QUESTION 153
A U.S. company and a European company purchased the same stock on a European stock exchange and held the stock for one year. If the value of the euro weakened against the
U.S
dollar during the period, in comparison with the European company's return, the
U.S
company's return will be:
- A. Higher.
- B. The same.
- C. Indeterminate from the information provided.
- D. Lower.
Answer: D
Explanation:
Because the return to the U.S. company is adversely affected and the return to the European company is unaffected, the return to the U.S. company will definitely be lower than the return to the European company.
NEW QUESTION 154
Just-in-time (JIT) inventory systems have been adopted by large manufacturers to minimize the carrying costs of inventories. Identify the primary vulnerability of JIT systems.
- A. Work stoppages.
- B. Materials supply contracts.
- C. Computer resources.
- D. Implementation time.
Answer: A
Explanation:
JIT minimizes inventory by relying on coordination with suppliers to provide deliveries when they are needed for production. Consequently, work stoppages are more likely due to stock outs, because the inventory buffer is reduced or eliminated.
NEW QUESTION 155
One of the main reasons that implementation of a total quality management (TQM) program works better through the use of teams is:
- A. The use of teams eliminates the need for supervision, thereby allowing a company to reduce staffing.
- B. Teams are more efficient and help an organization reduce its staffing.
- C. Employee motivation is always higher for team members than for individual contributors.
- D. Teams are a natural vehicle for sharing ideas, which leads to process improvement.
Answer: D
Explanation:
TQM promotes teamwork by modifying or eliminating traditional (and rigid) vertical hierarchies and instead forming flexible groups of specialists. Quality circles, cross-functional teams, and self-managed teams are typical formats. Teams are an excellent means of encouraging the sharing of ideas and removing process improvement obstacles.
NEW QUESTION 156
Refer to the exhibit.
If the profit margin of an organization decreases, and all else remains equal, which of the following describes how the "Funds Needed" line in the graph below will shift?
- A. The "Funds Needed" line will point downward with an extreme slope.
- B. The "Funds Needed" line will point downward with a minimal slope.
- C. The "Funds Needed" line will remain pointed upward, but will become less steep.
- D. The "Funds Needed" line will remain pointed upward, but will become more steep.
Answer: D
NEW QUESTION 157
When comparing the residual income of several investment centers the validity of comparisons may be destroyed by:
- A. Differences in the relative amount of income.
- B. Common amounts of invested capital for each investment center.
- C. Peculiarities of each investment center.
- D. Consistent use of an imputed interest rate.
Answer: C
Explanation:
Residual income is income of an investment center, minus an imputed interest charge for invested capital. The theory is that earning an income greater than residual income indicates that expansion is desirable. However, comparisons of investment centers based on residual income may be misleading because of differences in products, markets, costs, and local conditions.
NEW QUESTION 158
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