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IIA-CIA-Part3 exam is ideal for individuals who are interested in pursuing a career in internal auditing, particularly those who wish to specialize in business knowledge. IIA-CIA-Part3 exam provides an excellent opportunity for internal auditors to showcase their skills and knowledge in the field. Moreover, holders of the CIA certification enjoy many benefits, including enhanced professional recognition, improved job opportunities, and higher salaries.
IIA-CIA-Part3 certification exam is an excellent opportunity for internal auditors to demonstrate their knowledge of business concepts and principles. By passing IIA-CIA-Part3 exam, candidates can enhance their credibility and demonstrate their commitment to ongoing professional development. Additionally, the certification can lead to career advancement opportunities and higher salaries in the field of internal auditing.
NEW QUESTION # 41
An example of secured short-term financing is:
- A. A warehouse receipt
- B. A revolving credit agreement.
- C. Trade credit
- D. Commercial paper.
Answer: A
Explanation:
A document of title is usually issued by a bailee covering goods in the bailee's possession or care UCC 1-201). It represents ownership of the goods and is ordinarily needed to obtain the goods from the bailee. The two major types of documents of title are bills of lading issued by carriers) and warehouse receipts_ A warehouse receipt is issued by a person engaged in the business of storing goods for hire. Security for short-term inventory financing can be arranged if the debtor places its inventory under the control of the lender or its agent e.g., a public warehouse), and the lender holds the warehouse receipts.
NEW QUESTION # 42
Which of the following principles are common to both hierarchical and open organizational structures?
1. Employees at all levels should be empowered to make decisions.
2. A supervisor's span of control should not exceed seven subordinates.
3. Responsibility should be accompanied by adequate authority.
4. A superior cannot delegate the ultimate responsibility for results.
- A. 3 and 4
- B. 1 and 2
- C. 2 and 3
- D. 1 and 4
Answer: A
NEW QUESTION # 43
Assuming a 360-day year and that CyberAge continues paying on the last day of the credit period, the entity's weighted-average annual interest rate for trade credit ignoring the effects of compounding) for these two vendors is:
- A. 30.2%
- B. 27.0%
- C. 28.0%
- D. 25.2%
Answer: D
Explanation:
If the entity pays Web [...Taster within 10 days, it will save US $500 $25,000 2%). Thus, the entity is effectively paying US $500 to retain US $24,500 $25,000 - $500) for 20 days 30 10). The annualized interest rate on this borrowing is 36.7346% [(US $500 + $24,500) x 360 days / 20 days)]. Similarly, the entity is, in effect, paying Softidee US $2,500 $50,000 5%) to hold US $47.500 $50,000 - $2,500) for 80 days 90 - 1 0). The annualized rate on this borrowing is 23.6842% [(US $2,501-1 - $47,500) 361 r days - 80 days)]. The average amount burrowed from Web Master is US $16,333 33 [$24,500 x 1 month x 20 days - 30 days)]. The average amount borrowed from web master is US $126,666.67 [$47,500 x 3 months x 80 days / 90 days)]. Thus, the weighted average of these two rates based on average borrowing is 25.2% [(US16,333,33 x 36.7346%) + ($126,666,67 x 23,6824%] / $16,333.33 + $126,666.67)]. This calculation however, understates the true cost of not taking the discount because it does not consider the effects of compound. CyberAge Outlet, a relatively new store, is a cafe that offers customers the opportunity to browse the Internet or play computer games at their tables while they drink coffee. The customer pays a fee based on the amount of time spent signed on to the computer. The store also sells books. tee-shirts, and computer accessories. CyberAge has been paying all of its bills on the last day of the payment period, thus forfeiting all supplier discounts. Shown below are data on CyberAge's two major vendors, including average monthly purchases and credit terms.
NEW QUESTION # 44
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: TC = total inventory costs Q = size of each order D = annual demand in units F = fixed costs of ordering P = variable cost of placing one order S = holding (carrying) cost per year for one unit of inventory
The following inventory information is available for an organization:
Annual demand (D) 20.000 units Variable cost of placing one order (P) US $100 Holding cost per unit (S) $1 Economic order quantity (Q) 2.000 units Fixed cost of ordering $0
- A. US $500 increase
- B. US $900 increase
- C. US $1,000 decrease
- D. US $1,000 increase
Answer: A
Explanation:
When the order size is 2,000 units, the variable inventory costs are US $2,000 {[(2.000 units x $1) + 2] + [(20,000 units + 2,000 units) x $100]}. When the order size is 4,000 units, the variable inventory costs are US $2,500 {[(4.000 units x $1) + 2] + [(20,000 units + 4,000 units) x $100]}. The increase in inventory costs is US $500 ($2,500 - $2,000).
NEW QUESTION # 45
What is the overall audit objective when auditing an e-commerce activity?
- A. To ensure that all e-commerce processes meet the functionality requirements of the end users.
- B. To ensure that all e-commerce processes have effective internal controls.
- C. To ensure that all e-commerce processes are adequate to fulfill their intended objectives.
- D. To ensure that all e-commerce processes have efficient internal controls.
Answer: B
Explanation:
According to PA 2100-6, when auditing e-commerce activities, the overall audit objective should be to ensure that all e-commerce processes have effective internal controls.
NEW QUESTION # 46
During the past few years, Wilder Company has experienced the following average number of power outages:
Each power outage results in out-of-pocket costs of US $800. For US $1,000 per month, Wilder can lease a generator to provide power during outages. If Wilder leases a generator in the coming year, the estimated savings (or additional expense) for the year will be
- A. US$7,200
- B. US $(1,267)
- C. US $(15,200)
- D. US$3,200
Answer: D
Explanation:
Each outage costs US $800, but this expense can be avoided by paying US $1,000 per month (US $12,000 for the year). The expected-value approach uses the probability distribution derived from past experience to determine the average expected outages per month.
3/12x0 = 0.0 2/12x1 = 0.16667 4/12x2 = 0.66667 3/12x3 = 0.75000 1.58334
The company can expect to have, on average. 1.58334 outages per month. At US $800 per outage, the expected cost is US $1,266.67. Thus, paying US $1.000 to avoid an expense of US $1,266.67 saves US $266.67 per month, or US $3,200 per year.
NEW QUESTION # 47
Which of the following budgets must be prepared first?
- A. Sales budget.
- B. Cash budget.
- C. Selling and administrative expenses budget.
- D. Production budget.
Answer: A
NEW QUESTION # 48
Organization X owns a 38 percent equity stake in Organization Y. Which of the following statements is true regarding the financial treatment for this relationship?
- A. Y should not be reported by X as X does not have a controlling interest
- B. Y should be listed as an investment asset on X's balance sheet
- C. Y should be reported as a footnote to X's financial statements
- D. X must consolidate the financial statements for both organizations
Answer: B
NEW QUESTION # 49
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. The process of using the method is too time consuming
- B. The evaluator must place some employees in the lowest and highest tails of a bell-shaped curve.
- C. Different evaluators have different standards.
- D. An employee's evaluation will depend on who the evaluator is.
Answer: B
Explanation:
The forced normal distribution method forces evaluators to label employees with ratings that fall along the normal distribution of a bell-shaped curve. The major drawback of this method is that the employees will be labeled with an evaluation regardless of their abilities. No matter what, some people will be evaluated at the bottom of the normal distribution and some people will be evaluated at the top of the II normal distribution.
NEW QUESTION # 50
One department of an organization, Final Assembly, is purchasing subcomponents from another department, Materials Fabrication. The price that will be charged to Final Assembly by Materials Fabrication is to be determined. Outside market prices for the subcomponents are available. Which of the following is the most correct statement regarding a market-based transfer price?
- A. Overall long term competitiveness is enhanced with a market-based transfer price.
- B. Market transfer prices provide an incentive to use otherwise idle capacity.
- C. Corporate politics is more of a factor in a market-based transfer price than with other methods.
- D. Marginal production cost transfer prices provide incentives to use otherwise idle capacity.
Answer: A
Explanation:
A transfer price is the price charged in an intercompany transaction. Market-based prices provide market discipline because efficient internal suppliers will tend to prosper, thereby enhancing the overall long-term competitiveness of the firm.
NEW QUESTION # 51
If the entity uses the weighted-average method of inventory valuation, cost of goods sold for the period will be:
- A. US $228.023
- B. US $186,978
- C. US $197,000
- D. US $235.000
Answer: B
NEW QUESTION # 52
The gross margin for Year 1 is:
- A. US $4,232,160
- B. US $4,350,000
- C. US $3,429,360
- D. US $4,800,000
Answer: D
Explanation:
The gross margin equals revenue minus gist of goods sold beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory). Cost of goods manufactured equals all manufacturing adjusted for the change in work-in progress.
Consequently, the gross margin was US $4,800,000 $9,000,000 $1,800,000 DM $720,000 DL $ 1,080,000 VOH $6000,000 FOH), given no beginning or ending finished goods or work-in-process inventories. Data regarding Year 1 operations for an enterprise that had no beginning or ending inventories are as follows:
The enterprise estimates that next year direct materials costs will increase by 101 and direct labor costs will increase by US $0.60 unit to US $5.40 per unit. In addition fixed selling expenses will increase by US $29,520. All other costs will be increased at the same rates or amounts as the, current year.
NEW QUESTION # 53
In the statement of cash flows, the payment of cash dividends appears in the <List A} activities section as a <List B- of cash.
- A. Option B
- B. Option D
- C. Option A
- D. Option C
Answer: A
Explanation:
Dividends paid may be treated as a cash outflow from financing activities because they are a cost of obtaining resources from owners. However, they may also be treated as operating items to help determine the entity's ability to pay dividends from operating cash flows.
NEW QUESTION # 54
Preventing someone with sufficient technical skill from circumventing security procedures and making changes to production programs is best accomplished by:
- A. Providing suitable segregation of duties.
- B. Comparing production programs with independently controlled copies.
- C. Reviewing reports of jobs completed.
- D. Running test data periodically.
Answer: A
Explanation:
When duties are separated, users cannot obtain a detailed knowledge of programs and computer operators cannot gain unsupervised access to production programs.
NEW QUESTION # 55
The necessary elements of a contract include:
- A. Some form of writing, equal consideration, and legal capacity.
- B. Bilateral promises, legal capacity, and legality of purpose.
- C. Offer and acceptance, consideration, legal capacity, and mutual assent.
- D. Formal execution, definite terms, and a valid offer and acceptance.
Answer: C
Explanation:
Contracts require each of the following:
1.Offer and acceptance
2.Mutual assent meeting of the minds)
3.Consideration bargained-for exchange)
4.Legality legal purpose)
5.Capacity of parties legal ability
NEW QUESTION # 56
Which of the following control techniques would minimize the risk of interception during transmission in an electronic data interchange system?
1. Encryption.
2. Traffic padding.
3. Edit checks.
4. Structured data format.
- A. 1, 2, and 3 only
- B. 2 and 3 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: C
NEW QUESTION # 57
The practice of recording advance payments from customers as a liability is an example of applying the:
- A. Going concern assumption.
- B. Historical cost principle.
- C. Monetary unit assumption.
- D. Revenue recognition principle.
Answer: D
Explanation:
Recognition of revenue occurs when the flow of future economic benefits to the enterprise is probable and such benefits are reliably measurable. Recording advance payments as a Ii ability reflects a determination that the receipt of future economic benefits is not sufficiently certain to merit revenue recognition, given that the enterprise has not yet performed its obligations.
NEW QUESTION # 58
Which of the following refers to taxes that do not necessarily take a larger absolute share of an increase in income?
- A. Flat.
- B. Regressive.
- C. Progressive.
- D. Proportional
Answer: B
Explanation:
Regressive taxes are those for which the average tax rate falls as income rises. They take a smaller percentage of income as income rises, so they will not necessarily take a larger absolute amount of income as income rises.
NEW QUESTION # 59
In the standard regression equation y- a + bx, how is the letter E> best described?
- A. Slope of the regression line.
- B. Y intercept.
- C. Independent variable.
- D. Dependent variable.
Answer: A
Explanation:
In the standard regression equation, b is the slope of the regression line.
NEW QUESTION # 60
Which of me following statements is most accurate concerning me management and audit of a web server?
- A. The number of ports and protocols allowed to access the web server should be maximized
- B. Secure protocols for confidential pages should be used instead of clear-text protocol such as HTTP or FTP
- C. The simple mail transfer protocol (SMTP) should be operating under me most privileged accounts
- D. The file transfer protocol (FTP) should always be enabled
Answer: B
NEW QUESTION # 61
The following forms of short-term borrowing are available to an entity: Floating lien Factoring Revolving credit Chattel mortgages Bankers' acceptances . Lines of credit Commercial paper
The forms of short-term borrowing that are unsecured credit are:
- A. Floating lien, chattel mortgage, bankers' acceptances, and line of credit
- B. Revolving credit, bankers' acceptances, line of credit, and commercial paper
- C. Floating lien, revolving credit, chattel mortgage, and commercial paper
- D. Factoring, chattel mortgage, bankers' acceptances, and line of credit
Answer: B
Explanation:
An unsecured loan is a loan made by a bank based on credit information about the borrower and the ability of the borrower to repay the obligation. The loan is not secured by collateral, but is made on the signature of the borrower. Unsecured credit is not backed by collateral. Revolving credit bankers' acceptances, lines of credit, and commercial paper are all unsecured means of borrowing. A chattel mortgage is a loan secured by personal property movable property such as equipment or livestock). A floating lien is also secured by property, such as inventory, the composition of which may be constantly changing. Factoring is a form of financing in which receivables serve as security.
NEW QUESTION # 62
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