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IIA Composite Test IIA-CIA-Part3 Price

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IIA Business Knowledge for Internal Auditing Sample Questions (Q68-Q73):

NEW QUESTION # 68
An organization facing rapid growth decides to employ a third party service provider to manage its customer relationship management function. Which of the following is true regarding the supporting application software used by that provider compared to an in-house developed system?
1. Updating documentation is always a priority.
2. System availability is usually more reliable.
3. Data security risks are lower.
4. Overall system costs are lower.

  • A. 2 and 4 only
  • B. 3 and 4 only
  • C. 1 and 3 only
  • D. 1 and 2 only

Answer: A

NEW QUESTION # 69
In an effort to increase business efficiencies and improve customer service offered to its major trading partners, management of a manufacturing and distribution company established a secure network, which provides a secure channel for electronic data interchange between the company and its partners. Which of the following network types is illustrated by this scenario?

  • A. A value-added network.
  • B. A metropolitan area network.
  • C. A wide area network.
  • D. A local area network.

Answer: A

NEW QUESTION # 70
Lawson Ltd. has the opportunity to increase annual sales US $100,000 by selling to a new, riskier group of customers. Based on sales, the uncollectible expense this increase to be 15%, and collection costs will be 5%. Manufacturing and selling expenses are 70% of sales, and the effective tax rate is 40%. If Lawson accepts this opportunity, the after-tax profit will increase by:

  • A. US $6,000
  • B. US $9,000
  • C. US $4,000
  • D. US $10,000

Answer: A

Explanation:
Manufacturing and selling costs exclusive of bad debts equal 70% of sales. Hence, the gross profit en the US $100,000 increase in sales will be US $30,000$100,000 x 305: Assuming US $15,000 of bad debts and US $5,000 of collection expense, the increase in pre-tax profit will be
An entity has the following statements:

NEW QUESTION # 71
Short-term, unsecured promissory notes issued by large entities are known as:

  • A. Repurchase agreements.
  • B. Agency securities.
  • C. Commercial paper.
  • D. Bankers acceptances.

Answer: C

Explanation:
Commercial paper is the term for the short-term typically less than 9 months) unsecured, large denomination often over US $100,000) promissory notes issued by large. creditworthy companies to other companies and institutional investors. In many instances, the maturity date is only a few days after issuance.

NEW QUESTION # 72
The cost of statistical quality control in a product quality cost system is categorized as a(n):

  • A. External failure cost.
  • B. Appraisal cost.
  • C. Internal failure cost.
  • D. Training cost.

Answer: B

Explanation:
The following are the four categories of quality costs: prevention, appraisal, internal failure, and external failure (lost opportunity). Appraisal costs include quality control programs, inspection, and testing. However, some authorities regard statistical quality and process control as preventive activities because they not only detect faulty work but also allow for adjustment of processes to avoid future defects.

NEW QUESTION # 73
……

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