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IIA-CIA-Part3 exam consists of 100 multiple-choice questions, which must be completed within a three-hour time limit. To pass the exam, candidates must achieve a minimum score of 600 out of 800 possible points. IIA-CIA-Part3 exam is computer-based and can be taken at any time of year, at a testing center or online.
IIA-CIA-Part3 exam is a certification exam offered by the Institute of Internal Auditors (IIA) for internal auditors seeking to enhance their knowledge and skills in the area of business knowledge. IIA-CIA-Part3 exam is designed to test the candidate's understanding of business principles and practices, including financial management, marketing, operations, and information technology. It is one of the three exams required to obtain the Certified Internal Auditor (CIA) designation, which is recognized globally as the standard for internal auditors.
IIA-CIA-Part3 exam is a comprehensive examination designed to measure the candidate's knowledge in business principles and concepts that are essential for internal auditing professionals. It is a challenging exam that requires the candidate to have a deep understanding of various business domains. Hence, individuals interested in pursuing a career in internal auditing should consider taking the IIA-CIA-Part3 exam to enhance their professional recognition and career prospects.
NEW QUESTION # 27
The assets of a liquidating entity should be shown on the balance sheet at their
- A. Fair value
- B. Realizable value.
- C. Current cost.
- D. Undepreciated historical cost.
Answer: B
Explanation:
When liquidation is imminent, and the going concern assumption is no longer valid, the most appropriate measurement attribute for assets is realizable value which is the amount of cash currently obtainable by sale in an orderly disposal.
NEW QUESTION # 28
When granting third parties temporary access to an entity's computer systems, which of the following is the most effective control?
- A. Administrator access is provided for a limited period.
- B. User accounts are deleted when the work is completed.
- C. Access is approved by the supervising manager.
- D. User accounts specify expiration dates and are based on services provided.
Answer: D
NEW QUESTION # 29
If the government were to increase corporate tax rates, after-tax cost-volume-profit relationships for individual firms would change as follows:
- A. There would be no change whatsoever in cost-volume-profit relationships.
- B. There would be no change in the breakeven points.
- C. Br eakeven points would decrease.
- D. Br eakeven points would increase.
Answer: B
Explanation:
The firm owes no tax if it does not earn a profit. At the breakeven point, there is no profit.
Thus, a tax increase would have no effect on a firm's breakeven point, which is calculated by dividing fixed costs by the contribution margin ratio. The contribution margin equals sales revenues minus total variable costs. A business needs a computer application that can be either other related data follows Computer time is charged using developed internally or purchased. Suitable software from a predetermined rates. The organization has sufficient excess vendor costs US $29,000. Minor modifications and testing can be conducted by the systems staff as part of their regular workload. If the software is developed internally, a systems analyst would be assigned full time, and a contractor would assume the analyst's responsibilities. 1 he hourly rate for the regular analyst is US $25. The hourly rate for the contractor is US $22. The contractor would occupy an empty office.
The office has 100 square feet, and occupancy cost is US $45 per square foot computer capacity for either software development or modification/testing of the purchase software.
NEW QUESTION # 30
Which of the following statements is true regarding user-developed applications (UDAs)?
- A. UDAs typically are subjected to application development and change management controls.
- B. Updating UDAs may lead to various errors resulting from changes or corrections.
- C. UDAs are less flexible and more difficult to configure than traditional IT applications.
- D. Using UDAs typically enhances the organization's ability to comply with regulatory factors.
Answer: B
NEW QUESTION # 31
Which of the following is a disadvantage of selecting a commercial software package rather than developing an application internally?
- A. Incompatibility with client/server technology.
- B. Employee resistance to change.
- C. Lack of flexibility.
- D. Inadequate technical support.
Answer: C
NEW QUESTION # 32
Quality cost indices are often used to measure and analyze the cost of maintaining a given level of quality. One example of a quality cost index, which uses a direct labor base, is computed as:
The following quality cost data were collected for May and June:
Based upon these cost data, the quality cost index
- A. Decreased four points from May to June.
- B. Was unchanged from May to June.
- C. Increased 10 points from May to June.
- D. Decreased 10 points from May to June.
Answer: A
Explanation:
The index for May was 40 [(US $4,000 + $6,000 + $12,000 + $14,000) - $90,000] and the index for June was 36 [(US $5,000 + $5,000 + $15,000 + $11.000) * $100,000].
NEW QUESTION # 33
Company J produces two components: A-1 and A-2. The unit throughput contribution margins for A-1 and A-2 are US $150 and US $300, respectively. Each component must proceed through two processes: Operation 1 and Operation 2. The capacity of Operation 1 is 180 machine hours, with A-1 and A-2 requiring 1 hour and 3 hours, respectively.
Furthermore, Company J can sell only 45 units of A-1 and 100 units of A-2. However,
Company J is considering expanding Operation 1's capacity by 90 machine hours at a cost of US $80 per hour. Assuming that Operation 2 has sufficient capacity to handle any additional output from Operation 1, how much should Company J produce?
- A. Option C
- B. Option D
- C. Option C
- D. Option A
Answer: C
Explanation:
A-1's throughput contribution margin per unit of the scarce resource the internal binding constraint) is US $150 $150 UCM - 1 machining hour). A-2's throughput contribution margin per unit of the scarce resource is U $100 $300 UCM - 3 machine hours).
Consequently, Company J should produce as much A-1 as it can sell 45 units). If Company adds 90 machine hours to increase the capacity of Operation -I to 270 hours 180 + 90), it cannot produce additional units of A-1 because the external binding constraint has not been relaxed. However, it can produce additional units of A-2. Given that the UCM per machine hour of A-2 is U $100 and that the cost is US $80 per hour, adding capacity to Operation 1 is profitable. Thus, Company J should use 45 machine hours to produce 45 units of A-1. The remaining 225 machine hours 270 - 45) should be used to produce 75 units 225 - 3 hours) of A-2. The latter amount is within the external binding constraint. A company produces two products, and Y, which use material and labor as inputs. Fixed amounts of labor and material are available for production each month In addition. the demand for product Y each month is limited: product has no constraint an the number of units that can be sold. A graphical depiction of these production and demand constraints is presented in the opposite column.
NEW QUESTION # 34
If a just-in-time purchasing system is successful in reducing the total inventory costs of a manufacturing company, which of the following combinations of cost changes would be most likely to occur?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: D
NEW QUESTION # 35
An entity is currently being sued by a customer. A reliable estimate can be made of the costs that would result from a ruling unfavorable to the entity, and the amount involved is material. The entity's managers, lawyers, and auditors agree that the likelihood of an unfavorable ruling is remote. This contingent liability:
- A. Should be disclosed in a note.
- B. Should be disclosed by an appropriation of retained earnings.
- C. Need not be disclosed.
- D. Should be disclosed as a parenthetical comment in the balance sheet.
Answer: C
Explanation:
A contingent liability includes a present obligation for which an outflow of resources embodying economic benefits is not probable. A contingent liability is not recognized but is disclosed unless the possibility of the outflow is remote.
NEW QUESTION # 36
Which of the following is not required when ISO 9000 standards are adopted?
- A. Organization of a quality management system.
- B. On-site inspections by a registrar.
- C. Consistent high quality products.
- D. Creation of an internal audit system.
Answer: C
Explanation:
ISO 9000 is a set of generic standards for establishing and maintaining a quality system within a company. The standards provide no basis for judging the quality of the end product.
The marketplace it will make this determination on its own. The objective of ISO 9000 standards is to ensure consistent quality.
NEW QUESTION # 37
An entity has total asset turnover of 3.5 times and a total debt to total assets ratio of 70%.
If the entity has total debt of US $1,000,000, it has a sales level of:
- A. US $2,450,000.00
- B. US $5,000,000.00
- C. US $408,163.26
- D. US $200,000.00
Answer: B
Explanation:
If the debt-to-total assets ratio is 70% and debt is US $1,000,000, total assets must be US $1,428,571.4 $1,000,000 / 7). Given total asset turnover sales - total assets) of 3.5, sales must be US $5,000,000 (3.5 x $1,423,571.4).
NEW QUESTION # 38
A company manufactures a single product. Estimated cost data regarding this product and other information for the product and the company are as follows:
The number of units the company must sell in the coming year in order to reach its breakeven point is:
- A. 518,400 units
- B. 972,000 units
- C. 388,800 units
- D. 583,200 units
Answer: D
Explanation:
The breakeven point is determined by dividing total fixed costs by the unit contribution margin. The total fixed costs are US $9,331,200 $5,598,720 manufacturing overhead +$3,732,480 general and administrative). The contribution margin is US $16.00 $40 sales
price - $22 variable production cost-$2 commission). Thus, the breakeven point is 583,200
units US $9.331,200 - $16).
NEW QUESTION # 39
In Year 1, Company C introduced a new line of computer products that carry a 2-year warranty against defects and workmanship. The entire/ estimates that the total warranty cost will be 10% of sales, with 40% of the expenditures occurring during the first year and 60% during the second year_ Sales and actual warranty expenditures for Year 1 and Year 2 were as follows:
At the end of Year 2, what will the balance in the estimated accrued warranty liability account be?
- A. US $28,000
- B. US $46,000
- C. US $24,000
- D. US $58,000
Answer: A
Explanation:
If the warranty expenses is 10% of sales, the total expense for the 2 years is US $70,000$700,000 10%). Of that US $70,000 ($700,000) x 10%). Of that US $70,000, $12,000 was paid in Year 1 and $30,000 in Year 2. The US $42,000 of payments leaves an unpaid balance of US $28.000$70,000 - $42,000).
NEW QUESTION # 40
An internationally recognized brand name is an entrance barrier to new competitors because new competitors would:
- A. Face higher learning costs, which would increase fixed costs.
- B. Face increased production costs.
- C. Have to initiate a price war in order to enter the industry.
- D. Face increased marketing costs.
Answer: D
NEW QUESTION # 41
A condensed comparative balance sheet for an entity appears below:
In looking at liquidity ratios at both balance sheet dates, what happened to the 1) current ratio and 2) acid-test (quick) ratio?
- A. Option C
- B. Option B
- C. Option D
- D. Option A
Answer: C
Explanation:
The current ratio is determined by dividing current assets by current liabilities. The acidtest
ratio is determined by dividing quick assets by current liabilities. At December 31. Year 1. The current ratio is 6 to 1 [(US $40,000 + $120,000 + $200,000) - $60,01101. December
31. Year 2, the current ratio is 4.3 to 1 [(US $30,000 + $100,000 + $300,000) -$100,000]. Hence, there was a decrease in the current ratio. At December 31, Year 1, the acid-test ratio is 2.667 to 1 [(US $40,000 + $120,000) - $60.000]. At December 31, Year 2, the acid-test ratio is 1.3 to 1 [(US $3:0,000 + $100,000) - $100,000]. Thus, the acidtest ratio also declined. An entity's financial statements for the current year are presented below:
NEW QUESTION # 42
A manufacturer receives an advance payment for special-order goods that are to be manufactured and delivered within the next year. The advance payment should be reported in the manufacturer's current-year balance sheet as a(n):
- A. Current liability
- B. Noncurrent liability
- C. Accrued revenue.
- D. Contra asset amount.
Answer: A
Explanation:
Recognition of an element of financial statement, income which includes revenue and gains) requires that two criteria be met. It must be probable that any future economic benefit associated with the item will flow to or from the enterprise, and the cost or value of the item must be measurable with reliability. The usual procedures for income recognition, e.g., that income be earned, reflect these criteria. Thus, income is recognized when an increase in future economic benefits is associated with an increase in an asset or a decrease in a liability. However, the enterprise has not substantially completed what it must do to be entitled to the benefits represented by the advance payment, and the receipt of future economic benefits is not sufficiently certain to merit income recognition.
Accordingly, a liability should be recognized because the entity has a current obligation arising from a past event that will require an outflow of economic benefits, that is, to deliver goods or to refund the customer's money. The delivery of good is to take place within a year of the balance-sheet date, therefore, the obligations is expected to be settled in the normal course of the operating cycle or is due to be settled within 12 months.
NEW QUESTION # 43
The marketing department's proposal was finally accepted, and the marketing employees attended a class in using the report writer. Soon, the marketing analysts found that it was easier to download the data and manipulate it on their own desktop computers in spreadsheets than to perform all the data manipulation on the server. One analyst became highly skilled at downloading and wrote downloading command sequences for the other employees. When the analyst left the company for a better job, the department had problems making modifications to these command sequences. The department's problems are most likely due to inadequate:
- A. Documentation.
- B. Anti-virus software.
- C. Data backup.
- D. Program testing.
Answer: A
Explanation:
One risk of end-user computing is that documentation may be poor and that important knowledge may be limited to one person. The command sequences should have been documented so that other analysts could use and modify them readily.
NEW QUESTION # 44
Which of the following examples demonstrates that the internal audit activity uses descriptive analytics in its engagements?
- A. An internal auditor analyzed electricity production and sales interim reports and compiled a risk assessment.
- B. An internal auditor classified solar panel sales by region and discovered unsuccessful sales representatives.
- C. An internal auditor broke down a complex process into smaller pieces to make it more understandable.
- D. An internal auditor extracted sales data to a spreadsheet and applied judgmental analysis for sampling.
Answer: A
NEW QUESTION # 45
Which of the following is an objective of logical security controls for information systems?
- A. To restrict access to specific data and resources.
- B. To ensure complete and accurate processing of data.
- C. To provide an audit trail of the results of processing.
- D. To ensure complete and accurate recording of data.
Answer: A
Explanation:
The primary objective of security controls for information systems is to restrict access to data and resources both hardware and software) to only authorized individuals.
NEW QUESTION # 46
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