[2021] Use Valid IIA-CIA-Part3 Exam - Actual Exam Question & Answer
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NEW QUESTION 200
Exchange rates are determined by:
- A. Exporters and importers of manufactured goods.
- B. The International Monetary Fund.
- C. Supply and demand in the foreign currency market.
- D. Each industrial country's government.
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 201
According to the International Professional Practices Framework, which of the following statements is true regarding a corporate social responsibility (CSR) program?
1.Every employee generally has a responsibility for ensuring the success of CSR objectives.
2.The board has overall responsibility for the effectiveness of internal control processes associated with CSR.
3.Public reporting on the CSR governance process is expected.
4.Organizations generally have flexibility regarding what is included in a CSR program.
- A. 1, 2, and 4 only
- B. 2, 3, and 4 only
- C. 1, 3, and 4 only
- D. 1, 2, and 3 only
Answer: A
NEW QUESTION 202
In a process-costing system, the cost of abnormal spoilage should be:
- A. Included in the cost of units transferred out.
- B. Treated as a loss in the period incurred.
- C. Ignored.
- D. Prorated between units transferred out and ending inventory
Answer: B
Explanation:
Abnormal spoilage is spoilage that is not expected to occur under normal, efficient operating conditions. Because of its unusual nature, abnormal spoilage is typically treated as a loss in the period in which it is incurred. Believing that its traditional cost system may be providing misleading information, an organization is considering an activity-based costing ABC) approach. It now employs a full cost system and has been applying its manufacturing overhead on the basis of machine hours. The organization plans on using
50.000 direct labor hours and 30.000 machine hours in the coming year. The following data show the manufacturing overhead that is budgeted.
Cost, sales, and production data for one of the organization' s products for the coming year are as follows:
NEW QUESTION 203
A tax is regressive if:
- A. Individuals pay a constant percentage in taxes, regardless of income level.
- B. The burden for payment falls disproportionately on lower-income persons.
- C. Individuals with higher incomes pay a higher percentage of their income in tax.
- D. Individuals with lower incomes pay a lower percentage of their income in tax.
Answer: B
Explanation:
With a regressive tax, the percentage paid in taxes decreases as income increases. For example, excise taxes and payroll taxes are both regressive taxes. An excise to is regressive because its burden falls disproportionally on lower-income persons. As personal income increases, percentage of income paid declines because an excise tax is a flat amount per quantity of the good or service purchased.
NEW QUESTION 204
The primary reason for adopting TOM was to achieve:
- A. Reduced delivery time.
- B. Greater customer satisfaction.
- C. Greater employee participation.
- D. Reduced delivery charges.
Answer: B
Explanation:
TOM is an integrated system that anticipates, meets, and exceeds customers needs, wants, and expectations. The management and employees of a large household goods moving company decided to adopt total quality management TOM) and continuous improvement CI). The company believes that if it became nationally known as adhering to TOM and CI, one result would be an increase in the company's profits and market share.
NEW QUESTION 205
A company began work on a long-term construction contract in Year 1. The contract price was US $3,000,000. Year-end information related to the contract is as follows
If the company uses the percentage-of-completion method of accounting for this contract, the profit to be recognized in Year 1 is:
- A. US $(350,000)
- B. US $(100,000)
- C. US $(200,000)
- D. US $(100,000)
Answer: A
Explanation:
When the outcome of a contract can be reasonably estimated, the percentage-ofcompletion method for estimated recognizes revenue based on the stage of completion of the contract. One typical method for estimating the stage of completion is the calculation of ratio of the contract costs incurred to date to the estimated total cost. The percentage-ofcompletion at year-end on the cost-to-cost basis is 35%US $7150,1509. The profit for Year 1 is the anticipated profit on the contract times the completion percentage. Thus, profit for Year 1 is US $350,000 [($3,000,000 - $2,000,000) x 35%].
NEW QUESTION 206
Which of the following application-based controls is an example of a programmed edit check?
- A. Reasonableness check.
- B. Transaction log.
- C. Input error correction.
- D. Authorization for access.
Answer: A
NEW QUESTION 207
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. Data backup.
- B. Program testing.
- C. Anti-virus software.
- D. Documentation.
Answer: D
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 208
In recording transactions, which of the following best describes the relation between expenses and losses?
- A. Losses are material items, whereas expenses are immaterial items.
- B. Losses are expenses that may or may not arise in the course of ordinary activities.
- C. Losses are extraordinary charges to income, whereas expenses are ordinary charges to income.
- D. Expenses can always be prevented, whereas losses can never be prevented.
Answer: B
Explanation:
Expenses are defined as "decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrence's of liabilities that result in decreases in equity, other than those relating to distributions to equity participants."
Expenses include losses. Thus, losses are not treated as separate elements. Expenses include items arising in the course of ordinary activities. Losses meet the definition of expenses but may or may not occur in the course of ordinary activities. For example, losses may result from the sale of noncurrent assets or from natural disasters.
NEW QUESTION 209
At the introduction stage of an innovative product, the profit growth is normally slow due to:
- A. High competition.
- B. Available alternatives.
- C. Expensive sales promotion.
- D. A mass market.
Answer: C
Explanation:
The introduction stage is characterized by slow sales growth and lack of profits because of the high expenses of promotion and selective distribution to generate awareness of the product and encourage customers to try it. Thus, the per-customer cost is high. Competitors are few, basic versions of the product are produced, and higher-income customers innovators) are usually targeted. Cost-plus prices are charged. They may initially be high to permit cost recovery when unit sales are low. The strategy is to infiltrate the market, plan for financing to cope with losses, build supplier relations, increase production and marketing efforts, and plan for competition.
NEW QUESTION 210
Which of the following actions would senior management need to consider as pan of new IT guidelines regarding the organization's cybersecurity policies?
- A. Expansion of operations into new markets with united IT access
- B. Hiring new personnel within the IT department tor security purposes
- C. Assigning new roles and responsibilities for senior IT management.
- D. Growing use of bring your own devices tor organizational matters
Answer: B
NEW QUESTION 211
What amounts should be retorted for prepaid insurance and insurance expense in the annual financial statements prepared at December 31?
- A. Option D
- B. Option A
- C. Option C
- D. Option B
Answer: D
Explanation:
The insurance policy in effect at the beginning of the year expired and was renewed during the year. Hence, the entire US $3,600 beginning balance in the prepaid insurance account should be expensed. The amount of the prepayment on the new policy to be expensed is US $1,500 [3 months elapsed x$18,000 - 36-month duration of the policy)].
The debit balance in prepaid insurance at year-end is therefore US $16,500$18,000 $1,500), and total insurance expense is US $5,100$3,600 + $1.500).
NEW QUESTION 212
In which of the following plans is an employee most likely to find guidance on action and performance standards?
- A. Strategic plans.
- B. Tactical plans.
- C. Mission plans.
- D. Operational plans.
Answer: D
NEW QUESTION 213
Correlation is a term frequently used in conjunction with regression analysis and is measured by the value of the coefficient of correlation, r. The best explanation of the value r is that it:
- A. Is a measure of the relative relationship between two variables.
- B. Interprets variances in terms of the independent variable.
- C. Ranges in size from negative infinity to positive infinity.
- D. Is always positive.
Answer: A
Explanation:
The coefficient of correlation (r) measures the strength of the linear relationship between the dependent and independent variables. The magnitude of r is independent of the scales of measurement of x and y. The coefficient has a range of-1 to +1. A value of zero indicates no linear relationship between the x and y variables. A value of+1 indicates a perfectly direct relationship, and a value of -1 indicates a perfectly inverse relationship.
NEW QUESTION 214
If a series of profit lines for and Y are drawn on the graph, the mix of G and Y that will result in the maximum profit can be determined from:
- A. The last point in the feasible solution region touched by a profit line.
- B. The first paint an the feasible solution region boundary that intersects a profit line.
- C. Any point on the demand constraint that intersects a profit line.
- D. Any point on the boundary of the feasible solution region touched by a profit line.
Answer: A
Explanation:
A. profit line has negative slope because the profit from sales of one product increases as
the profit from sales of the other product declines. Moving the profit line rightward while maintaining its slope) to the last paint in the feasible region determines the solution.
NEW QUESTION 215
Which of the following describes the free trade zone in an e-commerce environment?
- A. Zone that separates an organization's servers from outside forces.
- B. Area in which messages are scrutinized to determine if they are authorized.
- C. Area where communication and transactions occur between trusted parties.
- D. Zone where data is encrypted, users are authenticated, and user traffic is filtered.
Answer: C
NEW QUESTION 216
Factoring is the:
- A. Conversion of accounts receivable to bad debt on financial statements for accounts that are long overdue.
- B. Selling of accounts receivable by one entity to another.
- C. Selling of inventory by one entity to another.
- D. Adjustment of inventories on financial statements for supplies that have become obsolete.
Answer: B
Explanation:
A factor purchases an entity's accounts receivable and assumes the risk of collection. The seller receives money immediately to reinvest in new inventories. The financing cost is usually high: about 2 points or more above prime, plus a fee for collection. Factoring has been traditional in the textile industry for years, and recently companies in many industries have found it an efficient means of operation. An entity that uses a factor can eliminate its credit department, accounts receivable staff, and bad debts. These reductions in costs can more than offset the fee charged by the factor, which can often operate more efficiently than its clients because of the specialized nature of its service.
NEW QUESTION 217
The Huron Corporation purchases 60,000 headbands per year. The average purchase lead time is 20 working days, and the maximum lead time is 27 working days. Safety stock equals 1,750 units. The corporation works 240 days per year. Huron should reorder headbands when the quantity in inventory reaches:
- A. 5,250 units.
- B. 6,750 units.
- C. 5,000 units.
- D. 1,750 units.
Answer: B
Explanation:
The reorder point is the quantity on hand when an order is placed. If it has 20-day normal lead time, a safety stock of 1,750 units, and usage of 250 units per day, an order should be placed when 27 days of inventory are on hand, a total of 6,750 units 250 units 27 days).
Jed Ryerson Computer Furniture, Inc. RCF) manufactures a line of office computer chairs. The annual demand for the chairs is estimated to be 5,000 units. The annual cost to hold one unit in inventory is US 10 per year, and the cast to initiate a production run is US $1,000. There are no computer chairs on hand, and RCF has scheduled four equal production runs of computer chairs for the coming year, the first of which is to be run immediately. RCF has 250 business days per year, sales occur uniformly throughout the year, and production start-up is within one day. RCF is considering using the following formula for determining the economic order quantity EOQ):
If: A = cast to initiate a production run per purchase order D = annual unit demand K = cost of carrying one unit per year
NEW QUESTION 218
In performing an audit, you encounter an adjusting journal entry recorded at year-end that contains a debit to rental revenue and a credit to deferred rental revenue. The purpose of this journal entry is to record?
- A. An unexpired expense
- B. An accrued revenue
- C. An expired expense
- D. A liability
Answer: D
Explanation:
A deferred revenue is a revenue item that has been received but has not met the recognition criteria, The journal entry described in the question is an adjusting entry to transfer an amount from the revenue account to a liability deferred revenue) account. The initial collection of cash in advance from the tenant was apparently recorded by a credit to revenue. An adjusting entry is for required at year-end to transfer any remaining amount that does not qualify for revenue recognition.
NEW QUESTION 219
What is the contribution margin of Division B?
- A. US $205,000
- B. US $150,000
- C. US $235,000
- D. US $265,000
Answer: D
Explanation:
The contribution margin equals revenue minus variable costs. Thus, Division B's contribution margin is US $265,000 $400,000 sales + $15,000 other revenue - $65,000 direct materials - $40,000 direct labor-$15,000 variable overhead - $30,000 variable S&A expense).
NEW QUESTION 220
Cost allocation is the process of assigning indirect costs to a cost object. The indirect costs are grouped in cost pools and then allocated by a common allocation base to the cost
object. The base that is employed to allocate a homogeneous cost pool should.
- A. Have a cause-and-effect relationship with the cost items in the cost pool.
- B. Assign the casts in the pool uniformly to cost objects even if the cost objects use resources in a non uniform way.
- C. Have a high correlation with the cost items in the cost pool as the sole criterion for selection.
- D. Be a nonfinancial measure e.g., number of setups) because a nonfinancial measure is more objective.
Answer: A
Explanation:
A cost allocation base is the common denominator for systematically correlating indirect costs and a cost object. The cost driver of the indirect costs is ordinarily the allocation base. In a homogeneous cost pool, all cost should have the same or a similar cause-andeffect relationship with the cost allocation base.
NEW QUESTION 221
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