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NEW QUESTION 36
The internal audit activity has identified accounting errors that resulted in the organization overstating its net income for the fiscal year. Which of the following is the most likely cause of this overstatement?

  • A. Cost of goods sold was understated for the year.
  • B. Beginning inventory was overstated for the year.
  • C. Ending inventory was understated for the year.
  • D. Cost of goods sold was overstated for the year.

Answer: A

 

NEW QUESTION 37
Inefficient use of excess computer equipment can be controlled by

  • A. Contingency planning.
  • B. Capacity planning.
  • C. Exception reporting.
  • D. System feasibility studies.

Answer: B

Explanation:
Planning is as important for the information systems function as for any other part of the organization. The master plan for this function should be consistent with the strategic plan for the organization and include goals and objectives. an inventory of current capacity, and a forecast of future needs. The plan is the basis for determining hardware needs.

 

NEW QUESTION 38
To mitigate a possible loss and offset risk, an entity can use derivatives or other hedging instruments. Which of the following?
IIA-CIA-Part3-7a08a9302b911f1d6965d71ee3d8bda5.jpg

  • A. Option D
  • B. Option C
  • C. Option A
  • D. Option B

Answer: A

Explanation:
A fair value hedge is a hedge of the exposure to changes in fair value of a recognized asset or liability or unrecognized firm commitment The exposure must be due to a given risk and be, able to affect profit or loss. A cash flow hedge is a hedge of the exposure to variability in cash flows that1) is due to a given risk associated with a recognized asset or liability or a highly probable forecast transaction and2) could affect profit or loss.

 

NEW QUESTION 39
In Year 2, a manufacturing company instituted a total quality management (TQM) program producing the following report:
IIA-CIA-Part3-45615ff7a2b07aec4d2a507dea830ecd.jpg
On the basis of this report, which one of the following statements is most likely true?

  • A. Quality costs, such as returns and repairs under warranty, decreased by 40%.
  • B. An increase in prevention and appraisal costs resulted in a higher quality product and therefore resulted in a decrease in failure costs.
  • C. Quality costs, such as scrap and rework, decreased by 48%.
  • D. An increase in inspection costs was solely responsible for the decrease in quality costs.

Answer: B

Explanation:
Prevention and appraisal costs increased substantially, but internal and external failure costs decreased. Thus, the soundest conclusion is that the increase in prevention and appraisal costs resulted in a higher-quality product.

 

NEW QUESTION 40
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