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IIA-CIA-Part3 exam consists of 100 multiple-choice questions and must be completed within two and a half hours. IIA-CIA-Part3 exam is computer-based and can be taken at any authorized testing center around the world. The passing score for the exam is 600 out of a possible 800 points.
NEW QUESTION # 50
Which of the following statements about market signaling is correct?
1. The organization releases information about a new product generation.
2. The organization limits a challenger's access to the best source of raw materials or labor.
3. The organization announces that it is fighting a new process technology.
4. The organization makes exclusive arrangements with the channels.
- A. 2 and 4 only
- B. 1 and 4 only
- C. 1 and 3 only
- D. 2 and 3 only
Answer: C
NEW QUESTION # 51
On December 31, Year 1, XYZ led 5-year bonds with a face amount of US $1 million.
The bonds carry a stated interest rate of 10% and were sold at par. Interest is payable annually on December 31 According to the provisions of the bond denture, XYZ was to make annual deposits into a bond sinking fund (beginning December 31, Year 2) to accumulate the funds necessary to retire the bonds at their maturity. On December 31 Year 5, all required interest payments and sinking-fund payments due to date had been made on schedule. If the sinking-fund assets are properly classified as noncurrent. How should the balance of bonds payable be classified on the December 31 Year 5 balance sheet?
- A. Long-term liability.
- B. Current liability
- C. Deferred credit.
- D. Contra to long-term investments.
Answer: B
Explanation:
A current liability is an obligation on that is expected to be settled within the normal operating cycle or is due to be settled within1 2 months of the balance sheet date. Any other liability is noncurrent. Some current liabilities are included in the working capital employed in the normal operating e.g., trade payables and accrued employee operating costs. Current liabilities not settled within the normal operating cycle include the current part of interest-bearing debt, dividends, income taxes, and bank overdrafts. Thus, the bends payable should be classified as current because they are due to be settled within 12 months. Under the Standards, the classification of the sinking-fund assets is irrelevant to the classification of the bond payable.
NEW QUESTION # 52
On May 1, Year 1, an entity issued, at 103 plus accrued interest, 500 of its 12%, US $1,000 bonds. The bonds are dated January 1, Year 1, and mature on January 1, Year 6. Interest is payable semiannually on January 1 and July 1 The journal entry to record the issuance of the bonds and the receipt of the cash proceeds is
- A. Option B
- B. Option C
- C. Option A
- D. Option D
Answer: B
Explanation:
The face amount of the 500 bonds is equal to US $500,000500 x $1,000). The cash proceeds excluding interest from the issuance of the bonds are US $515.000$500,000 103%). The US $15,000 premium is the difference between the cash issuance proceeds and the face amount of the bonds. Because the bonds were issued between interest payment dates, the issuer is also entitled to receive accrued interest for the 4 months between the prior interest date and the issuance date. The accrued interest is US $20,000 [500 bonds x $1,000 face value 12% stated rate x4 - 12)]. The issuing entity will therefore receive US $535,000 in cash$515,000 + $20,000). The resulting journal entry includes a US $535,000 debit to cash, a US $500,000 credit to bonds payable, a US $15,000 credit to premium, and a US $20,000 credit to either interest payable or interest
NEW QUESTION # 53
A cost-volume-profit model developed in a dynamic environment determined that the estimated parameters used may vary between limits. Subsequent testing of the model with respect to all possible values of the estimated parameters is termed:
- A. Statistical hypothesis testing.
- B. Statistical estimation.
- C. A sensitivity analysis.
- D. A time-series study.
Answer: C
Explanation:
After a problem has been formulated into any mathematical model, it may be subjected to sensitivity analysis. Sensitivity analysis examines how the model's outcomes change as the parameters change.
NEW QUESTION # 54
The current generation of ERP software ERP II) may include an advanced planning and scheduling system that:
- A. Permits tracking of orders by customers.
- B. Determines the location of retail outlets.
- C. Controls the flow of a manufacturer's materials and components through the supply chain.
- D. Connects the organization with other members of a joint venture.
Answer: C
Explanation:
An advanced planning and scheduling system may be an element of a supply chain management application for a manufacturer. It controls the flow of materials and components within the chain. Schedules are created given projected costs, lead times, and inventories.
NEW QUESTION # 55
An organization had three large centralized divisions: one that received customer orders for service work; one that scheduled the service work at customer locations; and one that answered customer calls about service problems. These three divisions were restructured into seven regional groups, each of which performed all three functions. One advantage of this restructuring would be:
- A. Increased specialization.
- B. Better internal controls.
- C. Improved work flow.
- D. Greater economies of scale.
Answer: C
NEW QUESTION # 56
The process of scenario planning begins with which of the following steps?
- A. Identifying how customers, suppliers, competitors, employees, and other stakeholders will react.
- B. Selecting the issue or decision that will impact how the organization conducts future business.
- C. Selecting leading indicators to alert the organization of future developments.
- D. Determining the trends that will influence key factors in the organization's environment.
Answer: B
NEW QUESTION # 57
Which of the following is a characteristic of just-in-time inventory management systems?
- A. They are applicable only to large organizations.
- B. Users determine the optimal level of safety stocks.
- C. They rely heavily on high quality materials.
- D. They do not really increase overall economic efficiency because they merely shift inventory levels further up the supply chain.
Answer: C
NEW QUESTION # 58
The following information and diagram apply to a project:
The earliest completion time for the project is:
- A. 14 days.
- B. 15 days.
- C. 20 days.
- D. 11 days.
Answer: B
Explanation:
The two paths through the network are A-C-E (5 + 4 + 6 = 15 days) and B-D-E (3 + 2 + 6 = 11 days). The critical or longest path is thus A-C-E. Hence, the earliest completion time is 15 days.
NEW QUESTION # 59
Which of the following situations best applies to an organisation that uses a project, rather than a process, to accomplish its business activities?
- A. A commercial construction company is hired to build a warehouse.
- B. A city department sets up a new firefighter training program.
- C. A manufacturing organization acquires component parts from a contracted vendor
- D. Clothing company designs, makes, and sells a new item.
Answer: A
NEW QUESTION # 60
A vendor sells specialty inks on consignment to a manufacturer of colored paper at a price of US $200 per barrel. Payment is made to the vendor in the month the manufacturer uses the barrels in production. The vendor records revenues when the barrels are shipped and makes no adjusting entries to record unearned revenues until the December 31 closing of the books. At the end of July the manufacturer had 40 barrels of ink on consignment.
During August, the vendor consigned 50 barrels and received payment for 30 barrels. Another five barrels were returned to the vendor by the manufacturer for credit. At the end of August, what is the amount of unearned revenue contained in the vendor's accounts receivable from the manufacturer?
- A. US $12,000
- B. US $11,000
- C. US $4,000
- D. US $3,000
Answer: B
Explanation:
Under a consignment arrangement the consignor ships merchandise to the consignee who acts as agent for the consignor in selling the goods. The goods are in the physical possession of the consignee but remain the property of the consignor and are included in the consignor's inventory. Revenue and the related cost of goods sold from these consigned goods should only be recognized by the consignor when the merchandise is sold and delivered to the final customer. Accordingly, recognition occurs when notification is received that the consignee has sold the goods. Only then are the recognition criteria for a sale of goods satisfied: The enterprise has transferred the significant risks and rewards of ownership, the enterprise has neither continuing managerial involvement to an extent associated with ownership nor effective control over the goods, the amount can be reliably measured, it is probable that the economic benefits will flow to the enterprise, and transactional costs can be reliably measured. In this consignment arrangement. 30 barrels have been paid for, so the revenue is recognized for these barrels. The five barrels returned are not included in unearned revenue because they constitute a return of consigned goods. Accordingly, the amount of inappropriately recognized revenue is US $11,000 [(40 consigned + 50 consigned - 30 paid for- 5 returns) x $200].
NEW QUESTION # 61
If a bank's activities are categorized under such departments as community banking, institutional banking, and agricultural banking, what kind of departmentalization is being utilized?
- A. Product departmentalization.
- B. Functional departmentalization.
- C. Process departmentalization.
- D. Customer departmentalization.
Answer: D
NEW QUESTION # 62
What ensures that an entity is complying with the documented quality management system (QMS) procedures and ISO 9000 standards?
- A. The registrar.
- B. Management commitment.
- C. An internal audit system.
- D. Onsite inspections by an external auditor.
Answer: C
Explanation:
An important requirement of the ISO 9000 standards is an internal audit system. Internal audits ensure that the entity is complying with the documented QMS procedures and ISO 9000 standards.
NEW QUESTION # 63
Which of the following describes the free trade zone in an e-commerce environment?
- A. Area where communication and transactions occur between trusted parties.
- B. Zone that separates an organization's servers from outside forces.
- C. Area in which messages are scrutinized to determine if they are authorized.
- D. Zone where data is encrypted, users are authenticated, and user traffic is filtered.
Answer: A
NEW QUESTION # 64
Which must be part of any risk model involving inventory valuation?
- A. Inventory shrinkage expense.
- B. Vendor pricing policies.
- C. Annual sales forecasts.
- D. Product warranty policies.
Answer: A
Explanation:
The amount of inventor} loss through shrinkage directly affects inventory valuation_Inventory. Shrinkage must be considered in risk models involving inventory valuation.
NEW QUESTION # 65
In the standard regression equation y= a + bx, how is the letter b best described?
- A. Y intercept
- B. Slope of the regression line
- C. Dependent variable
- D. Independent variable
Answer: B
Explanation:
In the standard regression equation, b is the slope of the regression line.
NEW QUESTION # 66
According to IIA guidance on IT which of the following best describes a but recovery and restore processes have not been defined?
- A. Absence of recovery plan
- B. Hot recovery plan
- C. Warm recovery plan
- D. Cold recovery plan.
Answer: A
NEW QUESTION # 67
A company manufactures banana hooks for retail sale. The bill of materials for this item and the parts inventory for each material required are as follows:
An incoming order calls for deliver," of 2,000 banana hooks in 2 weeks. The company has
200 finished banana hooks in current inventory. If no safety stocks are required for inventory, what are the company's net requirements for swag hooks and screws needed to fill this order?
- A. Option C
- B. Option A
- C. Option B
- D. Option D
Answer: C
Explanation:
The company needs 1,800 banana hooks 2,000 - 200) and therefore 1,800 swag hooks 1 1,800) and 3,600 wood screws 2 1,800). Given that 300 swag hooks and 400 wood screws are on hand, the company must obtain 1,500 swag hooks 1,800 - 300) and 3,200 wood screws 3,600 400).
NEW QUESTION # 68
Which of the following is a malicious program, the purpose of which is to reproduce itself throughout the network and produce a denial of service attack by excessively utilizing system resources?
- A. Trojan horse.
- B. Worm.
- C. Logic bomb.
- D. Virus.
Answer: B
Explanation:
A worm is an independent program that reproduces by copying itself from one system to another over a network and consumes computer and network resources.
NEW QUESTION # 69
Which of the following is not a criterion for hedge accounting?
- A. The hedge is expected to be highly effective and can be reliably measured.
- B. A forecast transaction subject to a cash flow hedge must be highly probable.
- C. The hedge is formally designated and documented at its inception.
- D. The hedge is assessed only at its inception.
Answer: D
Explanation:
An entity can mitigate a possible loss by using hedges to offset risk. Thus, an entity is said to hedge its financial positions. One of the criteria for hedge accounting is that the hedge be continually assessed and determined to have been effective. Thus it is not assessed only at its inception.
NEW QUESTION # 70
Which of the following storage options would give the organization the best chance of recovering data?
- A. Encrypted physical copies of the data, and their encryption keys are stored together at the organization and are readily available upon request.
- B. Encrypted copies of the data are stored in a separate secure location a few hours away, while the encryption keys are stored at the organization and are readily
- C. Encrypted reports on usage and database structure changes are stored on a cloud-based, secured database that is readily accessible.
- D. Encrypted physical copies of the data are stored separately from their encryption keys, and both are held in secure locations a few hours away from the organization.
Answer: B
Explanation:
available.
NEW QUESTION # 71
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IIA-CIA-Part3 exam is a computer-based test that consists of 100 multiple-choice questions. Candidates are given two and a half hours to complete the exam. To be eligible to take IIA-CIA-Part3 exam, candidates must have completed the IIA-CIA-Part1 and IIA-CIA-Part2 exams. Passing IIA-CIA-Part3 exam is a critical step towards obtaining the CIA certification, which is recognized globally as the standard for excellence in internal auditing.
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