An organization accumulated the following data for the prior fiscal year: Value of Percentage of Quarter Output Produced Cost X $4,750,000
2.9
$4,700,000
3.0
$4,350,000
3.2 $4,000,000
3.5
Based on this data, which of the following describes the value of Cost X in relation to the value of Output Produced?
A. Cost X is a variable cost.
B. Cost X is a fixed cost.
C. Cost X is a semi-fixed cost.
D. Cost X and the value of Output Produced are unrelated.
In order to provide useful information for an organization's risk management decisions, which of the following factors is least important to assess?
A. The underlying causes of the risk.
B. The impact of the risk on the organization's objectives.
C. The risk levels of current and future events.
D. The potential for eliminating risk factors.
An organization needs to borrow a large amount of cash to fund its expansion plan. Which of the following annual interest rates is least expensive?
A. 7 percent simple interest with a 10 percent compensating balance.
B. 7 percent simple interest paid at the end of each year.
C. 7 percent discount interest.
D. 7 percent compounding interest.
Which of the following borrowing options is an unsecured loan?
A. Second-mortgage financing from a bank.
B. An issue of commercial paper.
C. Pledged accounts receivable.
D. Asset-based financing.
The decision to implement enhanced failure detection and back-up systems to improve data integrity is an example of which risk response?
A. Risk acceptance.
B. Risk sharing.
C. Risk avoidance.
D. Risk reduction.
Which of the following application software features is the least effective control to protect passwords?
A. Suspension of user IDs after a user's repeated attempts to sign on with an invalid password.
B. Encryption of passwords prior to their transmission or storage.
C. Forced change of passwords after a designated number of days.
D. Automatic logoff of inactive users after a specified time period of inactivity.
Which of the following statements accurately describes the responsibility of the internal audit activity (IAA)
regarding IT governance?
1) The IAA does not have any responsibility because IT governance is the responsibility of the board and
senior management of the organization.
2) The IAA must assess whether the IT governance of the organization supports the organization's
strategies and objectives.
3) The IAA may assess whether the IT governance of the organization supports the organization's
strategies and objectives.
4) The IAA may accept requests from management to perform advisory services regarding objectives.
A. 1 only
B. 4 only
C. 2 and 4
D. 3 and 4
The process of scenario planning begins with which of the following steps?
A. Determining the trends that will influence key factors in the organization's environment.
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. Identifying how customers, suppliers, competitors, employees, and other stakeholders will react.
The main reason to establish internal controls in an organization is to:
A. Encourage compliance with policies and procedures.
B. Safeguard the resources of the organization.
C. Ensure the accuracy, reliability, and timeliness of information.
D. Provide reasonable assurance on the achievement of objectives.
Which of the following is the primary benefit of including end users in the system development process?
A. Improved integrity of programs and processing.
B. Enhanced ongoing maintenance of the system.
C. Greater accuracy of the testing phase.
D. Reduced need for unexpected software changes.
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