IIA CIA IIA-CIA-PART3-3P Questions & Answers

• Question 401:

  Preferred stock is less risky for investors than is common stock because:

  A. Common stock pays dividends as a stated percentage of face value.

  B. Common stock has priority over preferred stock with regard to earnings and assets.

  C. Preferred dividends are usually cumulative.

  D. Preferred stock with no conversion feature has a higher dividend yield than does convertible preferred stock.

  Correct Answer: C

• Question 402:

  Which of the following phases of a business cycle are marked by an underuse of resources?

  1) The trough. 2) The peak. 3) The recovery. 4) The recession.

  A. 1 and 3 only

  B. 1 and 4 only

  C. 2 and 3 only

  D. 2 and 4 only

  Correct Answer: B

• Question 403:

  Which of the following purchasing scenarios would gain the greatest benefit from implementing electronic data interchange?

  A. A time-sensitive just-in-time purchase environment.

  B. A large volume of custom purchases.

  C. A variable volume sensitive to material cost.

  D. A currently inefficient purchasing process.

  Correct Answer: A

• Question 404:

  Presented below are partial year-end financial statement data (000 omitted from dollar amounts) for companies A and B:

  If company A has a quick ratio of 2:1, then it has an accounts receivable balance of:

  A. $100

  B. $200

  C. $300

  D. $500

  Correct Answer: A

• Question 405:

  Which of the following is an example of a risk avoidance response?

  A. Buying an insurance policy to protect against loss events.

  B. Hedging against natural gas price fluctuations.

  C. Selling a non-strategic business unit.

  D. Outsourcing a high risk process to a third party.

  Correct Answer: C

• Question 406:

  Which of the following techniques would be least effective in resolving the conflict created by an internal audit client's perception of the audit report as a personal attack on his management performance?

  A. The auditor should focus on the audit client as a person and understand him, rather than just concentrating on the problem.

  B. The auditor should make recommendations based on objective criteria, rather than based on a subjective assessment.

  C. The auditor should explore alternative solutions to address the audit problem, so the audit client has options.

  D. The auditor should take a flexible position on the recommendations and focus on resolving the issue by addressing the interests of the people concerned.

  Correct Answer: A

• Question 407:

  Which of the following price adjustment strategies encourages prompt payment?

  A. Cash discounts.

  B. Quantity discounts.

  C. Functional discounts.

  D. Seasonal discounts.

  Correct Answer: A

• Question 408:

  An organization is considering mirroring the customer data for one regional center at another center. A disadvantage of such an arrangement would be:

  A. Lack of awareness of the state of processing.

  B. Increased cost and complexity of network traffic.

  C. Interference of the mirrored data with the original source data.

  D. Confusion about where customer data are stored.

  Correct Answer: B

• Question 409:

  A chief audit executive (CAE) was asked to participate in the selection of an external auditor. Which of the following would not be a typical responsibility for the CAE?

  A. Evaluate the proposed external auditor fee.

  B. Recommend criteria to be used in the selection process.

  C. Develop appropriate performance metrics.

  D. Monitor the work of the external auditors.

  Correct Answer: C

• Question 410:

  According to Porter, which of the following is associated with fragmented industries?

  A. Weak entrance barriers.

  B. Significant scale economies.

  C. Steep experience curve.

  D. Strong negotiation power with suppliers.

  Correct Answer: A