IIA IIA-CIA-PART3 Online Practice Questions and Exam Preparation

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 321:

  Which of the following would be the best approach for negotiating the purchase of a large number of microcomputers, assuming that both parties follow the same approach?

  A. Review previous demands, concessions, and settlements (precedents).
  B. Attempt to get personal information about the opposing negotiators.
  C. Enter without preconceived ideas about what should be accomplished.
  D. Ask as few questions as possible during negotiations.
  A. Review previous demands, concessions, and settlements (precedents).

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  Explanation

  The best approach to negotiating a large purchase, assuming that both parties follow the same approach, is to review previous settlements, demands, and concessions to determine what can be achieved. The history of past practices and interactions tends to define current standards of fairness in negotiations.

• Question 322:

  A small chain of grocery stores made a reporting error and understated its ending inventory. What effect would this have on the income statement for the following year?

  A. Net income would be understated
  B. Net income would not be affected
  C. Net income would be overstated
  D. Net income would be negative
  A. Net income would be understated

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  Explanation

• Question 323:

  When firms compete in different geographical locations or have multiple product lines that do not necessarily overlap, the most effective way of responding to an aggressive move by a competitor without directly triggering destructive moves and countermoves is to

  A. Mislead the competitor into taking or not taking an action.
  B. Make a prior announcement of intended moves.
  C. Initiate a move in the market where the competitor is strong.
  D. Initiate direct aggressive moves
  C. Initiate a move in the market where the competitor is strong.

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  Explanation

  Initiating a move in the market where the competitor is strong is a cross- parry. A cross- parry is an effective way to signal displeasure and raise the threat of more serious retribution without directly triggering destructive moves and countermoves.

• Question 324:

  Market-follower strategies are adopted by firms that do not wish to challenge the leader. The market-follower strategy adopted in such industries as fertilizers and chemicals is:

  A. Conscious parallelism.
  B. Product innovation.
  C. Multiple niching.
  D. Counterfeiting.
  A. Conscious parallelism.

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  Explanation

  Some industries are characterized by conscious parallelism. These industries (e.g., fertilizers and chemicals) tend to have high fixed costs and little product and image differentiation. Market followers tend to imitate the leader because competing for a greater market share provokes painful retaliation.

• Question 325:

  Which of the following does not provide operational assurance that a computer system is operating properly?

  A. Performing a system audit.
  B. Making system changes.
  C. Testing policy compliance.
  D. Conducting system monitoring.
  B. Making system changes.

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  Explanation

• Question 326:

  An organization decided to install a motion detection system in its warehouse to protect against after-hours theft. According to the COSO enterprise risk management framework, which of the following best describes this risk managementstrategy?

  A. Avoidance.
  B. Reduction.
  C. Elimination.
  D. Sharing.
  B. Reduction.

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  Explanation

• Question 327:

  Which of the following statements is true with regard to a vertically integrated acquisition?

  A. A grocery store chain that purchases a dairy and begins to make milk-based products under its own brand is forward integrated.
  B. A movie producer that acquires a chain of theaters is backward integrated.
  C. A clothing manufacturer that acquires a chain of clothing stores is forward integrated.
  D. A soda maker that purchases its leading competitor is backward integrated.
  C. A clothing manufacturer that acquires a chain of clothing stores is forward integrated.

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  Explanation

  Vertical integration occurs upstream (backward) by acquiring suppliers or downstream (forward) by acquiring wholesalers and retailers. An example of forward integration is a clothing manufacturer's acquisition of a chain of clothing stores in which to sell its products.

• Question 328:

  A firm considering entry into a fragmented industry may be able to eliminate the factors preventing concentration in which ways?

  A. Recognizing that the industry is "stuck" for noneconomic reasons. II. Adding value to products that cannot be significantly differentiated. III. Specialization by customer type. IV. Acquisitions of local firms.
  B. I and II only.
  C. I and IV only.
  D. II, III, and IV only.
  E. I, II, Ill, and IV.
  B. I and II only.

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  Explanation

  Overcoming fragmentation has significant strategic payoffs given that entry is not costly and competitors are weak. If the factor(s) preventing consolidation can be eliminated, industry structure will change. For example, industries may be "stuck" in a fragmented state for reasons other than underlying economic factors. Firms in the industry lack the resources, skills, awareness, or ambition to make the strategic moves needed for consolidation. Outside firms do not recognize the opportunity offered by an industry tuck" in a fragmented state, for example, because it is new, small, or obscure. Also, acquisitions may enable a firm to expand when competing with local firms is difficult because of their contacts or image. However, adding value to products that cannot be significantly differentiated and specialization by customer type are methods of coping with, not overcoming, fragmentation.

• Question 329:

  Which of the following situations best applies to an organization that uses a project, rather than a process, to accomplish its business activities?

  A. A clothing company designs, makes, and sells a new item.
  B. A commercial construction company is hired to build a warehouse.
  C. A city department sets up a new firefighter training program.
  D. A manufacturing organization acquires component parts from a contracted vendor.
  B. A commercial construction company is hired to build a warehouse.

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  Explanation

• Question 330:

  If an organization has a high amount of working capital compared to the industry average, which of the following is most likely true?

  A. Settlement of short-term obligations may become difficult.
  B. Cash may be tied up in items not generating nancial value.
  C. Collection policies of the organization are ineffective.
  D. The organization is efficient in using assets to generate revenue.
  B. Cash may be tied up in items not generating nancial value.

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  Explanation