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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 981:

  A manager in a government agency supervises a section of clerical employees who review license applications for approval or denial. The clerical jobs are well defined procedurally and are covered by government regulations. In this case, what is the best leadership style for the manager?

  A. Directive.
  B. Supportive.
  C. Participative.
  D. Achievement-oriented.
  B. Supportive.

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  Explanation

  A supportive style is best when tasks are highly structured and the authority relationships are clear and bureaucratic. This approach depends on people who want to work, grow, and achieve. The supportive style may be best when tasks are unsatisfying.

• Question 982:

  Which of the following best describes depreciation?

  A. It is a process of allocating cost of assets between periods.
  B. It is a process of assets valuation.
  C. It is a process of accumulating adequate funds to replace assets.
  D. It is a process of measuring decline in the value of assets because of obsolescence
  A. It is a process of allocating cost of assets between periods.

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  Explanation

  Depreciation is the systematic allocation of an asset's cost over its useful life. It reflects how much of the asset's value is used up in each accounting period.

  Spreads Cost Over Time - Instead of expensing the total cost immediately, depreciation distributes it across multiple periods.

  Matches Expenses with Revenue - Ensures that the cost of long-term assets is allocated in the periods they generate revenue.

  Required for Financial Reporting - Compliance with GAAP and IFRS requires proper allocation of asset costs.

  Option B: It is a process of asset valuation - Incorrect because depreciation does not determine market value ; it only spreads cost over time. Option C: It is a process of accumulating adequate funds to replace assets - Incorrect because

  depreciation is an accounting concept , not a savings mechanism.

  Option D: It is a process of measuring decline in the value of assets because of obsolescence - Incorrect because depreciation allocates cost , not necessarily measuring value decline (which is impairment).

  IIA's GTAG on Financial Controls and Reporting - Defines depreciation as a cost allocation method.

  International Financial Reporting Standards (IFRS 16) and US GAAP (ASC 360) - State that depreciation is used to allocate asset costs over time.

  COSO's Internal Control Framework - Covers accounting treatments for fixed assets.

  Why Depreciation is an Allocation Process?Why Not the Other Options?IIA References:# Final Answer: A. It is a process of allocating cost of assets between periods.

• Question 983:

  An organization buys equity securities for trading purposes and sells them within a short time period. Which of the following is the correct way to value and report those securities at a financial statement date?

  A. At fair value with changes reported in the shareholders' equity section
  B. At fair value with changes reported in net income.
  C. At amortized cost in the income statement.
  D. As current assets in the balance sheet.
  B. At fair value with changes reported in net income.

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  Explanation

• Question 984:

  What operations strategy is most likely to be adopted when the product sold by an organization is a commodity and the market is very large?

  A. Flexibility strategy.
  B. Quality strategy.
  C. Service strategy.
  D. Cost strategy.
  D. Cost strategy.

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  Explanation

  An operations strategy formulates a long-term plan for using enterprise resources to reach strategic objectives. A cost strategy is successful when the enterprise is the low-cost producer. However, the product (e.g., a commodity) tends to be undifferentiated in these cases, the market is often very large, and the competition tends to be intense because of the possibility of high-volume sales.

• Question 985:

  Forecasting early and late markets is necessary to shape product development and marketing efforts and to predict structural evolution of an industry. Which factor is the most significant in obtaining customer acceptance of a new industry's product or service?

  A. High switching costs.
  B. Required regulatory approval.
  C. High cost of obsolescence.
  D. A performance rather than a cost advantage.
  D. A performance rather than a cost advantage.

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  Explanation

  The nature of the benefit is the most significant factor. At one extreme, the benefit may consist of a performance advantage unattainable by other methods. At the other extreme, the benefit may be a pure cost advantage. Ordinarily, early markets purchase a product because it offers a performance advantage. Early markets tend to be suspicious of a product offering a cost advantage.

• Question 986:

  During a review of a web-based application used by customers to check the status of their bank accounts, it would be most important for the internal auditor to ensure that: A. Access to read application logs is restricted to authorized users.

  B. Account balance information is encrypted in the database.

  C. The web server used to host the application is located in a physically secure area.

  D. Sensitive data, such as account numbers, are submitted using encrypted communications.

  Correct Answer. D
  D

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  Explanation

• Question 987:

  Which of the following is the best measure of productivity to use to evaluate several departments in a large retail store?

  A. Number of customers served per employee per day.
  B. Revenue per square foot.
  C. Number of units sold per department per day.
  D. Average number of units stocked per month per department.
  B. Revenue per square foot.

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  Explanation

  Productivity is the ratio of real output to a unit of input. Increased productivity is the goal of every organization because its effect is to improve the ultimate measures of performance, such as the profits of a business. For a retail store, a critical output of interest is revenue per square foot. The floor space in the store is a limited resource whose productivity should be analyzed.

• Question 988:

  A weakness of cohesive groups may be:

  A. Conformity.
  B. Groupthink.
  C. The development of norms.
  D. Commitment by members.
  B. Groupthink.

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  Explanation

  Groupthink occurs when a cohesive group's members tend to conform and ignore a relevant individual input that is at variance with the perceived group opinion.

• Question 989:

  Which one of the following techniques is not generally recognized as an effective conflict resolution technique for management to use in a dispute between employees?

  A. Accommodation - management encourages a high degree of cooperation and a low degree of assertiveness.
  B. Competition - management encourages the parties to seek their own interests, regardless of the effect on each other.
  C. Reorganization - management transfers one of the disputants to another department.
  D. Compromise - management persuades each party to make concessions.
  B. Competition - management encourages the parties to seek their own interests, regardless of the effect on each other.

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  Explanation

  Competition is a conflict-handling intention characterized by considerable assertiveness (the degree to which the party seeks to achieve his/her goals) and a low degree of cooperativeness (the degree to which the party attempts to satisfy the

  concerns of others).

  Encouraging competition stimulates conflict.

• Question 990:

  Which of the following activities best illustrates a user's authentication control?

  A. Identity requests are approved in two steps.
  B. Logs are checked for misaligned identities and access rights.
  C. Users have to validate their identity with a smart card.
  D. Functions can be performed based on access rights.
  A. Identity requests are approved in two steps.

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  Explanation