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IIA IIA-CIA-Part3 Actual Questions and Braindumps
IIA IIA-CIA-Part3 Exam Syllabus Topics:
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NEW QUESTION 226
Which of the following statements is true regarding the capital budgeting procedure known as discounted payback period?
- A. It ignores the time value of money.
- B. It begins at time zero for the project.
- C. It calculates the time a project takes to break even.
- D. It calculates the overall value of a project.
Answer: C
Explanation:
Explanation/Reference: https://www.investopedia.com/terms/d/discounted-payback-period.asp#:~:text=The%20discounted
%20payback%20period%20is,the%20time%20value%20of%20money
NEW QUESTION 227
When using PERT (Program Evaluation Review Technique), the expected time for an activity when given an optimistic time (a), a pessimistic time (b), and a most likely time (m) is calculated by which one of the following formulas?
- A. (4abm) / 6
- B. (a +b) + 2
- C. (b-a) + 2
- D. (a+4m+b) / 6
Answer: D
Explanation:
PERT was developed to aid managers in controlling large, complex projects. PERT analysis includes probabilistic estimates of activity completion times. Three time estimates are made Optimistic, most likely, and pessimistic. The time estimates for an activity are assumed to approximate a beta probability distribution. PERT approximates the mean of the beta distribution by dividing the sum of the optimistic time, the pessimistic time, and four times the most likely time by six.
NEW QUESTION 228
The entity should invest in Project(s) <List A> and has an optimal capital budget of <List B> million.
- A. Option B
- B. Option A
- C. Option C
- D. Option D
Answer: A
Explanation:
The inf.-,reaction of the IOS and MCC schedules determines the cost of capital and the optimal capital budget. The entity should begin with the project having the highest return and continue accepting projects as long as the IRR the MCC. The highest ranked project is A, with a $50 million cost and a 14% IRR. The MCC is only 6% over this range of financing. The next highest ranked project is B, with a US $75 million cost and a 12% IRR. When US $125 million has been invested, the marginal cost of the next unit of capital is 10%, so Project B. is also acceptable, bringing the optimal capital budget to US $125 million. Project C is not acceptable because it has an 8% return. The MCC is 10% for the first US $50 million invested in this project and 12% for the remaining US $75 million.
NEW QUESTION 229
The head of the research and development department at a manufacturing organization believes that his team lacks expertise in some areas, and he decides to hire more experienced researchers to assist in the development of a new product. Which of the following variances are likely to occur as the result of this decision?
1. Favorable labor efficiency variance.
2. Adverse labor rate variance.
3. Adverse labor efficiency variance.
4. Favorable labor rate variance.
- A. 1 and 4.
- B. 2 and 3.
- C. 1 and 2.
- D. 3 and 4.
Answer: C
NEW QUESTION 230
Which of the following costs are not relevant in a special-order decision?
- A. Opportunity costs.
- B. Outlay costs.
- C. Incremental costs.
- D. Sunk costs.
Answer: D
Explanation:
Sunk costs are always irrelevant because they occurred in the past
NEW QUESTION 231
The errors cause the reported retained earnings at December 31. Year 4, to be:
- A. Overstated by US $25,000.
- B. Overstated by US $65,000.
- C. Overstated by US $32,000.
- D. Understated by US $18,000.
Answer: C
Explanation:
The Year 3 inventory error reversed in Year 4excluding tax considerations) and therefore had no effect on reported retained earnings at December 31. Year 4, The US $15,000 inventory error at year-end Year 4 and the failure to accrue US $10,000 of expenses for Year 4 both overstated retained earnings as well as 4 year profit The omission of US $7,000 of depreciation overstated Year 3 net income and Year 3 and Year .1 retained earnings. Hence, the net effect of the errors on December 31, Year 4, retained earnings was a US $32,000$0 + $15,000 + $7,000 + $10,000) overstatement.
NEW QUESTION 232
According to IIA guidance, which of the following is a typical risk associated with the tender process and contracting stage of an organization's IT outsourcing life cycle?
- A. There is increased potential for loss of assets.
- B. There is a lack of alignment to organizational strategies.
- C. The operational quality is less than projected.
- D. The process is not sustained and is not optimized as planned.
Answer: A
NEW QUESTION 233
Which of the following is false with respect to client-server networks?
- A. The server customarily manages peripheral hardware and control.; a,::,:,,-. .;hared databases.
- B. In a client-server network, many applications reside on the client computer.
- C. A client-server network divides processing of an application between a client machine on a network and a server.
- D. A client-server network can cope with only 12 or fewer clients at a time.
Answer: D
Explanation:
A client-server network can cope with thousands of clients at a time. They can access the server over the Internet from any where at any time with no time-related charges.
NEW QUESTION 234
If the probability of hot weather, given a hot weather forecast, is 50%, how much would the vendor be willing to pay for the forecast?
- A. US $600
- B. US $300
- C. US $500
- D. US $1,000
Answer: B
Explanation:
If the weather is hot and coffee is served, the vendor earns US $1,900. If the vendor knows the weather will be hot, she would sell soft drinks and make U $2,500, a US $600 increase.
Thus, the vendor should be willing to pay up to U $600 for perfect information regarding hot weather. However, if the forecasts are only 50% accurate, the information is not perfect. Accordingly, the vendor should be willing to pay only U $300 the U $600 potential increase
in profits 50%) for the sometimes accurate forecasts.
NEW QUESTION 235
Which of the following is not a potential area of concern when an internal auditor places reliance on spreadsheets developed by users?
- A. Interface with corporate systems.
- B. Ability to meet user needs.
- C. Increasing complexity over time.
- D. Hidden data columns or worksheets.
Answer: B
NEW QUESTION 236
The appropriate discount rate to use in valuing a business combination is the:
- A. Combined entity's cost of equity.
- B. Acquirer's cost of equity.
- C. Combined entity's cost of debt.
- D. Acquirer's weighted average cost of capital.
Answer: A
Explanation:
If the not incremental cash flows to the acquirer's shareholders are to be calculated, the discount rate used should be the cost of equity capital. Moreover, this rate should reflect the risk associated with the use of funds rather than their source. The rate therefore should not be the cost of capital of the acquirer but rather the cost of equity of the acquire after the combination. This calculation requires a new estimate of beta to be used in the Capital Asset Pricing Model.
NEW QUESTION 237
According to Porter's model of competitive strategy, which of the following is a generic
strategy?
1.Differentiation.
2.Competitive advantage.
3.Focused differentiation.
4.Cost focus.
- A. 2 only
- B. 1, 2, 3, and 4
- C. 3 and 4 only
- D. 1, 3, and 4 only
Answer: D
NEW QUESTION 238
The purpose of the economic order quantity model is to:
- A. Minimize the safety stock.
- B. Minimize the sum of the demand costs and the backlog costs.
- C. Minimize the inventory quantities.
- D. Minimize the sum of the order costs and the holding costs.
Answer: D
Explanation:
The purpose of the EOQ model is to minimize the sum of inventory order costs (or production setup) and holding (carrying) costs. The EOQ equals the square root of twice the annual demand multiplied by the variable cost per order, divided by the unit periodic holding cost.
NEW QUESTION 239
The management and employees of a large household goods moving company decided to adopt total quality management (TQM) and continuous improvement (CI). The company believes that if it became nationally known as adhering to TQM and CI, one result would be an increase in the company's profits and market share.
The primary reason for adopting TQM was to achieve
- A. Reduced delivery charges.
- B. Greater employee participation.
- C. Greater customer satisfaction.
- D. Reduced delivery time.
Answer: C
Explanation:
TQM is an integrated system that anticipates, meets, and exceeds customers' needs, wants, and expectations.
NEW QUESTION 240
Which of the following access setups is appropriate in a computer environment?
- A. No Yes Yes Yes
- B. Yes No No Yes
- C. Yes No No No
- D. No Yes Yes No
Answer: C
Explanation:
The appropriate setup for access in the computer environment is for users to have update access for production data. Users need to update data through applications programs, but have no need to change production programs.
NEW QUESTION 241
Finance and operating leases differ in that the lesser:
- A. Is using the lease as a source of financing only under an operating lease.
- B. Finances the transaction through the leased asset only under a finance lease.
- C. Obtains use of the asset only under a finance lease.
- D. Makes rent payments that are actually installment payments constituting a payment of both principal and interest only under a finance lease.
Answer: B
Explanation:
A lease is a rental or sub-purchase arrangement between a lesser the owner or seller of the property) and a lesser the renter or purchaser). The issue in all leases is whether the risks and rewards of ownership have been transferred from the lesser to the lessee. If so, the lease should be accounted for as a sale-purchase, i.e., a finance lease. If the risks and rewards of ownership have not transferred, the lease is a rental arrangement and is called an operating lease. In effect, the lesser provides financing for an installment purchase, and the lessee's payments include both principal and interest components.
NEW QUESTION 242
The credit instrument known as a banker's acceptance:
- A. Is a method of sales financing in which the bank retains title to the goods until the buyer has completed payment.
- B. Is a time draft payable on a specified date and guaranteed by the bank.
- C. Involves an invoice being signed by the banker upon receipt of goods, after which both the banker and the seller record the transaction on their respective books.
- D. Calls for immediate payment upon delivery of the shipping documents to the bank's customer and acceptance of Hoods by the bank.
Answer: B
Explanation:
A time draft trade acceptance) is a form of commercial draft because it is drawn by a seller on the buyer: that is, it calls for the buyer to pay a specified amount. The draft and the shipping documents related to the goods are then sent to the buyer's bank, which transmits the draft to the buyer. The buyer effects the draft by signing it. A time draft, however, is similar to a promissory note because it is payable at a specific time in the future rather than upon acceptance by the buyer, which is characteristic of a sight draft. If a seller is reluctant to ship goods because of concern about the buyer's ability to pay a time draft, the seller's bank may, for a fee, guarantee payment. This banker's acceptance is an assumption of the obligation to pay at the due date.
NEW QUESTION 243
An inventory planning method that minimizes inventories by arranging to have raw materials and subcomponents arrive immediately preceding their use is called:
- A. An economic order quantity model.
- B. A master budgeting system.
- C. A. just-in-time inventory system.
- D. safety stock planning system.
Answer: C
Explanation:
JIT is a manufacturing philosophy popularized by the Japanese that combines purchasing, production, and inventory control. As with MFP, minimization of inventory is a goal; however, JIT also encompasses changes in the production process itself. An emphasis on quality and a "pull" of materials related to demand are key differences between JIT and MFP.
The factory is organized so as to bring materials and tools close to the point of use rather than keeping them in storage areas. A key element of the JIT system is reduction or elimination of waste of materials, labor, factory space, and machine usage. Minimizing inventory is the key to reducing waste. V1lhen a part is needed on the production line, it arrives just in time, not before. Daily deliveries from suppliers are the ultimate objective, and some Japanese users have been able to get twice-daily deliveries.
NEW QUESTION 244
In a large organization, the biggest risk in not having an adequately staffed information center help desk is:
- A. Increased likelihood of use of unauthorized program code.
- B. Increased difficulty in performing application audits.
- C. Inadequate documentation for application systems.
- D. Persistent errors in user interaction with systems.
Answer: D
Explanation:
The biggest risk in not having an adequately staffed help desk is that users will
unknowingly persist in making errors in their interaction with the information systems.
NEW QUESTION 245
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