Latest [Mar 04, 2024] IIA-CIA-Part3 Exam Questions – Valid IIA-CIA-Part3 Dumps Pdf [Q12-Q34]

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Latest [Mar 04, 2024] IIA-CIA-Part3 Exam Questions – Valid IIA-CIA-Part3 Dumps Pdf

IIA-CIA-Part3 Practice Test Questions Answers Updated 344 Questions

IIA-CIA-Part3 certification is an important step for internal auditors looking to advance their careers and increase their value to their organizations. By demonstrating a deep understanding of business processes and organizational structures, certified professionals are better equipped to provide valuable insights and recommendations to their organizations.

Q12. Assume that the construction company recognizes US $2 million of revenue for the long-term contract in Year 1 If the company uses the percentage-of-completion method cost-to cost basis), the difference between revenue recognized to date and contract billings at the end of Year 1 will be shown on the December 31, Year 1, balance sheet as a <List A> of <List B>.

Option A

Option B

Option C

Option D

The gross amount due from to customers for contract work is an asset liability. If the amount of costs incurred plus recognized profits minus recognized loss exceeds progress billings, the entity reports an asset. If the amount of progress billings exceeds costs incurred plus recognized profits minus recognized losses, the entity reports a liability. At the end of Year 1, the company had recognized US $2,000,000 of revenue costs to date +recognized profit) and had submitted billings of US $6,000,000. Thus, the excess billings equal US $4,000,000. Because the billings exceed revenue recognized, this amount is listed as a current liability. It represents deferred revenue. Given a US $10 million fixed price and US $8.5 million of total costs, the assumption that US $2 million of revenue was recognized under the percentage-of-completion method cost-to-cost basis) necessarily includes the assumption that the stage of completion was 20%US $2 million $10 million), that recognized profit was US $300,000 [($10 million – $8.5 million) x 20%], and that costs to date were US $1 7 million$8.5 million x 20%). On January 1. a new landscaping firm, Bandit Co., acquired a fleet of vehicles, all the necessary tools and equipment, and a parking and storage facility. It began operations immediately. It is now the end of the first year of operations, and the first set of year-end financial statements are being prepared. Several decisions have to be made regarding the appropriate accounting and reporting practices for this company. Relevant information for several of these items is described in the following list of transactions and events: At year-end, the parking and storage facility that was purchased for US $150,000 has a fair value of US $250,000. The physical flow of inventory is first in, first out, and the cost of materials has risen steadily over the year. To promote sales for the coming year, maintenance contracts were sold in December at very reasonable prices, provided that the customers paid cash. On April 1, the company arranged a US $100,000 10% bank loan. Interest payments of US $5,000 are due on October 1 and April 1 of each year during the 5-year term of the loan. During the first year of operations, the company experienced a 5% bad debt rate on credit sales None of the bad debts are expected to be recovered, given that 5% i s the industry average level of bad debts. Total credit sales for the year were U $400,000. The year-end balance of accounts receivable includes uncollected overdue accounts of US $100,000. Half of the uncollected overdue amounts are estimated to be uncollectible.

Q13. A company’s budget for next year contains the following information:

How many equivalent units should the company plan to produce next year?

1,800

1,565

1.815

1.845

Q14. Which of the following is not true of responsibility accounting?

Managers should only be held accountable for factors over which they have significant influence.

The focus of cost center managers will normally be more narrow than that of profit center managers.

Every factor that affects a firm’s financial performance ultimately is controllable by someone, even if that someone is the person at the top of the firm.

When a responsibility account system exists, operations of the business are organized into separate areas controlled by individual managers.

Q15. The measurement date in accounting for shares issued to employees in share option plans accounted for in accordance with the fair value method prescribed by FRS 2 is:

The date on which options are granted to specified employees.

The earliest date on which both the number of shares to be issued and the option price are known.

The date on which the options are exercised by the employees.

The date the entity forgoes alternative use of the shares to be sold under option

Q16. Which of the following is not a component of physical distribution?

Transportation.

Pricing.

Location of retail outlets.

Warehousing.

Q17. An organization has collected data on the complaints made by personal computer users and has categorized the complaints.

Using the information collected, the organization should focus on:

The total number of personal computer complaints that occurred.

The number of computer complaints associated with CD-ROM problems and new software usage.

The number of computer complaints associated with the lack of user knowledge and hardware problems.

The cost to alleviate all computer complaints.

Q18. Which of the following controls most likely could prevent computer personnel from
modifying programs to bypass programmed controls?

Periodic management review of computer utilization reports and systems documentation.

Segregation of duties within computer for computer programming and computer operations.

Participation of user department personnel in designing and approving new systems.

Physical security of computer facilities in limiting access to computer equipment.

Q19. Which of the following is an encryption feature that can be used to authenticate the originator of a document and ensure that the message is intact and has not been tampered with?

Heuristic terminal.

Perimeter switch.

Default settings.

Digital signatures.

Q20. A checkpoint restart procedure is primarily designed to recover from:

Programming errors.

Data input errors.

Computer operator errors.

Hardware failures.

Q21. Which of the following is true regarding an organization’s relationship with external stakeholders?

Specific guidance must be followed when interacting with nongovernmental organizations.

Disclosure laws tend to be consistent from one jurisdiction to another.

There are several internationally recognized standards for dealing with financial donors.

Legal representation should be consulted before releasing internal audit information to other assurance providers.

Q22. What are revenue tariffs designed to do?

Develop new export opportunities.

Provide the government with tax revenues.

Restrict the amount of a commodity that can be imported in a given period.

Encourage foreign companies to limit the amount of their exports to a particular country.

Q23. Which of the following is a characteristic of total quality management TQM)?

Management by objectives.

On-the-job training by other workers.

Quality by final inspection.

Education and self-improvement.

Q24. Which of the following measures create the most restrictive barrier to exporting to a country?

Tariffs

Quotas.

Embargoes.

Exchange controls.

Q25. A bank was considering its first use of computer-aided software engineering CASE) to develop an inquiry system for account representatives to access consolidated profiles of customers’ accounts. A benefit of using CASE in this situation is that:

No new software development tools would be needed.

No training of programmers would be required.

Management of the development process would be improved.

The need for testing would be reduced.

Q26. Which of the following capital budgeting techniques considers the tune value of money?

Annual rate of return.

Incremental analysis.

Discounted cash flow.

Cash payback

Q27. Company P, which produces computers, uses a target pricing and costing approach. The following is Company P’s costs and revenues for the year just ended:

Company P plans to increase sales of computers to 15,000 in the next year by reducing the unit price to US $1,250. If Company P wishes to achieve a unit target operating income of 10%, by what amount must it reduce the full cost per unit?

US $100

US $125

US $225

US $250

Q28. 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.

1 and 3 only

1 and 4 only

2 and 3 only

2 and 4 only

Q29. Which of the following budgets serves as a basis for the budgeted income statement?

All financial budgets

All operating budgets

Only the cash budget and budgeted balance sheet

Only the sales and production budgets

Q30. Which of the following is an example of a risk avoidance response?

Buying an insurance policy to protect against loss events.

Hedging against natural gas price fluctuations.

Selling a non-strategic business unit.

Outsourcing a high risk process to a third party.

Q31. When using cost-volume-profit analysts which of the following will increase operating income once the break-even point has been reached?

Fixed costs per unit for each additional unit sold

Variable costs per unit for each additional unit sold

Contribution margin per unit for each additional unit sold

Gross margin per unit for each additional unit sold

Q32. According to the International Professional Practices Framework, which of the following statements is true regarding a corporate social responsibility (CSR) program?
1.Every employee generally has a responsibility for ensuring the success of CSR objectives.
2.The board has overall responsibility for the effectiveness of internal control processes associated with CSR.
3.Public reporting on the CSR governance process is expected.
4.Organizations generally have flexibility regarding what is included in a CSR program.

1, 2, and 3 only

1, 2, and 4 only

1, 3, and 4 only

2, 3, and 4 only

Q33. The economic order quantity can be calculated using the following formula:
Which of the following describes how the optimal order size will change if the annual demand increases by 36 percent?

Decrease by about 17 percent.

Decrease by about 7 percent.

Increase by about 7 percent.

Increase by about 17 percent.

Q34. Which of the following is an example of a key systems development control typically found in the in-house development of an application system?

Logical access controls monitor application usage and generate audit trails.

The development process is designed to prevent, detect and correct errors that may occur

A record is maintained to track the process of data from input, to output, to storage

Business users’ requirements are documented, and their achievement is monitored