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NEW QUESTION 218
Unsecured loans are loans:
- A. Granted on the basis of a company's credit standing.
- B. That appear to be too risky for most lenders to consider.
- C. That do not have to be repaid for over one year.
- D. Backed by mortgaged assets.
Answer: A
NEW QUESTION 219
A major disadvantage of the life cycle approach to system development is that it is not well-suited for projects that are:
- A. Large.
- B. Structured.
- C. Complex.
- D. Unstructured.
Answer: D
Explanation:
The life cycle approach is best employed when systems are large and highly structured, users understand the tasks to be performed by the information system, and the developers have directly applicable experience in designing similar systems. In the life cycle process. each stage of development is highly structured, and requirements are clearly defined. However, when the task is unstructured, prototyping may be the better approach.
NEW QUESTION 220
Which of the following may provide a leading indicator of a future increase in gross domestic product?
- A. An increase in the average hours worked per week of production workers.
- B. A decrease in the issuance of building permits.
- C. An increase in the timeliness of delivery by vendors.
- D. A reduction in the money supply.
Answer: A
Explanation:
An economic indicator is highly correlated with changes in aggregate economic activity. A leading indicator changes prior to a change in the direction of the business cycle. The leading indicators included in the Conference Board's index are average weekly hours worked by manufacturing workers, unemployment claims, consumer goods orders, stock prices, orders for fixed assets, building permits, timeliness of deliveries, money supply, consumer confidence, and the spread between the yield on 10-year Treasury bonds and the federal funds rate. An increase in weekly hours worked by production workers is favorable for economic growth.
NEW QUESTION 221
During the last year, an organization had an opening inventory of $300,000, purchases of $980,000, sales of $1,850,000, and a gross margin of 40 percent. What is the closing inventory if the periodic inventory system is used?
- A. $300,000
- B. $170,000
- C. $280,000
- D. $540,000
Answer: B
NEW QUESTION 222
If Bandit Co. reports expenses on an accrual basis, interest expense for the first year of operations is
- A. US $10,000
- B. US $12,500
- C. US $7,500
- D. US $5,000
Answer: C
Explanation:
Interest expense for the first year equals the US $5,000 payment made on October 1 plus the 3 months' accrued interest at year-end, or US $7,500$5,000 + $2,500).
NEW QUESTION 223
Which of the following correctly describes the introduction of a government tax credit on investments?
- A. Tax credits on investments are taxes that are typically levied on individual projects rather than on groups of projects.
- B. Corporate investments will have higher net present values, all else equal, than without the tax credit.
- C. Tax credits on investments increase investment costs, and all else equal, reduce the level of corporate investment.
- D. Tax credits on investments are designed to restrain inflation.
Answer: B
Explanation:
An investment tax credit is an incentive because it directly reduces future tax payments. Thus, corporate investments will have higher net present values, all else equal, than without tax credits.
NEW QUESTION 224
A balanced scorecard is primarily concerned with:
- A. Systems.
- B. Strategy.
- C. Structure.
- D. Staff.
Answer: B
Explanation:
The scorecard is primarily a tool to assist the organization in describing and clarifying its strategy and then alignment of its performance measures to that strategy.
Topic 2, Volume B
NEW QUESTION 225
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?
- A. US $225
- B. US $125
- C. US $100
- D. US $250
Answer: A
Explanation:
Unit target operating income is US $125 10% $1,250 target price). Thus, the unit target full cost is US $1,125 $I,250 $125). The current full cost per unit is US $1,350 [($8,000,000 cost of goods sold + $5,500,000 operating costs excluding production) - 10,000 units sold], so the necessary reduction in full cost per unit is US $225 $1,350 - $1 .125).
NEW QUESTION 226
In terms of international business strategy, which of the following is true regarding a multi-domestic strategy?
- A. It provides cost advantages, improves coordinated activities, and speeds product development.
- B. It is an effective strategy when large differences exist between countries.
- C. It uses the same products in all countries.
- D. It centralizes control with little decision-making authority given to the local level.
Answer: B
NEW QUESTION 227
Which of the following is a primary driver behind the creation and prioritization of new strategic initiatives established by an organization?
- A. Performance.
- B. Governance
- C. Risk tolerance
- D. Threats and opportunities.
Answer: D
NEW QUESTION 228
Which of the following statements is true regarding a bring-your-own-device (BYOD) environment?
- A. There is a greater need Kr organizations to rely on users to comply with policies and procedures.
- B. There is greater sharing of operational risk in a BYOD environment.
- C. Incident response times are less critical in the BYOD environment. compared to a traditional environment
- D. With fewer devices owned by the organization, there is reduced need to maintain documented policies and procedures.
Answer: A
NEW QUESTION 229
An investment company is attempting to allocate its available funds between two investment alternatives, stocks and bonds, which differ in terms of expected return and risk. The company would like to minimize its risk while earning an expected return of at least 10% and investing no more than 70% in either of the investment alternatives. An appropriate technique for allocating its funds between stocks and bonds is:
- A. Linear programming.
- B. Differential analysis.
- C. Queuing theory.
- D. Capital budgeting.
Answer: A
Explanation:
Linear programming is a mathematical technique for planning resource allocation that optimizes a given objective function that is subject to certain constraints. In this case, the maximum investment is constrained by a 70% limit on either investment choice.
NEW QUESTION 230
According to IIA guidance on IT auditing, which of the following would not be an area examined by the internal audit activity?
- A. Access system security.
- B. Operations processes.
- C. Change management.
- D. Policy development.
Answer: D
NEW QUESTION 231
The entity has current assets of:
- A. US $3,033,333 C US $3,333,333
- B. US $1,000,000
- C. US $3,633,333
Answer: A
Explanation:
Return on total assets3% equals profit US $100,000) divided by total assets. Consequently, total assets equal US $3,333,333$100,000 - 03). Current assets must therefore equal US $3,033,333$3,333,333 total assets - $300,000 other assets).
NEW QUESTION 232
A controller became aware that a competitor appeared to have access to the company's pricing information. The internal auditor determined that the leak of information was occurring during the electronic transmission of data from branch offices to the head office.
Which of the following controls would be most effective in preventing the leak of information?
- A. Encryption.
- B. Asynchronous transmission.
- C. Use of passwords.
- D. Use of fiber-optic transmission lines.
Answer: A
Explanation:
Encryption software uses a fixed algorithm to manipulate plain text and an encryption key a set of random data bits used as a starting point for application of the algorithm to introduce variation. Although data may be accessed by tapping into the transmission line, the encryption key is necessary to understand the data being sent.
NEW QUESTION 233
The following information and diagram apply to a project:
The earliest completion time for the project is:
- A. 15 days.
- B. 11 days.
- C. 20 days.
- D. 14 days.
Answer: A
Explanation:
The two paths through the network are A-C-E (5+4 + 6= 15days) and B-D-E (3 + 2 + 6 = 11 days). The critical or longest path is thus A-C-E. Hence, the earliest completion time is 15 days.
NEW QUESTION 234
Refer to the exhibit.
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. $500
- D. $300
Answer: A
NEW QUESTION 235
A post office serves customers in a single line at one service window. During peals periods, the rate of arrivals has a Poisson distribution with an average of 100 customers per hour and service times that are exponentially distributed with an average of 0 seconds per customer.
From this, one can conclude that the:
- A. Average customer waiting time is minutes.
- B. Average rate is 100 customers per hour.
- C. Server' will be idle one-sixth of the time.
- D. Queue will expand to infinity.
Answer: D
Explanation:
One hundred customers arrive in line per hour and only 60 are serviced per
hour.
Accordingly, the queue will expand to infinity during peaty periods.
NEW QUESTION 236
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 a lack of alignment to organizational strategies.
- B. The process is not sustained and is not optimized as planned.
- C. The operational quality is less than projected.
- D. There is increased potential for loss of assets.
Answer: D
NEW QUESTION 237
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