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IIA Business Knowledge for Internal Auditing Sample Questions (Q295-Q300):

NEW QUESTION # 295
Cost of goods sold in Year 2 was:

A. US $160,000B. US $167,000C. US $180,000D. US $147,000

Answer: D

Explanation:
Cost of goods sold equals beginning inventory, plus purchases, minus ending inventory. To determine cost of goods purchases must be calculated. Purchases equal US $167,000$49,000 ending accounts payable + $ 130,000 payments to suppliers - $62,000 beginning accounts payable). Thus, cost of goods sold equals US $ 147,000$120,000 beginning inventory + $167,000 purchases - $140,000 ending inventory).
Balance sheets on December 31, Year 1, and December 31, Year 2, are presented below

NEW QUESTION # 296
Image processing systems have the potential to reduce the volume of paper circulated throughout an organization. To reduce the likelihood of users relying on the wrong images, management should ensure that appropriate controls exist to maintain the:

A. Legibility of image data.B. Accessibility of image data.C. Integrity of index data.D. Initial sequence of index data.

Answer: C

Explanation:
Data integrity is a protectibility objective. If index data for image processing systems are corrupted, users will likely be relying on the wrong images.

NEW QUESTION # 297
Everything else being equal, the internal rate of return IRR) of an investment project will be lower if:

A. The investment cost is lower.B. Cash inflows are received later in the life of the projectC. The project has a shorter payback period.D. Cash inflows are larger.

Answer: B

Explanation:
The IRR is the discount rate at which the net present value is zero. Because the present value of a dollar is higher the sooner it is received, projects with later cash flows will have lower net present values for any given discount rate than will projects with earlier cash flows, if other factors are constant. Hence projects with later cash flows will have a lower IRR A company that annually reviews its investment opportunities and selects appropriate capital expenditures for the coming year is presented with two projects, called Project A and Project B. Best estimates indicate that the investment outlay for Project A is US and for Project B. is LI: $ 1 million. The projects are considered to be equally risky. Project A is expected to general cash inflows of US $40,010 at the end of each year for 2 years. Project B. is expected to generate cash inflows of US $700,000 at the end of the first year and US $500,000 at the end of the second year. The company has a cost of capital of 8%.

NEW QUESTION # 298
Which of the following is an example of a key systems development control typically found in the in-house development of an application system?

A. The development process is designed to prevent, detect, and correct errors that may occur.B. Business users' requirements are documented, and their achievement is monitored.C. Logical access controls monitor application usage and generate audit trails.D. A record is maintained to track the process of data from input, to output, to storage.

Answer: D

NEW QUESTION # 299
Which of the following is an example of an efficiency measure?

A. The number of insurance claims processed per day.B. The goal of increasing market share.C. The rate of absenteeism.D. The goal of becoming a leading manufacturer.

Answer: A

Explanation:
The number of insurance claims processed per day is a typical measure used in a balanced scorecard. It relates to the critical success factor of productivity. This factor is based on an input-output efficiency) relationship. An organizational structure is efficient if it facilitates the accomplishment of organizational objectives with minimum resources and fewest unsought consequences. An efficient organizational structure maximizes output for a given amount of input. Thus, an efficiency measure compares input with output. Insurance claims processed per day relates output claims processed) to input a day's work).

NEW QUESTION # 300
......

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