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IIA Business Knowledge for Internal Auditing Sample Questions (Q358-Q363):

NEW QUESTION # 358
Which of the following standards would be most useful in evaluating the performance of a customer-service group?

A. Employees should maintain a positive attitude when dealing with customers.
B. Customer complaints should be processed promptly.
C. The average time per customer inquiry should be kept to a minimum.
D. All customer inquiries should be answered within seven days of receipt.

Answer: D

NEW QUESTION # 359
Listed below are selected line items from the cost-of-quality report for Company B for
What is Company B's total prevention and appraisal cost for last month?

A. US $786
B. US $2,665
C. US $1,940
D. US $1,154

Answer: C

Explanation:
The costs of prevention and appraisal are conformance costs that serve as financial measures of internal performance. Prevention costs are incurred to prevent defective output. These costs include preventive maintenance, employee training, review of equipment design, and evaluation of suppliers. Appraisal costs are incurred to detect nonconforming output. They embrace such activities as statistical quality control programs, inspection, and testing. The equipment maintenance cost of US $1,154 is a prevention cost. The product testing cost of US $786 is an appraisal cost. Their sum is US $1,940.

NEW QUESTION # 360
Which of the following statements accurately describes the impact that automation has on
the controls normally present in a manual system?

A. The quality of documentation becomes less critical in a computer-based system than it is in a manual system because data records are stored in machine-readable files.
B. Controls must be more explicit in a computer-based system because many processing points that present opportunities for human judgment in a manual system are eliminated.
C. Responsibility for custody of information assets is more concentrated in user departments in a computer- based system than it is in a manual system.
D. Transaction trails are more extensive in a computer-based system than in a manual system because there is always a one-for-one correspondence between data entry and output.

Answer: B

Explanation:
Using a computer does not change the basic concepts and objectives of control. However, the use of computers may modify the control techniques used. The processing of transactions may be combined with control activities previously performed separately, or control function may be combined within the information system activity.

NEW QUESTION # 361
On August 1 Jones leased property to Smith for a 5-year period. The annual US $20,000 lease payment is payable at the end of each year. The expected residual value at the end of the lease term is US $10,000. Jones's implicit interest rate is 12%. The cost of the property to Jones was US $50,000, which is the fair value at the lease date. The present value of an ordinary annuity of I for five periods is 3.605. The present value of I at the end of five periods is .567. At the inception of the lease, the recorded gross investment is:

A. US $90.000
B. US $100,000
C. US $110,000
D. US $72.100

Answer: C

Explanation:
For a finance lease, the lesser should record the gross investment in the lease at the undiscounted sum of the minimum payments the total of the lessee's required payments, excluding contingent rent and costs for services and taxes to be paid by and reimbursed to the lesser and any guaranteed residual value) and any Unguaranteed residual value. The gross investment is the same regardless of whether any residual value is guaranteed. The five periodic payments of US $20,000 equal US $100,000. The expected residual value including guaranteed and unguaranteed portions equals US $10,000. The gross investment should be US $110,000$100,000 + $10,000).

NEW QUESTION # 362
Which of the following should the auditor recommend as the most economical point at which to correct input errors in an online system?

A. Entry of data into each record is completed.
B. Entry of data into each field of a record is completed.
C. Input data are balanced with computer-produced control totals.
D. Output data are balanced with computer-produced control totals and delivered to the user.

Answer: B

Explanation:
The most economical point at which to correct input errors is at the earliest time after the data has been entered into the system. The earliest point is the entry of data into each field of a record. Errors can easily be rectified because the proper information is already available.

NEW QUESTION # 363
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