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Q331. A device used to connect dissimilar networks is a:
D. Wiring concentrator.
A gateway, often implemented via software, translates between two or more different protocol families and makes connections between dissimilar networks possible.
Q332. The carrying costs associated with inventory management include:
A. Insurance costs, shipping costs, storage costs, and obsolescence.
B. Storage costs, handling costs, capital invested, and obsolescence.
C. Purchasing costs, shipping costs, setup costs, and quantity discounts lost.
D. Obsolescence, setup costs, capital invested, and purchasing costs.
Carrying costs include storage costs, handling costs, insurance costs, interest on capital invested, and obsolescence. Candman Company is a wholesale distributor of candy. The company leases space in a public warehouse and is charged according to the square feet occupied. Candman has decided to employ the economic order quantity 0Q) method to determine the optimum number of cases of candy to order. The company placed 2,400 orders last year. Data for the high-activity month, the low-activity month, and the year for the purchasing and warehouse operations appear in the next column. The annual charges for the warehouse totaled US $12,750 last year. In addition, the annual insurance and property taxes on the candy stored in the warehouse amounted to US $1,500 and US $2,250, respectively.
The average monthly inventory last year was US $75,000.
Q333. If a country uses trade quotas to overcome chronic trade deficits, what would the most likely outcome be?
A. Unemployment and productivity rates will rise.
B. Unemployment rates will rise and productivity rates will decline.
C. Unemployment rates will decline and productivity rates will rise.
D. Unemployment and productivity rates will decline.
With trade quotas, home jobs will be saved, hence, unemployment will decline. Since jobs will be saved for inefficient industries less efficient than foreign competitors), productivity rates will decline because they will not be specializing in those goods with which they have a comparative advantage.
Q334. Sales representatives for a manufacturing company are reimbursed for 100 percent of their
cellular telephone bills. Cellular telephone costs vary significantly from representative to representative and from month to month, complicating the budgeting and forecasting processes. Management has requested that the internal auditors develop a method for controlling these costs. Which of the following would most appropriately be included in the scope of the consulting project?
A. Control self-assessment involving sales representatives.
B. Benchmarking with other cellular telephone users.
C. Business process review of procurement and payables routines.
D. Performance measurement and design of the budgeting and forecasting processes.
A business process review BPR) assesses the performance of administrative, financial, and other
processes, such as those within the procurement and payables functions. BPR considers process
effectiveness and efficiency, including the presence of appropriate controls, to mitigate business
risk. It seeks to achieve improvements in such critical measures of performance as cost, quality,
service, speed, and customer satisfaction. Because the objective is to control cellular phone costs,
BPR is the appropriate tool.
Section 2: Sec Two (158 to 276)
Details: Managing Resources and Pricing
Q335. How is the letter x in the standard regression equation best described?
A. Independent variable.
B. Dependent variable.
C. Y intercept.
D. Coefficient of determination.
Explanation: The letter x in the standard regression equation is the independent variable. For example, in a regression to determine the total cost of production, x equals units produced.
Q336. A company with many branch stores has decided to use its best-performing store as a benchmark organization for the purpose of analyzing the accuracy and reliability of branch store financial reporting.
Which one of the following is the most likely measure to be included in a financial benchmark?
A. High turnover of employees.
B. High level of employee participation in setting budgets.
C. High amount of bad debt write-offs.
D. High number of suppliers.
Internal benchmarking is the application of best practices in one part of the organization (e.g., a high-performing branch store) to its other parts (other branches). This process requires, among other things, use of quantitative and qualitative measures. A key indicator for financial performance measurement is the amount of bad debt write-offs. A high level of bad debt write-offs could indicate fraud, which would compromise the accuracy and reliability of financial reports. Bad debt write-offs may result from recording fictitious sales.
Q337. The economic reasoning dictating that each nation specialize in the production of goods that it produces relatively more efficiently than other nations and import those goods that are produced relatively more efficiently by other nations is called the doctrine of:
A. Efficient trade.
B. Diminishing returns.
C. Relative competition.
D. Comparative advantage.
The doctrine of comparative advantage relates to comparative costs within one country. It holds that a country should produce those products in which it has a comparative advantage, not necessarily those products in which it has an absolute advantage. The doctrine suggests that a country should produce those products for which the greatest efficiencies are attainable even if it could also produce other goods more efficiently than another nation. In the long run, importing a product in which a country has an absolute advantage but not a comparative advantage will result in an overall increase in global production.
Q338. As part of a risk analysis, an auditor wishes to forecast the percentage growth in next month's sales for a particular plant using the past 30 months' sales results. Significant changes in the organization affecting sales volumes were made within the last 9 months. The most effective analysis technique to use would be
A. Unweighted moving average.
B. Exponential smoothing.
C. Queuing theory.
D. Linear regression analysis.
Explanation: Under exponential smoothing, each forecast equals the sum of the last observation times the smoothing constant, plus the last forecast times one minus the constant. Thus, exponential means that greater weight is placed on the most recent data, with the weights of all data falling off exponentially as the data age. This feature is important because of the organizational changes that affected sales volume.
Q339. The two broad groupings of information systems control activities are general controls and application controls. General controls include controls:
A. Relating to the correction and resubmission of faulty data.
B. For developing, modifying, and maintaining computer programs.
C. Designed to assure that only authorized users receive output from processing.
D. Designed to ensure that all data submitted for processing have been properly authorized.
General controls are policies and procedures that relate to many information systems application and support the effective functioning of application controls by helping to ensure the continued proper operation of information systems. General controls include controls over 1) data center and network operations; 2) systems software acquisition and maintenance; 3) access security; and 4) application systems, acquisition, development, and maintenance AU 319).
Q340. If electronic funds transfer EFT) is used to pay vendor invoices, which of the following computer- assisted audit procedures would an auditor use to determine if any payments were made twice?
I. Testing of EFT transactions for reasonableness.
II. Identification of EFT transactions to the same vendor for the same dollar amount.
III. Extraction of EFT transactions with unauthorized vendor codes.
Searching for EFT transactions with duplicate purchase order numbers.
I and II only. B.
I and IV only. C.
II and Ill only. D.
III and IV only.
EFT is a service provided by financial institutions worldwide that is based on EDI technology. EFT transaction costs are lower than for manual systems because documents and human intervention are eliminated from the transactions process.
Inaccurate transaction processing including duplication) is a risk specific to EFT. Thus, an auditor should 1) review transactions with the same vendor for the same amount and 2) search for transactions with duplicate purchase order numbers. However, selection of transactions with unauthorized vendor codes and testing of transactions for reasonableness do not identify duplicate payments.
Q341. A bank plans to open a branch in one of five locations (labeled L1, L2, L3, L4, L5). Demand for bank services may be high, medium, or low at each of these locations Profits for each location- demand combination are presented in the payoff matrix.
If the bank uses the minimax regret criterion for selecting the location of the branch. it will select:
Under the minimax regret criterion, the decision maker selects the choice that minimizes the maximum regret (opportunity cost). The maximum regret for each location is determined from the opportunity loss matrix.
Q342. A situation in which companies conspire to restrict output and set artificially high prices is known as:
A. Collusive pricing.
B. Predatory pricing
C. Price discrimination.
D. Market-based pricing.
Collusive pricing is illegal. It involves two or more competitors conspiring to restrict output and charge artificially high prices.
Q343. The total exports of Vietnam are US $20,000,000 worth of rice to Greece, and the total exports of Greece are US $18, 11,111100 worth of olives to Vietnam. The terms of trade are:
A. Option A
B. Option B
C. Option C
D. Option D
A country's terms of trade are calculated by dividing its export price index by its import price index and multiplying by 100. Greece's total exports US $18,000,000) divided by its total imports US $20,000,000) equals 0.9 x 100 = 90. Vietnam's total exports US $20,000,000) divided by its total
imports US $18,000,000) equals 1.11 x 100 = 111.
Q344. Spoofing is one type of online activity used to launch malicious attacks. Spoofing is:
A. Trying large numbers of letter and number combinations to access a network.
B. Eaves dropping on information sent by a user to the host computer of a website.
C. Accessing packets flowing through a network.
D. Identity misrepresentation in cyberspace.
Passwords, user account numbers, and other information may be stolen using techniques such as Trojan horses, IP spoofing, and packet sniffers. Spoofing is identity misrepresentation in cyberspace, for example, by using a false website to obtain information about visitors.
Q345. Which of the following is not a major component of an audit of e-commerce activities?
A. Make certain that goals and objectives can be achieved.
B. Assess the internal control structure.
C. Review the interface issues.
D. Evaluate the business continuity and disaster recovery plans.
Auditing e-commerce activities should provide reasonable assurance - not ensure or make certain -that goals and objectives can be achieved. An auditor cannot be absolutely certain that goals and objectives will be achieved. The following are other major components of an audit of e-commerce activities:
Assess the internal control structure, including the tone set by senior management, Determine whether the risks are acceptable.
Understand the information flow.
Review the interface issues such as hardware to hardware, software to software, and hardware to software), and
Evaluate the business continuity and disaster recovery plans.