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IIA Business Knowledge for Internal Auditing Sample Questions (Q269-Q274):

NEW QUESTION # 269
Which of the following is true regarding an organization's relationship with external stakeholders?

• A. Disclosure laws tend to be consistent from one jurisdiction to another.
• B. Specific guidance must be followed when interacting with nongovernmental organizations.
• C. Legal representation should be consulted before releasing internal audit information to other assurance providers.
• D. There are several internationally recognized standards for dealing with financial donors.

Answer: C
NEW QUESTION # 270
A company updates its accounts receivable master file weekly and retains the master files and corresponding update transactions for the most recent 2-week period.
The purpose of this practice is to

• A. Permit reconstruction of the master file if needed.
• B. Match internal labels to avoid writing on the wrong volume.
• C. Verify run-to-run control totals for receivables.
• D. Validate groups of update transactions for each version.

Answer: A Explanation:
The grandfather-father-son approach normally employs magnetic tapes to furnish backup in a batch processing system. The procedure involves creation and retention of three generations of master files so that lost or destroyed data may be regenerated from the remaining master files and transaction data. In this case, a master file the grandfather) and the first week's transactions are used to generate a second master file (the father). This file and the second week's transactions are the basis for the current master file the son). Online systems employ rollback and recovery procedures. i.e., the master file is periodically dumped onto a storage medium. Reconstruction is then possible using the backup copy and the transactions lord.
NEW QUESTION # 271
The following are the January 1 and June 30 balance sheets of an entity/From January 1 to June 30, the net works no capital:

• A. Stayed the s
• B. Increased by US $1 million
• C. Decreased by US $1 million
• D. Increased by US $2 million

Answer: B Explanation:
Net working capital equals current assets cash, accounts receivable, inventories for this entity minus current liabilities accounts payable. notes payable, accrued wages). From January 1 to June 30. the net working capital increased by US $1.000.000 {[($4 + $4 +$10)
-$3 + $3 + $2)] - [($3 + $5 + $8) - $2 + $4 + $1)]}.
NEW QUESTION # 272
A company has US $450,000 per year of fixed production costs, of which US $150,000 are noncash outlays. The variable cost per unit is US $15, and the unit selling price is US $25. The breakeven volume in sales units for this company would be:

• A. 60,000 units.
• B. 45,000 units.
• C. 18,000 units.
• D. 30,000 units.

Answer: B Explanation:
The breakeven volume in sales units equals fixed costs divided by the unit contribution margin unit price - unit variable cost). Hence, the breakeven point is 45,000 units [US $450,000 - $25 - $15)]. Data regarding Year 1 operations for an enterprise that had no beginning or ending inventories are as follows:

The enterprise estimates that next year direct materials costs will increase by 10% and direct labor costs will increase by US $0.60 per unit to US $5.40 per unit. In addition, fixed selling expenses will increase by US $29,520. All other costs will be incurred at the same rates or amounts as the current year.
NEW QUESTION # 273
An entity had the following account balances at December 31 of Year 1:

All shares outstanding were issued in a prior period for US $15 per share. On January 5 of Year 21000 shares were purchased for the treasury for US $17 per share. These treasury shares were sold on February 6 of Year 2, for US $18 per share. The effect of the purchase and sale of the 1.000 treasury shares was to:

• A. Increase equity by US $1.000.
• B. Increase equity by US $3.000.
• C. Increase equity by US $2,000.
• D. Not change equity.

Answer: A Explanation:
Using the cost method, the journal entry to record the purchase of the treasury shares is.

NEW QUESTION # 274
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