Free IIA IIA-CIA-Part3-3P Practice Questions 2026 - Page 11

An organization has recorded the following profit and expenses:

Profit before interest and tax

$200,000

Sales

$2,300,000

Purchases of materials

$700,000

Interest expenses

$30,000

If the value-added tax (VAT) rate is 20 percent and the corporate tax rate is 30 percent,

which of the following is the amount of VAT that the organization has to pay?

A. $34,000

B. $51,000

C. $60,000

D. $320,000

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. $170,000

B. $280,000

C. $300,000

D. $540,000

Which of the following should an organization consider when developing strategic objectives for its business processes?

1) Contribution to the success of the organization.

2) Reliability of operational information.

3) Behaviors and actions expected of employees.

4) How inputs combine with outputs to generate activities.

A. 1 and 2 only

B. 1 and 3 only

C. 2 and 4 only

D. 3 and 4 only

Which of the following statements is correct regarding risk analysis?

A. The extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.

B. The highest risk assessment should always be assigned to the area with the largest potential loss.

C. The highest risk assessment should always be assigned to the area with the highest probability of occurrence.

D. Risk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.

Which of the following describes the result if an organization records merchandise as a purchase, but fails to include it in the closing inventory count?

A. The cost of goods sold for the period will be understated.

B. The cost of goods sold for the period will be overstated.

C. The net income for the period will be understated.

D. There will be no effect on the cost of goods sold or the net income for the period.

Unsecured loans are loans:

A. That do not have to be repaid for over one year.

B. That appear to be too risky for most lenders to consider.

C. Granted on the basis of a company's credit standing.

D. Backed by mortgaged assets.

According to the International Professional Practices Framework, which of the following statements is true regarding a corporate social responsibility (CSR) program?

1) Every employee generally has a responsibility for ensuring the success of CSR objectives.

2) The board has overall responsibility for the effectiveness of internal control processes associated with CSR.

3) Public reporting on the CSR governance process is expected.

4) Organizations generally have flexibility regarding what is included in a CSR program.

A. 1, 2, and 3 only

B. 1, 2, and 4 only

C. 1, 3, and 4 only

D. 2, 3, and 4 only

Which of the following is a characteristic of an emerging industry?

A. Established strategy of players.

B. Low number of new firms.

C. High unit costs.

D. Technical expertise.

What are the objectives of governance as defined by the Standards?

A. Inform, direct, manage, and monitor.

B. Identify, assess, manage, and control.

C. Organize, assign, authorize, and implement.

D. Add value, improve, assure, and conform.

Which of the following is the most likely reason an organization may decide to undertake a stock split?

A. To keep stock price constant.

B. To keep shareholders' equity constant.

C. To increase shareholders' equity.

D. To enhance the stock liquidity.