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IIA Business Knowledge for Internal Auditing Sample Questions (Q133-Q138):

NEW QUESTION # 133
Which of the following is most appropriately placed in the financing section of an organization's cash budget?

• A. Sale of securities.
• B. Payment of debt, including interest
• C. Purchase of trucks.
• D. Collections from customers

Answer: B

NEW QUESTION # 134
Which of the following represents an inventory costing technique that can be manipulated by management to boost net income by selling units purchased at a low cost?

• A. Average-cost method
• B. Specific identification method.
• C. First-in. first-out method (FIFO).
• D. Last-in, first-out method (LIFO).

Answer: C

NEW QUESTION # 135
Which is the least effective form of risk management?

• A. People-based preventive control.
• B. Systems-based detective control.
• C. Systems-based preventive control.
• D. People-based detective control.

Answer: D

NEW QUESTION # 136
An organization that sells products to a foreign subsidiary wants to charge a price that will decrease import tariffs. Which of the following is the best course of action for the organization?

• A. Increase the transfer price.
• B. Decrease the transfer price.
• C. Charge at the arm's length price.
• D. Charge at the optimal transfer price.

Answer: C

NEW QUESTION # 137
What should the company focus on to achieve quality more economically?

• A. Prevention costs.
• B. Internal failure costs.
• C. Appraisal costs.
• D. External failure costs.

Answer: A

Explanation:
Prevention attempts to avoid defective output. Prevention costs include preventive maintenance, employee training, review of equipment design, and evaluation of suppliers. Prevention is less costly than detection and correction of defective output.

NEW QUESTION # 138
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