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Fail CIA > CIA Pt 3 > Flashcards

CIA Pt 3 Flashcards

1
Q

Five Basic Forces

A 
Threat of new entrants
Threat of substitutes
Threat of buyers' bargaining power
Bargaining power of suppliers
Rivalry among existing firms
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2
Q

Michael E. Porter’s five competitive forces

A

(1) the degree of rivalry among existing firms (2) threats of, and barriers to, entry
(3) the threat of substitute products or services
(4) the threat of buyers’ bargaining power; (5) the threat of suppliers’ bargaining power

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3
Q

current ratio

A

The current ratio equals current assets divided by current liabilities

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4
Q

The communication process has six elements

A

the sender, the symbols in which the message is encoded, the medium through which the message is sent, the decoding of the message, the receiver, and feedback.

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5
Q

PERT formula

A

(a + 4m + b) ÷ 6

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6
Q

When production exceeds sales, ending inventory increases…

Under absorption costing

A

some fixed costs are still in ending inventory.

Operating income is higher under absorption costing.

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7
Q

When production exceeds sales, ending inventory increases…

Under variable costing

A

all fixed costs have been expensed.

Operating income is higher under absorption costing.

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8
Q

When production is less than sales, ending inventory decreases…
Under absorption costing

A

fixed costs in beginning inventory are expensed. Operating income is higher under variable costing.

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9
Q

When production is less than sales, ending inventory decreases…
Under variable costing

A

only the current period’s fixed costs are expensed.

Operating income is higher under variable costing.

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10
Q

When production and sales are equal for a period,

A

variable costing and absorption costing report the same operating income.

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11
Q

As described in the COSO ERM framework, risk appetite should be considered in

A

Evaluating strategies,
Setting related objectives, and
Developing risk management methods.

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12
Q

Inherent risk is the risk when

A

management has not taken action to reduce the impact or likelihood of an adverse event. Thus, it is risk in the absence of a risk response.

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13
Q

An increase in inventory carrying costs decreases the EOQ because, in the EOQ model,

A

carrying cost is a denominator value.

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14
Q

What is a comprehensive system that processes and monitors electronic transactions, communications, and business interactions? Also described as “conducting commercial activities over the Internet.

A

e-commerce

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15
Q

The basic EOQ equals

A

the square root of a fraction consisting of a numerator equal to the product of twice the unit periodic demand and the variable cost per order and a denominator equal to the unit periodic carrying cost.

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16
Q

The basic EOQ formula is used to

A

minimize the total of inventory carrying and ordering costs.

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17
Q

Audit objectives for an e-commerce engagement may include:

A

Evidence of e-commerce transactions
Availability and reliability of security system
Effective interface between e-commerce and financial systems
Security of monetary transactions
Effectiveness of customer authentication process
Adequacy of business continuity processes, including the resumption of operations
Compliance with common security standards
Effective use and control of digital signatures
Adequacy of systems, policies, and procedures to control Public Key Certificates (using public key cryptographic techniques)
Adequacy and timeliness of operating data and information
Documented evidence of an effective system of internal control

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18
Q

Queuing (waiting-line) models minimize

A

(1) the cost of providing service (including facility costs and operating costs) and (2) the cost of idle resources waiting in line. The latter may be a direct cost, if paid employees are waiting, or an opportunity cost in the case of waiting customers. This minimization occurs at the point where the cost of waiting is balanced by the cost of providing service.

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19
Q

Failure costs are incurred

A

after defective output has been removed from production.

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20
Q

An example of an external failure cost is

A

A contract penalty for faulty goods

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21
Q

The benefits to the company of the achievement-oriented leader approach include

A

(1) greater employee confidence and commitment, (2) more employee decision making, (3) increased employee creativity, (4) more challenging objectives, and (5) reduced supervision for employees who work best independently.

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22
Q

A risk-averse leader will avoid

A

risky situations, make decisions more slowly, and seek more information than a person who is described as a risk taker.

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23
Q

Conflict triggers include

A

ambiguous jurisdictions (unclear job boundaries); competition for scarce resources; status differentials; time pressures; personality clashes; unreasonable standards, rules, etc.; communication breakdowns; and unrealized expectations. However, an appeal to superordinate goals is a conflict resolution technique, not a conflict trigger.

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24
Q

What is the primary obstacle to adoption of self-managed teams?

A

Managerial acceptance. Tradition-oriented managers often perceive the loss of authority to a self-managed team as a threat to their status.

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25
Q

What type of integration arrangement involves partial integration and implies the ability to fully support an efficient subunit?

A

Tapered (partial) integration. Tapered integration implies that the firm can fully support an efficient subunit but has additional needs to be met in the market. If the in-house subunit will not be efficient, that inefficiency must be weighed against the benefits of tapering. Tapering results in lower fixed costs than full integration. Furthermore, the strategy may allow the firm’s subunit(s) to maintain constant production rates while external parties bear the risk of fluctuations. Another use of tapering is to protect against operational imbalances among the subunits. A risk of tapering is selling to, or buying from, competitors. Another is greater coordination cost. Advantages of tapering are avoidance of locked-in relationships, some access to external expertise, increased managerial incentives, offering a credible threat of full integration to suppliers or customers, and obtaining knowledge of the adjacent business and an emergency supply source.

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26
Q

Network models are used to solve managerial problems pertaining to

A

project scheduling, information systems design, and transportation systems design. Networks consisting of nodes and arcs may be created to represent in graphic form problems related to transportation, assignment, and transshipment. The shortest-route, minimal spanning tree, and maximal flow problems are other applications of network models. A shortest-route algorithm minimizes total travel time from one site to each of the other sites in a transportation system.

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27
Q

Self-actualization is the highest level need in Maslow’s hierarchy. It is the desire to become

A

what one is capable of becoming, to realize one’s potential and accomplish to the limit of one’s ability. In other words, the job itself is an intrinsic motivation; no extrinsic motivation (such as rewards or reinforcements) is needed. Intrinsic motivation provides the worker with psychological income. Thus, challenging new job assignments meet an employee’s self-actualization needs.

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28
Q

Ingratiating tactics attempt to

A

raise the other person’s self-esteem prior to a request.

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29
Q

Benefits of using ISO 14000

A
  1. decrease the cost of wasted management
  2. provide savings in consumption of energy and materials
  3. lower distribution costs
  4. improve corporate image among regulators, customers, and the public
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30
Q

A risk committee may be created that…

A
  • identifies key risks
  • connects them to risk management processes
  • delegates them to risk owners
  • considers whether tolerance levels delegated to risk owners are consistent with the organization’s risk appetite
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31
Q

What are the major components of governance?

A
  • Strategic direction

- Oversight

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32
Q

Strategic direction determines…

A
  1. the business model
  2. overall objectives
  3. risk appetite
  4. limits of organizational conduct
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33
Q

Elements of oversight are…

A
  1. the board’s responsibilities to stakeholders
  2. the risk management activities of senior management and the board
  3. internal and external assurance activities
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34
Q

Unit contribution margin =

A

Total contribution margin/Units sold

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35
Q

Breakeven point in unit sales=

A

fixed costs/ unit contribution margin

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36
Q

9 steps of the accounting cycle:

A
  1. journalizing transactions
  2. posting journal entries to the ledgers
  3. preparing an unadjusted trial balance
  4. recording adjusting entries
  5. preparing an adjusted trial balance
  6. preparing financial statements
  7. closing temporary (nominal) accounts
  8. preparing a post-closing trail balance (optional)
  9. reversing the accrual entries (optional)
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37
Q

The project life cycle has four phases:

A
  1. initiation
  2. planning
  3. execution
  4. closure
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38
Q

The planning (2nd) phase of the project life cycle involves

A

creating a detailed project plan and assigning resources

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39
Q

Electronic mail can be no more secure than…

A

the computer system on which it operates. Also, in larger organizations, there may be several electronic mail administrators and locations with varying levels of security

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40
Q

An object oriented approach is intended to produce reusable code. Because code segments can be reused in other programs, the time and cost of writing software should be…

A

reduced. This permits quicker and more reliable development of systems.

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41
Q

The primary objective of logical security controls for information systems is to…

A

restrict access to data and resources to only authorized individuals.

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42
Q

According to PA 2130-1, “Internal auditors determine whether senior management and the board have a …

A

clear understanding that information reliability and integrity is a management responsibility. This responsibility includes all critical information of the organization, regardless of how the information is stored.”

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43
Q

The life cycle approach is best employed when systems are…

A

large and highly structures, users understand the tasks to be performed by the information system, and the developers have directly applicable experience in designing similar systems. In the life cycle process, each stage of development is highly structured, and requirements are clearly defined. However, when the task is unstructured, prototyping may be the better approach.

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44
Q

Antivirus software designed to identify and remove known viruses is sometimes known as a ….

A

vaccine. A vaccine only works for known viruses and may not be effective for variants of those viruses or new viruses.

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45
Q

A ____ is an independent program that reproduces by copying itself from one system to another over a network and consumes computer and network resources.

A

worm

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46
Q

The objective of security software is to…

A

control access to information system resources, such as program libraries, data files, and proprietary software. Security software identifies and authenticates users, controls access to information, and records and investigates security related events and data.

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47
Q

Computer Aided Software Engineering (CASE) applies computers to software design and development. It permits creation and maintenance of…

A

systems documentation on the computer and the automation of a part of the programming effort. Using CASE would improve management of the development process because the CASE software maintains the links between the different components, provides built-in project management tolls, and supplies automated testing aids.

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48
Q

ISO 9001 is a generic standard that states the requirements for a…

A

quality management system. It applies when an entity needs to demonstrate its ability to:

  1. sell a product that meets customer and regulatory requirements and
  2. increase customer satisfactions through improving the quality management system and ensuring conformity with requirements.
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49
Q

Enterprise risk management helps management to…

A
  1. reach objectives
  2. prevent loss of reputation and resources
  3. report effectively
  4. comply with laws and regulations
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50
Q

ERM Components

I Only Ever ReAct, ReRun Control Is Money

A 
Internal environment
Objective setting
Event identification
Risk Assessment
Risk Responses
Control Activities 
Information and communication
Monitoring
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51
Q

Internal Environment reflects the entity’s…

A
  • risk management philosophy
  • risk appetite
  • integrity
  • ethical values
  • overall environment (sets tone at the top)
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52
Q

Categories of objectives:

SORC

A
  • Strategic objectives are consistent with & support the mission
  • Operations objectives address effectiveness and efficiency
  • Reporting objectives concern reliability
  • Compliance objectives relate to adherence to laws and regulations
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53
Q

The marginal tax rate is the tax applicable to the…

A

last unit of income.

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54
Q

The average tax rate=

A

the total tax rate divided by taxable income.

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55
Q

In a progressive tax system, higher incomes attract higher tax rates, so the marginal tax rate paid on the last unit of income exceeds…

A

the average tax rate

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56
Q

Regulatory agencies usually do not have the power to…

A

impose agency taxes on private industry. A regulatory agency may regulate some aspect of all industries or may regulate a specific industry in accordance with power delegated by the enabling legislation. Agency functions include executive, adjudicatory, and rule-making activities.

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57
Q

Regressive taxes are those for which the average tax rate falls as…

A

income rises. They take a smaller percentage of income as income rises, so they will not necessarily take a larger absolute amount of income as income rises

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58
Q

A nation has a progressive tax structure with income tax brackets that are not indexed to inflation. An individual taxpayer experiences an income increase just equal to the general inflation rate and moves into a higher tax bracket. The individual will the experience _____ nominal taxes payable and ____real taxes payable.

A

Increasing nominal taxes and increasing real taxes

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59
Q

If an imported good’s sale price is higher than a comparable, less expensive domestic good, consumers will…

A

purchase the domestic good and there will be lower domestic consumption of the imported item.

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60
Q

A domestic entity and a foreign entity purchased the same security on the foreign exchange and held the security for 1 year. The value of the foreign currency weakened against the domestic currency over this period. Comparing the returns of the two companies, which will be higher?

A

Foreign entity

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61
Q

In regards to monetary policy, selling government securities is contractional because…

A

it takes money out of circulation.

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62
Q

Reducing government spending, increasing taxes, reducing the money supply, and increasing interest rates are all…

A

contractionary policies, and thus appropriate for attempting to dampen the economy and prevent inflation.

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63
Q

The money supply in a nation’s economy will decrease following…

A

an increase in the reserve ratio.

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64
Q

The reserve ratio is the minimum % of its deposits that a bank must keep on deposit with the…

A

Federal Reserve. When the reserve ratio increases, banks must maintain larger reserves and less money is available for lending and investment. The money supply decreases.

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65
Q

Exchange rate appreciation/depreciation=

A

(the change in the rate)/(the starting rate)

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66
Q

Four essential elements of a contract:

A
  • agreement (offer and acceptance)
  • consideration
  • legal capacity of the parties to contract
  • legal objective or purpose
  • a writing is no always required
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67
Q

Under the output approach, GDP is measured as =

A

consumption expenditures + investment + gov’t purchases + expenditures by foreigners

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68
Q

An increase in excise taxes will generate more tax revenue if it is levied on products for which demand is…

A

less elastic.

Low elasticity products: gas, tobacco, alcohol

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69
Q

Teams may be built by

A

Rating group effectiveness.
Participating in a series of outdoor challenges.
Incorporating a number of interdependent roles.

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70
Q

fault tolerant is

A

the ability to continue processing at all sites except a nonfunctioning one. An advantage of distributed processing is fault tolerant.

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71
Q

Process costing is used to assign costs to products or services. It is applicable to relatively homogeneous items that are mass produced on a continuous basis. Process costing calculates the…

A

average cost per unit produced, or total cost divided by the number of units.

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72
Q

According to PA 2130.A1-1, the CAE both determines…

A

whether the internal audit activity has competent audit resources for evaluating internal and external risks to information reliability and integrity and whether senior management, the board, and the internal audit activity will be promptly notified about breaches and conditions that might represent a threat.

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73
Q

According to Fred E. Fiedler’s contingency theory, people become leaders not only because of personality attributes, but also because of…

A

various situational factors and the interaction between the leaders and the situation. Thus, the right person at the right time may rise to a position of leadership if his or her personality and the needs of the situation complement each other. The same person might not become a leader in different circumstances because of failure to interact successfully with that situation.

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74
Q

The contingency theory model has three dimensions:

A

(1) Position power is a function of the formal authority structure. It is the degree to which the position held enables a leader to evaluate, reward, sanction, or promote the group members independent of other sources of power, such as personality or expertise. (2) Task structure is how clearly and carefully members’ responsibilities for various tasks are defined. Quality of performance is more easily controlled when tasks are clearly defined. (3) Leader-member relations reflect the extent to which group members like, trust, and are willing to follow a leader.

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75
Q

Use of unlicensed software in an organization increases the risk of introducing viruses into the organization and can be…

A

detected by software checking routines that run from a network server

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76
Q

o reduce security exposure when transmitting proprietary data over communication lines, a company should use

A

Cryptographic devices. (encryption)

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77
Q

Strategic management is a five-step process:

My Sweet Aunt Sally Is Fine

A
  • Mission and goals
  • SWOT analysis
  • strategy
  • implementation, controls
  • feedback

Strategic management is a five-step process:

The board of directors drafts the organization’s mission statement, a general statement of what the organization intends to accomplish and its reason for existing. The statement may be accompanied by one or more goals, which are concrete targets for measuring the organization’s success.
The organization performs a situational analysis, also called a SWOT analysis, involving identification of its strengths, weaknesses, opportunities, and threats.
Based on the results of the situational analysis, upper management develops a group of strategies describing how the mission statement will be fulfilled.
Strategic plans are implemented through the execution of component plans at each level of the entity.
Strategic controls and feedback are used to monitor progress, isolate problems, and take corrective action. Over the long term, feedback can be used to adjust the original mission and goals.
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78
Q

Operating leverage is the extent to which a firm’s costs of operating are fixed as opposed to variable. Operating leverage equals fixed costs divided by total costs. Therefore, if a high percentage of an entity’s total cost is fixed, the entity is said to have high operating leverage.

A

high operating leverage.

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79
Q

What activities are included in ERM?

A
  • Determining risk appetite
  • Identifying potential risks
  • Communicating information on risks consistently and at all levels
  • Providing assurance on the effectiveness of risk management
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80
Q

To avoid creating conflict between the chief executive officer (CEO) and the audit committee, the chief audit executive (CAE) should

A

Request board establishment of policies covering the internal audit activity’s relationships with the audit committee.
Independence is not sufficient to avert conflict unless reporting relationships are well defined.

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81
Q

What will allow a manufacturer with limited resources to maximize profits?

A

Linear programming.
Linear programming is a mathematical technique for planning resource allocation that optimizes a given objective function subject to certain constraints. Thus, it maximizes a revenue or profit function or minimizes a cost function, subject to constraints. For example, constraints may be limited (scarce) resources or minimum/maximum levels of production, performance, etc. In business, linear programming is used for planning resource allocations. Managers are often faced with problems of selecting the most profitable or least costly way to use available resources.

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82
Q

The funds-needed line does not pass through the origin unless the entity has a

A

100% dividend payout policy. If all earnings are paid as dividends, no earnings are retained. All sales growth must be financed from spontaneous or external sources.

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83
Q

An appropriate technique for allocating its funds between equities and bonds is…

A

Linear programming.
Linear programming is a mathematical technique for planning resource allocation that optimizes a given objective function that is subject to certain constraints. In this case, the maximum investment is constrained by a % limit on either investment choice.

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84
Q

What is a malicious program with the purpose to reproduce itself throughout the network and produce a denial of service attack by excessively utilizing system resources?

A

Worm

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85
Q

A _____ is an independent program that appears to perform a useful function but hides another unauthorized program inside it.

A

Trojan horse

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86
Q

A _____ is a code fragment (not an independent program) that reproduces by attaching to another program.

A

virus

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87
Q

A _______ is a mechanism for releasing a system attack of some kind, which is triggered when a particular condition (for example, a certain date or system operation) occurs.

A

logic bomb

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88
Q

A device used to connect dissimilar networks is a

A

gateway. Often implemented via software, a gateway translates between two or more different protocol families and makes connections between dissimilar networks possible.

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89
Q

A _____ connects two or more network segments, such that the segments maintain their separate logical identities.

A

router

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90
Q

A _____ joins network segments so that they appear to be one physical segment.

A

bridge

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91
Q

An organization is changing to a quality assurance program that incorporates quality throughout the process. This is very different from its years of dependence on quality control at the end of the process. This type of change is a

A

cultural change.

A cultural change involves a change in attitudes and mindset.

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92
Q

Both users and management approve the initial proposal, design specifications, conversion plan, and testing plan of an information system. This is an example of

A

Implementation controls.
Implementation controls occur in the systems development process at various points to ensure that implementation is properly controlled and managed.

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93
Q

Globalization assists in achieving economies of scale, is a ____ benefit.

A

cost.
Cost benefits are obtained from economies of scale as a firm expands its operations. Average costs of output decline because of standardization of products or processes, and increased bargaining power versus suppliers of raw materials, components, and services. Moreover, economies of scale may arise from centralized production or from marketing, logistical, or purchasing factors.

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94
Q

Decentralization results in greater speed in making operating decisions because they are made by lower-level managers instead of being referred to top management. The quality of operating decisions should also be enhanced, assuming proper training of managers, because…

A

those closest to the problems should be the most knowledgeable about them.

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95
Q

An expert system is a…

A

knowledge-intensive computer program that captures the expertise of a human in limited domains of knowledge.

96
Q

A neural network is software that attempts to…

A

emulate the processing patterns of the biological brain.

97
Q

Intelligent agents are software programs that use a built-in or learned knowledge base to…

A

carry out specific, repetitive, and predictable tasks for an individual user, business process, or software application. On the Internet, an intelligent agent is generally a program that gathers information or performs some other service without the user’s immediate presence and on some regular schedule.

98
Q

Fuzzy logic is rule-based artificial intelligence that tolerates _____ by using non-specific terms called membership functions to solve problems.

A

imprecision

99
Q

In situations where the organization does not have formal risk management processes, the chief audit executive should…

A

formally discuss with management and the board their obligations to understand, manage, and monitor risks within the organization and the need to satisfy themselves that there are processes operating within the organization, even if informal, that provide the appropriate level of visibility into the key risks and how they are being managed and monitored (PA 2120-1, para. 3).

100
Q

EUC involves user-created or user-acquired systems that are maintained and operated outside of traditional information systems controls. In this environment, an individual user is ordinarily responsible for…

A

the physical security of the equipment (s)he uses.

101
Q

Governance practices may use various legal forms, structures, strategies, and procedures. They ensure that the organization:

A

(1) complies with society’s legal and regulatory rules; (2) satisfies the generally accepted business norms, ethical principles, and social expectations of society; (3) provides overall benefit to society and enhances the interests of the specific stakeholders in both the long- and short-term; and (4) reports fully and truthfully to its stakeholders, including the public, to ensure accountability for its decisions, actions, and performances. But earning a profit is not a goal of corporate governance.

102
Q

Successful electronic data interchange (EDI) implementation begins with…

A

Mapping the work processes and flows that support the organization’s goals.

103
Q

The three major factors favoring globalization are:

A

Political, technological, and social

Globalization is driven by the digital revolution that facilitates international commerce by providing capabilities that did not exist a relatively few years ago. It is also driven by such political events as the fall of the Soviet Union, the growth of China as an economic power, the emergence of other economic powers (e.g., India and Brazil), the expansion of the European Union, and the creation of other regional free trade zones. These technological and political factors are intertwined with social changes, for example, greater concern for the rights of women and minorities; the advance of multilingualism; and the convergence of tastes in fashion, music, and certain other cultural factors. Accordingly, these factors favor globalization by reducing trade barriers, reducing cost of coordination, increasing economies of scale, and encouraging standardization and global branding.

104
Q

A Chief Risk Officer (CRO) is a member of management assigned primary responsibility for enterprise risk management processes. The CRO is most effective when …

A

supported by a specific team with the necessary expertise and experience related to organization-wide risk.

105
Q

ISO 26000 provides guidance on how businesses and organizations can operate in a…

A

socially responsible way, which means acting in an ethical and transparent way that contributes to the health and welfare of society.

106
Q

What act develops safety standards and attempts to avoid injuries and promote job safety for employees?

A

The Occupational Safety and Health Act of 1970

107
Q

ISO 14000 is a set of criteria established by the …

A

International Organization for Standardization for an environmental management system to which the organization can be certified.

108
Q

What is a critical success factor in data mining a large data store?

A

Pattern recognition. Data mining allows a user to discover hidden relationships, such as associations, sequences of events, classifications (descriptions of the groups to which the item belongs), or clusters (new groupings previously not known). Typical applications of data mining are identification of potential customers and purchasing power.

109
Q

Memo posting is an intermediate stage between…

A

batch processing and real-time processing. It is used by banks and other entities to post real-time entries to a temporary memo file and permanently updates the balance at the end of the day. Memo posting allows changes to be viewed immediately.

110
Q

Value-added networks (VANs) are private networks that provide their customers with reliable, high-speed, secure transmission of data. To compete with the Internet, these third-party networks add value by providing their customers with…

A

error detection and correction services, electronic mailbox facilities for EDI purposes, EDI translation, and security for email and data transmissions.

111
Q

Senior management is responsible for…

A

risk assessment, including identification of risks and consideration of their significance, the likelihood of their occurrence, and how they should be managed. Senior management is also responsible for establishing organizational policies regarding computer security and implementing a compliance structure. Thus, senior management should assess the risks to the integrity, confidentiality, and availability of information systems data and resources.

112
Q

ISO 31000 defines a risk management framework as a…

A

“set of components that provide the foundations and organizational arrangements for designing, implementing, monitoring, reviewing and continually improving risk management throughout the organization”

113
Q

Positive assurance provides…

A

the highest level of assurance and normally also requires the most evidence to support the opinion. Such an opinion implies not only, for example, whether controls/risk mitigation processes are adequate and effective, but also that sufficient evidence was gathered to be reasonably certain that evidence to the contrary, if it exists, would have been identified.

114
Q

When rendering negative assurance, the

auditor, for example, states that based on the work done, nothing…

A

came to the auditor’s attention. By rendering such an opinion, the auditor takes no responsibility for the sufficiency of the audit scope and procedures to find all significant concerns or issues. Such an opinion is generally considered less valuable than positive assurance.

115
Q

3 dimensions of COSO ERM matrix:

A
  • Objectives
  • Entity
  • Components
116
Q

Risk management should provide _______ hat entity objectives are be achieved.

A

Reasonable assurance

117
Q

The objectives of Organizational Development (OD) are to…

A

(1) deepen the sense of organizational purpose and values and align individuals with them; (2) promote interpersonal trust, communication, cooperation, and support; (3) encourage a problem-solving approach; (4) develop a satisfying work experience; (5) supplement formal authority with authority based on expertise; (6) increase personal responsibility; and (7) encourage willingness to change.

118
Q

According to Edwin Locke’s goal-setting theory, _______ , ______ goals to which the employee is committed provide the best motivation tool.

A

specific, difficult

Performance improves when goals are specific rather than general, difficult rather than easy, and participative (self-set) rather than imposed by others. Feedback, especially self-generated feedback, also improves performance compared with lack of feedback. Commitment to goals, that is, a determination not to reduce or abandon them, and self-efficacy, that is, a belief in one’s ability to accomplish the task, are additional qualities that result in better performance.

119
Q

A regression equation estimates the…

A

Dependent variables.

Regression analysis is used to find an equation for the linear relationship among variables. The behavior of the dependent variable is explained in terms of one or more independent variables. Regression analysis is often used to estimate a dependent variable (such as cost) given a known independent variable (such as production).

120
Q

A Markov chain is a series of events in which the probability of an event depends on the…

A

immediately preceding event. An example is the game of blackjack in which the probability of certain cards being dealt is dependent upon what cards have already been dealt. In the analysis of bad debts, preceding events, such as collections, credit policy changes, and writeoffs, affect the probabilities of future losses.

121
Q

Private-key, or symmetric, encryption is the less secure of the two encryption methods because…

A

only one key is used. This single key must be revealed to both the sender and recipient.

122
Q

What are the COBIT 5 enablers? (7)

A
  • principles, policies and frameworks
  • processes
  • organizational structures
  • culture, ethics and behavior
  • information services, infrastructure and applications
  • people, skills and competencies
123
Q

What approach to providing assurance on the risk management process is based on the principle that effective risk management processes develop as value is added at each stage of maturation?

A

The maturity model approach.
The maturity model approach is based on the principle that effective risk management processes develop as value is added at each stage of maturation. Accordingly, this approach determines where risk management is on the maturity curve and whether it (1) is progressing as expected, (2) adds value, and (3) meets organizational needs.

124
Q

The COSO document, Enterprise Risk Management – Integrated Framework, defines enterprise risk management (ERM) as…

A

“a process, effected by an entity’s board of directors, management, and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.” The emphasis is on (1) the objectives of a specific entity and (2) establishing a means for evaluating the effectiveness of ERM.

125
Q

Perf. Std. 2110 states, “The internal audit activity must assess and make appropriate recommendations for improving the governance process in its accomplishment of the following objectives:

A
  • Promoting appropriate ethics and values within the organization;
  • Ensuring effective organizational performance management and accountability;
  • Communicating risk and control information to appropriate areas of the organization; and
  • Coordinating the activities of and communicating information among the board, external and internal auditors and management.”
126
Q

In an assurance engagement, “The internal audit activity must evaluate the design, implementation, and effectiveness of the organization’s…

A

ethics-related objectives, programs, and activities” (Impl. Std. 2110.A1).

127
Q

The CEO and CFO must include a statement in the annual report to the effect that the system of internal control has been assessed by…

A

an independent public accounting firm that is registered with the PCAOB.

128
Q

_______, not oversight, determines overall objectives.

A

Strategic direction

129
Q

Concurrency controls manage situations in which…

A

two or more users attempt to access a file or database simultaneously. As such, the purpose of concurrency controls is to protect data integrity.

130
Q

COBIT 4.1 is targeted at three distinct audiences:

A

management, users, and auditors.

131
Q

A cold site backup facility is a shell facility where the user can quickly install computer equipment and resume operations in the event of a disaster. The facility has all of the needed assets in place except…

A

the needed computer equipment and is vendor-dependent for timely delivery of equipment. Accordingly, an advantage of using a third-party cold site is the elimination of the need for additional equipment.

132
Q

What is the role of the systems analyst in an IT environment?

A

Designing systems, preparing specifications for programmers, and serving as intermediary between users and programmers.

133
Q

Spoofing is…

A

identity misrepresentation in cyberspace, for example, by using a false website to obtain information about visitors.

134
Q

An edit (field) check is an application input control that

A

prevents invalid characters from being accepted. Some data elements can only contain certain characters, and any transaction that attempts to use an invalid character is rejected.

135
Q

Net domestic product is the market value of

A

all final goods and services produced within the boundaries of a country within 1 year minus the capital consumption allowance.

136
Q

Under the income approach, gross domestic product (GDP) is measured as

A

Depreciation charges and indirect business taxes + Wages + Rents + Interest + Profits adjusted for net income earned abroad.

GDP is the total value of goods and services produced within the boundaries of a country. It may be measured using an expenditures approach or an income approach. Under the income approach, GDP equals all income derived from the production of the year’s output, with an adjustment for net income earned abroad (a positive or negative amount in theory). Two types of nonincome charges or allocations must be added to incomes (wages, rents, interest, and profits). Depreciation reflects the consumption of fixed capital during the period. It is the part of the year’s receipts that must be allocated to replace the machinery, plant, etc., used up in the production of GDP. Indirect business taxes, such as sales, excise, and property taxes, are treated by businesses as a cost of production and form part of the total price of goods and services. Thus, they are not paid as wages, rents, interest, and profits. Accordingly, GDP may be measured as the sum of consumption of fixed capital, indirect business taxes, wages, rents, interest, and profits (proprietors’ income, corporate taxes, dividends, and undistributed corporate profits), with an adjustment for net income earned abroad.

137
Q

Three strategies to address price escalation.

A

They include setting a standard price globally, setting a market-based price in each market, and setting a cost-based priced in each market.

138
Q

In theory of constraints (TOC) analysis, the constraint (bottleneck) operation is the…

A

slowest part of the process. It can usually be identified as the one where work-in-process backs up the most. Of this manufacturer’s two operations, the one that requires the most total time is assembly.

139
Q

A basic principle of TOC analysis is that short-term profit maximization requires…

A

maximizing the contribution margin through the constraint, called the throughput margin or throughput contribution.

140
Q

The objective of ISO 9000 standards is to ensure…

A

consistent quality of the process even if the product quality is poor. The market determines the quality of the product. Compliance is voluntary, but many entities are adopting the standards for competitive reasons or because of concern that the standards will be required in foreign markets. The ISO rules specify that standards are periodically revised every 5 years to reflect technical and market developments. ISO 9000 standards are generic and only ensure consistent quality in the product being produced.

141
Q

A markup is the difference between the cost (C) of a product and its selling price (P). The following assumes a 25% markup on price:
P – C = 25% P
C = 0.75% P
Markup on Cost = ?

A

(Profit ÷ Cost) = (25% P ÷ 75% P) = 33 1/3%

The markup on cost is 33 1/3%.

142
Q

The basic EOQ formula minimizes the total of inventory carrying and ordering costs. It equals the…

A

square root of a fraction consisting of (1) a numerator equal to the product of twice the unit periodic demand and the variable cost per order and (2) a denominator equal to the unit periodic carrying cost.

143
Q

The purpose of the EOQ model is to minimize the sum of…

A

inventory order costs (or production setup) and holding (carrying) costs. The EOQ equals the square root of twice the annual demand multiplied by the variable cost per order, divided by the unit periodic holding cost.

144
Q

MBO involves mutual setting of objectives by the superior and the subordinate as a basis for performance evaluation. Based on the Theory Y philosophy that employees want to work hard if they know what is expected, MBO requires…

A

(1) senior management participation and commitment to the program, (2) integration of the objectives for all subunits into a compatible system directed toward accomplishment of organizational objectives, (3) provision for regular reporting of performance, and (4) free and honest communication between superior and subordinates. Subordinates must make careful assessments of their abilities and their interests, and managers must coach subordinates rather than dictate their proper objectives. Both sides must maintain flexibility to accommodate unforeseen changes, and the review and analysis of results before setting the next round of objectives is a vital part of the process.

145
Q

TQM advocates replacement of the traditional hierarchal structure with…

A

teams of people from different specialties. This change follows from TQM’s emphasis on empowering employees and teamwork. Employees should (1) have proper training, necessary information, and the best tools; (2) be fully engaged in the decision process; and (3) receive fair compensation. If such empowered employees are assembled in teams of individuals with the required skills, TQM theorists believe they will be more effective than people performing their tasks separately in a rigid structure.

146
Q

A _____ style of leadership provides a high degree of task orientation and a high degree of relationship orientation. This type of leader explains decisions and provides opportunities for clarification. Thus, upward and downward two-way communication is active. This approach is more democratic than authoritarian.

A

selling

147
Q

A _____ leadership style (high task and low relationship) provides specific instructions and closely supervises performance.

A

telling

148
Q

The ___________ is a forecasting or decision-making approach that attempts to avoid groupthink (the tendency of individuals to conform to what they perceive to be the consensus). The technique allows only written, anonymous communication among group members. Each member takes a position on the problem at hand. A summary of these positions is communicated to each member. The process is repeated for several iterations as the members move toward a consensus. Thus, the Delphi technique is a qualitative, not quantitative, technique.

A

Delphi technique

149
Q

According to Fred E. Fiedler’s contingency theory, people become leaders not only because of personality attributes but also because of…

A

various situational factors and the interaction between the leaders and the situation. Thus, the right person at the right time may rise to a position of leadership if his or her personality and the needs of the situation complement each other.

150
Q

Monte Carlo simulation is often used in computer modeling to…

A

generate the individual values for a random variable. The performance of a quantitative model under uncertainty may be investigated by randomly selecting values for each variable in the model (based on the probability distribution of each variable) and then calculating the value of the solution. If this process is performed many times, the distribution of results from the model will be obtained.

151
Q

Taylor, Fayol, and other traditionalists advocated the creation of authoritarian organizations. One of the criteria for success was the ability to delegate…

A

authority but not responsibility. Responsibility should always remain with the person who made the decision.

152
Q

TQM emphasizes satisfaction of…

A

customers, both internal and external. TQM considers the supplier’s relationship with the customer, identifies customer needs, and recognizes that everyone in a process is at some time a customer or supplier of someone else, either inside or outside of the organization. Thus, TQM begins with external customer requirements, identifies internal customer-supplier relationships and requirements, and establishes requirements for external suppliers.

153
Q

To convert from the cash basis (cash payments) to the accrual basis (cost of goods sold), an increase in accounts payable must be added to

A

cash payments for goods to determine net purchases. Net purchases is then adjusted for the change in inventory to determine cost of goods sold.

154
Q

Using absorption costing, fixed manufacturing overhead is included in inventoriable (product) costs. Fixed manufacturing overhead costs are

A

indirect costs because they cannot be directly traced to specific units produced.

155
Q

ending inventory equals

A

Beginning inventory, plus purchases (or other inventory additions), minus cost of goods sold,

156
Q

Target unit volume =

A

(fixed costs + target operating income)/UCM

157
Q

The gross margin can be calculated as follows:

A 
\+ Sales 
- Manufacturing costs
- Direct materials
- Direct labor
- Variable overhead
- Fixed overhead
= Gross margin
158
Q

unit variable cost =

A

= unit sales price - unit contribution margin

159
Q

A contingent asset is a possible asset arising from past events and the existence of which will be confirmed only by uncertain future events not wholly within the entity’s control. An example is a potential recovery on a legal claim with an uncertain outcome. A contingent asset is…

A

not recognized but should be disclosed if an inflow of economic benefits is probable. Disclosures include a description of the contingent asset and an estimate of its financial effects. A contingent asset is not recognized because the income may not be realized. However, if realization is virtually certain, the asset is not contingent and may be recognized.

160
Q

The communication process has six elements:

A

the sender, the symbols in which the message is encoded, the medium through which the message flows, the decoding of the message, the receiver, and feedback. Because the effectiveness of communication can be known only by its impact on the receiver and the perceived change in the receiver’s behavior, the received message must govern the definition. The sent message may be garbled in encoding, in transmission, or in the receiver’s decoding.

161
Q

Media richness is lean (low) when the medium lacks

A

visual or audible cues. A memorandum provides almost no cues and warrants little feedback. Face-to-face meetings have high media richness. Personal phone calls have a medium level of media richness, allowing for immediate feedback and recognition of tone.

162
Q

The times-interest-earned ratio for equals…

A

profit before interest and tax divided by interest expense. Profit before interest and tax =profit + interest + tax expense.

163
Q

If an investor can exercise significant influence over an investee, the investment should be accounted for by the…

A

equity method. When a corporation owns 20% or more of the voting power of the investee, the ability to exercise significant influence is presumed.

164
Q

Net working capital is defined by accountants as the difference between…

A

current assets and current liabilities. Working capital is a measure of liquidity.

165
Q

Under the effective-interest method, interest expense for each period equals the effective interest rate times the carrying amount of the bond issue. As the discount is amortized, the carrying value…

A

rises and interest expense increases.

166
Q

An example of secured short-term financing is

A

A warehouse receipt.
A warehouse receipt is one of the two major types of documents of title; the other is the bills of lading. A warehouse receipt is issued by a person engaged in the business of storing goods for hire. Security for short-term inventory financing can be arranged if the debtor places its inventory under the control of the lender or its agent (e.g., a public warehouse), and the lender holds the warehouse receipts.

167
Q

The return on equity (ROE) equals=

A

profit divided by equity (common shares + retained earnings).

168
Q

Times-interest-earned=

A

(Sales-COGS-Admin Exp-Deprec)/Interest Exp

169
Q

Participating preferred shareholders are entitled to …

A

share in the earnings of the entity. They participate in earnings distributions under set terms and conditions. Hence, after the stated preferred dividend is paid, and common shareholders receive an equal dividend, any remaining dividends are allocated to all shareholders in proportion to the par values of their shares.

170
Q

An important concept in Victor Vroom’s expectancy theory is…

A

Motivation = Valence × Expectancy.

Victor Vroom’s expectancy theory holds that the force with which an individual is motivated is a function of the valence of a motivator (whether it has a positive or negative value to the individual) and the expectancy, which is that individual’s estimation of the probability that a particular action will lead to a desired outcome. Thus, motivation equals the valence times the expectancy.

171
Q

To index a progressive tax system to inflation, the government must

A

Adjust deductions, exemptions, and tax brackets.
If tax brackets are not adjusted for inflation, increases in nominal but not real income may push taxpayers into tax brackets with higher (progressive) rates. Additionally, deductions and exemptions must be indexed so that the real incidence of taxation is not increased by inflation. Increases in nominal but not real income will result in higher real taxable income if deductions and exemptions have not been adjusted for inflation.

172
Q

The two main variables that contribute to increases in real gross domestic product (GDP) derived from labor inputs are labor productivity and…

A

Total Worker Hours
.
Real GDP increases when resource inputs and their productivity increase. Thus, to the extent that real GDP depends on labor inputs, real GDP equals total worker hours (labor input) times labor productivity (real output per worker per hour).

173
Q

The process elements approach checks whether…

A

each element of the risk management process is in place.

174
Q

7 elements of Process Element Approach:

A
  1. Communication
  2. Setting the context
  3. Risk identification
  4. Risk analysis
  5. Risk evaluation
  6. Risk treatment
  7. Monitor and review
175
Q

The Key Principles approach is based on the concept that any risk management process must…

A

satisfy a minimum set of principles or characteristics to be fully effective. An audit of these principles would assess to what extent they are true for the risk management process in an organization.
Risk management:
-creates and protects value
-is an integral part of organizational process
-is part of decision-making
-explicitly addresses uncertainty
-is systematic, structured, and timely
-is based on the best available information
-is tailored
-takes human and cultural factors into account
-is transparent and inclusive
-is dynamic, iterative and responsive to change
-facilitates continual improvement and enhancement of the organization

176
Q

The Maturity Model approach builds on the assertion that the quality of an organization’s risk management process should improve with…

A

time. Effective risk management processes are developed over time, with additional value being provided at each step in the maturation process. This approach provides an assessment of where the organization’s risk management process lies on the maturity curve, so that the board and management can assess whether it meets the current needs of the organization and is maturing as expected.

177
Q

COBIT describes controls in three areas:

A

process controls, business controls, and IT general and application controls.

178
Q

Business impact analysis identifies processes integral to functioning in a disaster and determines how soon they should be recovered. Thus, the entity…

A

(1) identifies critical processes, (2) defines the recovery time objective and the recovery point objective for processes and resources, and (3) identifies the other parties and physical resources needed for recovery. The recovery time objective is the duration of time and service level within which a process must be restored. The recovery point objective is the amount of data the entity can afford to lose.

179
Q

Which one of the following network configurations is distinguished by the possibility of spreading the cost of ownership among multiple organizations?

A

Wide area network.
Wide area networks consist of a conglomerate of local area networks (LANs) over widely separated locations. The key aspect here is that a WAN can be either publicly or privately owned.

180
Q

GATG 1 recommends that each organization use the applicable components of existing frameworks to…

A

(1) categorize and assess IT controls and (2) provide and document its own IT control framework. It should achieve objectives related to (1) compliance with legal requirements, (2) consistency with organizational objectives, and (3) obtaining reliable evidence that control activities comply with governance policies and are consistent with the organization’s risk appetite.

181
Q

Frederick Herzberg’s two-factor theory of human behavior postulates that there are

A

two classes of factors in the job situation. Maintenance of hygiene factors (dissatisfiers) are those the presence of which will not especially motivate people but the absence of which will diminish performance. These factors are extrinsic to the work itself. They include supervision, working conditions, interpersonal relations, salary, and status. Motivational factors (satisfiers) are those the absence of which will not diminish performance but the addition or availability of which will motivate employees. Intrinsic to the work itself, these include achievement, recognition, challenging work, advancement, growth in the job, and responsibility.

182
Q

Absorption costing treats fixed manufacturing overhead as a _______

A

product cost.

183
Q

Variable costing treats fixed manufacturing overhead as a _________

A

period cost.

184
Q

Reward power is when…

A

the leader controls resources, based on a person’s ability to grant benefits.

185
Q

Coercive power is when…

A

the leader may punish the subordinate, based on the fear or threat of punishment.

186
Q

Legitimate power is when…

A

the leader has the right to lead

187
Q

Referent power is when…

A

the leader has fame, charisma, personal qualities, employees’ identification with the leader, etc.

188
Q

Expert power is when…

A

the leader has specialized ability or knowledge, based on the skills possessed by a person.

189
Q

What method of estimating the ending balance of the materials inventory account will result in the highest profit, assuming all other variables remain constant?

A

First-in, first-out (FIFO).

190
Q

Inventory turnover =

A

cost of goods sold /average inventory balance

average inventory balance= (Beginnings+Endings)/2

191
Q

In the short run, management decisions are made in reference to incremental costs without regard to

A

fixed overhead costs because fixed overhead cannot be changed in the short run. Thus, the emphasis in the short run should be on controllable costs. For example, service department costs allocated as a part of overhead may not be controllable in the short run.

192
Q

The credit instrument known as a banker’s acceptance is…

A

a time draft payable on a specified date and guaranteed by the bank.

A time draft (trade acceptance) is a form of commercial draft because it is drawn by a seller on the buyer; that is, it calls for the buyer to pay a specified amount. The draft and the shipping documents related to the goods are then sent to the buyer’s bank, which transmits the draft to the buyer. The buyer accepts the draft by signing it. A time draft, however, is similar to a promissory note because it is payable at a specific time in the future rather than upon acceptance by the buyer, which is characteristic of a sight draft. If a seller is reluctant to ship goods because of concern about the buyer’s ability to pay a time draft, the seller’s bank may, for a fee, guarantee payment. This banker’s acceptance is an assumption of the obligation to pay at the due date.

193
Q

Foreign currency transaction gains or losses are measured and recorded at …

A

the date of the financial statements and the date the transactions are settled.

194
Q

Conversion costs consist of …

A

direct labor and manufacturing overhead. These are the costs of converting raw materials into a finished product.

195
Q

What is an advantage of net present value modeling?

A

It accounts for compounding of returns.

Net present value modeling’s primary strength is its incorporation of the time value of money.

196
Q

The acid-test (quick) ratio equals

A

current assets - inventories / by current liabilities

197
Q

Under a defined contribution pension plan, a(n) ____ is reported on the statement of financial position only if the amount the organization has contributed to the pension trust is _____ the amount required.

A

asset, greater than

Under a defined contribution plan, the employer recognizes an expense and a liability for the contribution payable in exchange for an employee’s services performed during the period. The amount is determined after subtracting any contribution already made. If the contribution made exceeds the amount due, the excess is treated as a prepaid expense (an asset).

198
Q

External failure costs arise when problems occur after delivery. They occur because products or services are nonconforming or otherwise do not satisfy customers. External failure costs in service enterprises are even more important than in manufacturing environments. Faulty goods sometimes may be reworked or replaced to a customer’s satisfaction, but poor service tends to result in…

A

a loss of customers.

199
Q

A stochastic model is probabilistic. __________ quantify the likelihood of a future event based on the current state of the process.

A

Markov processes

i.e. A company in the process of analyzing inventory safety stock levels is having difficulty because demand varies widely from one week to the next. However, it has been discovered that demand occurs according to a probability distribution. Which of the following is a stochastic model that the company could use in this situation?

200
Q

The Monte Carlo simulation is often used in computer modeling to…

A

generate the individual values for a random variable. The performance of a quantitative model under uncertainty may be investigated by randomly selecting values for each variable in the model (based on the probability distribution of each variable) and then calculating the value of the solution. Because Monte Carlo processes use the laws of probability to generate values for random variables, simulations using them are probabilistic, not deterministic.

201
Q

______ awards are normally nonrecurring. They show appreciation for the role of the employee. Other similar examples are gift coupons, stock options, early time off with pay, or dinner and theater tickets.

A

Token

202
Q

In __________ negotiating, the two sides make multiple deals to add value to the process. Clarifying interests, identifying options, designing alternative deal packages, selecting a deal, and perfecting a deal are all steps in added-value negotiating.

A

added-value

203
Q

The steps in a Customer Value Analysis (CVA) are:

A
  • Determine what customers value
  • Assign quantitative amounts to the elements of customer value and have customers rank their relative significance
  • Evaluate how well the firm and its competitors perform relative to each element
  • Focus on performance with respect to each element, compared with an important competitor in a given market segment
  • Repeat the foregoing steps as circumstances change
204
Q

Productivity is the ratio of…

A

real output to a unit of input. Increased productivity is the goal of every organization because its effect is to improve the ultimate measures of performance, such as the profits of a business. For a retail store, a critical output of interest is revenue per square foot. The floor space in the store is a limited resource whose productivity should be analyzed.

205
Q

An internal entrant must cope with structural barriers and retaliation by existing firms. Costs incurred by the internal entrant include:

A
  • initial investments to overcome entry barriers (facilities, inventory, branding, technology, distribution channels, sources of materials, etc.)
  • operating losses in the start-up phase, and the effects of retaliation (e.g., higher marketing costs, capacity expansion, or lower prices)
  • the price increases for factors of production that may result because of the new entry
  • the capacity added to the industry by the entrant may affect the equilibrium level of supply and demand. The result may be additional competitive costs as firms with excess capacity cut prices.
206
Q

The database administrator is the individual with overall responsibility for developing and maintaining the database. (S)he uses data definition language to…

A

define, create, redefine, and restructure the database. The database administrator also establishes controls over the integrity of the database.

207
Q

The life cycle approach is best employed when systems are…

A

large and highly structured, users understand the tasks to be performed by the information system, and the developers have directly applicable experience in designing similar systems. In the life cycle process, each stage of development is highly structured, and requirements are clearly defined. However, when the task is unstructured, prototyping may be the better approach.

208
Q

What element of business continuity management involves identification of threats and the determination of their impact?

A

Risk assessment and mitigation.
Risk assessment and mitigation identifies risks from such threats (disruptive events) as (1) natural disasters, (2) IT events (e.g., cyberterrorism, viruses, and denial-of-service attack), (3) supplier failures, (4) industrial events (e.g., fires and toxic waste spills), (5) labor disruptions, and (6) human failures (e.g., fraud, other criminal acts, and errors). BCM then assesses their probability and impact and develops mitigation strategies.

209
Q

Which “families” of controls are described in The IIA’s Global Technology Audit Guide (GTAG) 1, titled Information Technology Controls?

A
  • Governance, management, and technical controls.
  • Preventive, detective, and corrective controls.
  • IT general and application controls.
210
Q

The importance and durability of the COSO Framework was reinforced when the U.S. Securities and Exchange Commission acknowledged it as…

A

an appropriate model for designing internal controls under the requirements of the Sarbanes-Oxley Act of 2002.

211
Q

The ___________ defines the database structure and content, especially the schema (the description of the entire database) and subschema (logical views of the database).

A

data definition language

212
Q

The _____ specifies characteristics such as the names of the data elements contained in the database and their relationship to each other.

A

schema

213
Q

The _______ defines the logical data views required for applications, which limits the data elements and functions available to each application.

A

subschema

214
Q

Property taxes tend to be…

A

regressive. Taxpayers with lower incomes must pay a higher portion of their incomes for necessities, such as housing.

215
Q

Price escalation is caused by an accumulation of additional costs, for example:

A

(1) changes in currency exchange rates; (2) transportation expenses; (3) profits earned by importers, wholesalers, and retailers; and (4) import duties.

216
Q

A global strategy regards the world as one market. The product is essentially the same in all countries. ______ of the production process is relatively strong. Faster product development and lower production cost are typical.

A

Central control

217
Q

An important requirement of the ISO 9000 standards is an…

A

internal audit system. Internal audits ensure that the entity is complying with the documented QMS procedures and ISO 9000 standards.

218
Q

HTML is the most popular language for authoring web pages. It is hardware and software ______, which means that it can be read by several different applications and on many different kinds of computer operating systems. HTML uses tags to mark information for proper display on web pages.

A

independent

219
Q

Voice over Internet protocol (VoIP) uses…

A

packet switching over the Internet rather than circuit switching over telephone lines. If the network is not configured optimally, the technology could slow the network.

220
Q

________ are specific production factors that include skilled labor, infrastructure, etc. Firms in each country naturally select those industries that give them an advantage due to their unique factor conditions.

A

Factor conditions

221
Q

________ is a free trade agreement of South American nations, which includes Argentina, Brazil, Uruguay, and Paraguay, with Chile and Bolivia as associate members. However, these nations have no common currency.

A

Mercosul

222
Q

A _____ strategy seeks the benefits of localization (flexibility, proximity, and adaptability) and global integration. Successful telecommunications firms are examples of balancing these elements. Local responsiveness is indicated when local product tastes and preferences, regulations, and barriers are significant. Global integration is indicated when demand is homogeneous and economies of productive scale are large.

A

glocal

223
Q

Under the “output” approach, gross domestic product (GDP) is measured as

A

Consumption expenditures + Investment + Government purchases + Expenditures by foreigners.

224
Q

The ______ process is of crucial interest to nations that wish to encourage local firms to grow and to operate globally. It involves the following steps: (1) lack of regular exports; (2) export via independent agents with a few markets, with later expansion to more countries; (3) creation of sales subsidiaries in larger markets; and (4) establishment of plants in foreign countries.

A

internationalization

225
Q

_______ involves the assumption of risk in the hope of gaining from price movements.

A

Speculation

226
Q

______ is the process of using offsetting commitments to minimize or avoid the impact of adverse price movements.

A

Hedging

227
Q

Overstating ending inventory understates

A

cost of sales

228
Q

Profit margin=

A

profit(net income)/sales

229
Q

Effective rate =

A

nominal rate/ (1 - (nominal rate + compensating balance %))

230
Q

current ratio=

A

current assets ÷ current liabilities

231
Q

debt ratio=

A

total debt ÷ total assets

232
Q

Net present value is defined as the difference between…

A

(1) the present value of the estimated net cash inflows provided by the investment and (2) the present value of the estimated net cash outflows. If the net present value is positive, the investment should be undertaken.

233
Q

net working capital=

A

current assets – current liabilities

234
Q

acid-test ratio=

A

quick assets ÷ current liabilities

235
Q

XML (eXtensible Markup Language) is useful for…

A

putting structured data into a text file. It can be used to extract and tag structured information from a database for transmission and subsequent use in other applications, e.g., display on the Internet or importation into a spreadsheet.

236
Q

Steps in a formal systems development life cycle are:

A
  • project definition
  • feasibility analysis
  • systems analysis
  • systems design
  • program development
  • system testing
  • implementation
  • maintenance

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