Free IIA-CIA-Part3 Exam Braindumps (page: 4)

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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?

  1. High turnover of employees.
  2. High level of employee participation in setting budgets.
  3. High amount of bad debt write-offs.
  4. High number of suppliers.

Answer(s): C

Explanation:

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.



The management and employees of a large household goods moving company believe that it if became nationally known as adhering to total quality management and continuous improvement, one result would be an increase in the company's profits and market share.
What should the company focus onto achieve quality more economically?

  1. Appraisal costs.
  2. Prevention costs.
  3. Internal failure costs.
  4. External failure costs.

Answer(s): B

Explanation:

Prevention costs are incurred to prevent defects. Prevention is ordinarily less costly than the combined costs of appraisal, internal failure, and external failure.



The cost of scrap, rework, and tooling changes in a product quality cost system is categorized as a (n):

  1. Training cost.
  2. External failure cost.
  3. Internal failure cost.
  4. Prevention cost.

Answer(s): C

Explanation:

Internal failure costs are incurred when detection of defective products occurs before shipment. Examples of internal failure costs are scrap, rework, tooling changes, and downtime.



The four categories of costs associated with product quality costs are:

  1. External failure, internal failure, prevention, and carrying.
  2. External failure, internal failure, prevention, and appraisal.
  3. External failure, internal failure, training, and appraisal.
  4. Warranty, product liability, training, and appraisal.

Answer(s): B

Explanation:

Prevention costs are incurred to prevent defects. Appraisal costs are incurred to detect defective output during and after the production process. Internal failure costs are associated with defective output discovered before shipping. External failure costs are associated with defective output discovered after it has reached the customer.






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