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The market price is the most appropriate transfer price to be charged by one department to another in the same organization for a service provided when:

A.

There is an external market for that service.

B.

The selling department operates at 50 percent of its capacity.

C.

The purchasing department has more negotiating power than the selling department.

D.

There is no external market for that service.

An organization is considering mirroring the customer data for one regional center at another center. A disadvantage of such an arrangement would be:

A.

Lack of awareness of the state of processing.

B.

Increased cost and complexity of network traffic.

C.

Interference of the mirrored data with the original source data.

D.

Confusion about where customer data are stored.

The internal audit activity completed an initial risk analysis of the organization's data storage center and found several areas of concern. Which of the following is the most appropriate next step?

A.

Risk response.

B.

Risk identification.

C.

Identification of context.

D.

Risk assessment.

Capacity overbuilding is most likely to occur when management is focused on which of the following?

A.

Marketing.

B.

Finance.

C.

Production.

D.

Diversification.

When initiating international ventures, an organization should consider cultural dimensions in order to prevent misunderstandings. Which of the following does not represent a recognized cultural dimension in a work environment?

A.

Self control.

B.

Power distance.

C.

Masculinity versus femininity.

D.

Uncertainty avoidance.

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.

Which of the following is a strategy that organizations can use to stimulate innovation?

1) Source from the most advanced suppliers.

2) Establish employee programs that reward initiative.

3) Identify best practice competitors as motivators.

4) Ensure that performance targets are always achieved.

A.

1 and 3 only

B.

2 and 4 only

C.

1, 2, and 3 only

D.

1, 2, 3, and 4

An internal auditor has been asked to conduct an investigation involving allegations of independent contractor fraud. Which of the following controls would be least effective in detecting any potential fraudulent activity?

A.

Exception report identifying payment anomalies.

B.

Documented policy and procedures.

C.

Periodic account reconciliation of contractor charges.

D.

Monthly management review of all contractor activity.

Which of the following IT strategies is most effective for responding to competitive pressures created by the marketplace?

A.

Promote closer linkage between organizational strategy and information.

B.

Provide users with greater online access to information systems.

C.

Enhance the functionality of application systems.

D.

Expand the use of automated controls.

Which of the following performance measures would be appropriate for evaluating an investment center, which has responsibility for its revenues, costs, and investment base, but would not be appropriate for evaluating cost, revenue, or profit centers?

A.

A flexible budget.

B.

Variance analysis.

C.

A contribution margin income statement by segment.

D.

Residual income.