- (Exam Topic 2)
Which of me following represents an inventory costing technique that can be manipulated by management to boost net income by selling units purchased at a low cost?

1. A. First-in first-out method (FIFO)
2. B. Last-in first-out method (LIFO)
3. C. Specific identification method
4. D. Average-cost method

Correct Answer: A

- (Exam Topic 1)
An internal auditor performed a review of IT outsourcing and found that the service provider was failing to meet the terms of the service level agreement. Which of the following approaches is most appropriate to address this concern?

1. A. The organization should review the skill requirements and ensure that the service provider is maintaining sufficient expertise and retaining skilled resources.
2. B. The organization should proactively monitor the performance of the service provider, escalate concerns, and use penalty clauses in the contract where necessary.
3. C. The organization should ensure that there is a clear management communication strategy and path for evaluating and reporting on all outsourced services concerns.
4. D. The organization should work with the service provider to review the current agreement and expectations relating to objectives, processes, and overall performance.

Correct Answer: B

- (Exam Topic 1)
Which of the following conditions could lead an organization to enter into a new business through internal development rather than through acquisition?

1. A. It is expected that there will be slow retaliation from incumbents.
2. B. The acquiring organization has information that the selling organization is weak.
3. C. The number of bidders to acquire the organization for sale is low.
4. D. The condition of the economy is poor.

Correct Answer: A

- (Exam Topic 1)
A small furniture-manufacturing firm with 100 employees is located in a two-story building and does not plan to expand. The furniture manufactured is not special-ordered or custom-made. The most likely structure for this organization would be:

1. A. Functional departmentalization.
2. B. Product departmentalization.
3. C. Matrix organization.
4. D. Divisional organization.

Correct Answer: A

- (Exam Topic 1)
A capital investment project will have a higher net present value, everything else being equal, if it has:

1. A. A higher initial investment level.
2. B. A higher discount rate.
3. C. Cash inflows that are larger in the later years of the life of the project.
4. D. Cash inflows that are larger in the earlier years of the life of the project.

Correct Answer: D