Question 1

A company has interest expense of $4 million, sales revenue of $50 million, earnings before interest and taxes of $20 million, and an income tax rate of 35%. This company has a times-interest-earned ratio of

Options :

A : 5.0

B : 0.2

C : 12.5

D : 7.5

Answer: A

Question 2

Which of the following constitutes sufficient audit evidence for verifying air travel reimbursement?

Options :

A : Either a pre-printed ticket or a boarding pass.

B : Either a printout of an electronic ticket or a boarding pass.

C : Either a pre-printed ticket or a printout of an electronic ticket.

D : Both a printout of an electronic ticket and a boarding pass.

Answer: D

Question 3

An organization automatically compares the total number of transactions processed and passed from its online order-entry system to the number of transactions received in its billing system and calculates variances. This is an example of which of the following information technology controls?

Options :

A : Logic test.

B : Check digits.

C : Data reasonableness tests.

D : Balancing control activities.

Answer: D

Question 4

According to the Standards, the organizational status of the internal audit activity

Options :

A : Must be sufficient to permit the accomplishment of its audit responsibilities.

B : Is guaranteed when the charter specifically defines its independence.

C : Requires the board-s annual approval of the audit schedules, plans, and budgets.

D : Is best when the reporting relationship is direct to the board of directors.

Answer: A

Question 5

When an internal auditor identifies multiple factors that have been linked with possible fraudulent conditions and suspects that fraud has taken place, the auditor should

Options :

A : Immediately report to the board.

B : Immediately report to senior management and the board.

C : Extend tests to determine the extent of the fraud.

D : Recommend an investigation.

Answer: D