An entity uses the following formula in determining its optimal level of cash.

This formula is a modification of the economic order quantity EOQ formula used for inventory management. Assume that the set of selling marketable securities is US $10 per transaction and the interest rate on marketable securities is 6% per year. The entity estimates that it will make cash payments of US $12.000 over a one-month period. What is the average cash balance rounded to the nearest dollar)?

• A.US $1,000
• B.US $2,000
• C.US $3,464
• D.US $6,928

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According to eSAC, accountability is:

• A.Usually an issue with regard to trade secrets and other intellectual property.
• B.The control attribute that identifies the source of a transaction.
• C.The restriction of access to processing and storage devices.
• D.Most often applicable to personal information about employees and customers.

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Which of the following would not be appropriate to consider in the physical design of a data center?

• A.Evaluation of potential risks from railroad lines and highways.
• B.Use of biometric access systems.
• C.Design of authorization tables for operating system access.
• D.Inclusion of an uninterruptible power supply system and surge protection.

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According to the Standards, which of the following is based on the assertion that the quality of an organization's risk management process should improve with time?

• A.Assurance.
• B.Maturity model.
• C.Process element.
• D.Key principles.

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Which of the following is true about the impact of price inflation on financial ratio analysis?

• A.Inflation has no impact on financial ratio analysis.
• B.Inflation affects financial ratio analysis for one entity over time but not comparative analysis of entities of different ages.
• C.Inflation affects financial ratio analysis for one entity over time, as well as comparative analysis of entities of different ages.
• D.Inflation affects comparative analysis of entities of different ages but not financial ratio analysis for one entity over time.

Correct Answer: C

Inflation is the diminution over time of the purchasing power of money. Because balance sheet amounts are expressed in terms of money, historical cost amounts for different
periods are measured in units representing different levels of purchasing power. Profit or loss is also distorted because of inflation's impact on depreciation expense and inventory costs. Inflation therefore impairs the comparability of financial statement items, whether for the same entity overtime or for entities of differing ages. Presented below are partial veer-end financial statement data for entities A and B.

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