Pass IIA IIA-CIA-Part3 PDF Dumps | Recently Updated 344 Questions
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NEW QUESTION # 104
Which of the following purchasing scenarios would gain the greatest benefit from implementing electronic data interchange?
- A. A variable volume sensitive to material cost.
- B. A currently inefficient purchasing process.
- C. A large volume of custom purchases.
- D. A time-sensitive just-in-time purchase environment.
Answer: D
NEW QUESTION # 105
Senior management has decided to implement the Three Lines of Defense model for risk management. Which of the following best describes senior management's duties with regard to this model?
- A. Set goals for implementation.
- B. Ensure compliance with the model.
- C. Identify management functions.
- D. Identify emerging issues.
Answer: B
NEW QUESTION # 106
The entity will pay dividends for the year of:
- A. US $21.250
- B. US $23,125
- C. US $10,625
- D. US $42,500
Answer: C
Explanation:
The entity has a dividend payout ratio of 25% of profit. Profit before taxes is US $85,000 [$500,000 sales - $250,000 CGS - $25,000 G&A expenses - $400,000 LT debt x 10% interest rate) - $600,000 fixed assets - 6 years)]. Hence, after-tax profit is US $42,500 [$85,000 x 1.0 - .5)], and the dividend payout is US $10,625 ($42,500 25%).
During the year ended December 31. an entity had US $500,000 in sales revenue and purchased US $150,000 of inventory. The cost of goods sold was US $250,000 for the year, and the entity incurred US $ 25.000 of general and administrative expenses. The January 1 opening balance sheet was as follows:
The cost of long-term debt financing is 10% per annum, payable in one installment on December 31 of each year. The entity has a 50% tax rate. The entity has a dividend payout ratio of 25%. The fixed assets were 1-year old at the start of the current year were originally estimated to have a 6-year useful life. and are being depreciated on the straightline basis.
NEW QUESTION # 107
ABC Manufacturing Company ships merchandise U s $40.000 on consignment to XYZ Stores. ABC pays US $3,000 of freight costs to a transport company, and XYZ pays US $2,000 for local advertising costs that are reimbursable from ABC. By the end of the period the three, fourths of the consigned merchandise has been sold for US $50,000 cash. XYZ notifies ABC of the sales, retains a 10% commission and the paid advertising costs and remits the cash due ABC. Select the journal entry that appropriately records the notification of sale and the receipt of cash by ABC.
- A. Cash US $43,000 Advertising expense 2,000 Commission expense 5,000 Revenue from consignment sales US $50,000
- B. Cash US $40,000 Revenue from consignment sales US $50,000
- C. Cash US $40,000 Advertising expense 2,000 Commission expense 5,000 Freight expense 3,000 Revenue from consignment sales US $50,000
- D. Cash US $40,000 Commission expense 5,000 Revenue from consignment sales US $50,000
Answer: A
Explanation:
ABC debits the cash received US $43,000 [$50,000 sales - $2,000 advertising -$50,000 $10) sales commission]. The advertising and commission expenses are debited for $2,000 and $5,000, respectively. Finally, US $50,000 of gross revenue is credited.
NEW QUESTION # 108
ABC entities, a manufacturer lesser, leased a chine to XYZ on January 1. The lease meets the criteria for a finance lease. Title to the asset will automatically pass to the lessee at the end of the lease term. Other details are as follow:
Assuming the fair value of the asset is at least equal to the present value of the minimum lease payments, the journal entry to record the inception of this lease on the laser's books at January 1 is:
- A. Option B
- B. Option A
- C. Option D
- D. Option C
Answer: C
Explanation:
For this finance lease, the manufacturer-lesser should record
1.As gross investment, the minimum lease payments because there
2.As net investment, the difference between the gross investment in the lease and unearned finance income a credit to a liability
3.As unearned finance income the difference between the gross investment gross investment discounted at the interest rate implicit in the lease)
4.As sales revenue the fair value of the asset o if lower, the present value payments computed at the interest rate implicit in the lease
5.As cost of goods sold, the cost of the leased asset Because the first payment is made at the inception of the lease. the payment structure is that of annuity due. Sales revenue is therefore equal to the US $10.000 periodic payment times the present value of an annuity due of I discounted for 10 years at 10%US $10,000 6.7590 = US $67,590). Given that cash is paid at the beginning of the year, the initial 10.000 cash debit immediately decreases the gross investment in the lease payments receivable) from US $100,000 to US $90,000. The cost of the leased asset US $55,000) must also be charged to cost of sales and credited to inventory. Finally, at the inception of the lease, unearned finance income equals the difference between the gross investment and the sales price US $100,000 ax$67,590 = US 632,410).
NEW QUESTION # 109
An organization produces two products, X and Y.
The materials used for the production of both products are limited to 500 kilograms (kg) per month. All other resources are unlimited and their costs are fixed. Individual product details are as follows:
Product X Product Y
Selling price per unit $10 $13
Materials per unit (at $1/kg) 2 kg 6 kg
Monthly demand 100 units 120 units
In order to maximize profit, how much of product Y should the organization produce each month?
- A. 60 units.
- B. 120 units.
- C. 100 units.
- D. 50 units.
Answer: D
NEW QUESTION # 110
Debtor Bank on a 10-year, 15% note in the amount of US $100,000, plus US $30,000 accrued interest. Because if financial difficulty. Debtor has been unable to make annual interest payments for the past 2 years and the n-ate is due today. Accordingly. Bank legally agreed to restructure
Debtor's debt as follows:
The US $30.000 of accrued interest was forgiven.
Debtor was given 3 more years to pay off the debt at 8% interest. Payments are to be made annually at year-end. The present value of the payments using the prevailing rate for similar instruments of an issuer with a similar credit rating is US $84.018.
At the date of the restructuring, Debtor properly records:
- A. A gain of US $30.000.
- B. No gain or loss because no extinguishments occurred.
- C. A loss of US $30.000.
- D. A gain of US $45,982.
Answer: D
Explanation:
Derecognition of a financial liability or a part) occurs only by means of extinguishment.
This condition is satisfied only when the debtor pays the creditor or is legally released from primary responsibility either by the creditor or through the legal process. An extinguishment and derecognition of the old debt and recognition of new debt occurs when the borrower and lender exchange debt instruments with substantially different terms, that is, when the respective discounted cash flows differ by at least 10%. A substantial modification of terms is also accounted for as an extinguishment. The difference between the carrying amountincluding unamortized costs) of a liabilityor part) that has been extinguished or transferred and the amount paid is included in profit or loss. This transaction qualifies as an extinguishment based on a substantial modification of terms because the discounted cash flow from the old debtUS $130.000 due immediately and the new debtgiven as US $84.018) differ by at least 10%. Hence, the amount included by Debtor in profit or loss at the date of the restructuring is a US $45,982 gain$130.000 - $84.018) that is. the difference between the carrying amount extinguished and the amount paid the present value of the new debt instrument determined by discounting the cash outflows at the prevailing rate for similar instruments of an issuer with a similar credit rating). The entry is to debit the extinguished liability for accrued interest and principal US $130.000), debit discount on note payable US $15,982), credit note payable US $100.000) and credit gain US $45,982).
NEW QUESTION # 111
An organization's technician was granted a role that enables him to prioritize projects throughout the organization. Which type of authority will the technician most likely be exercising?
- A. Coercive authority.
- B. Expert authority.
- C. Legitimate authority
- D. Referent authority.
Answer: B
NEW QUESTION # 112
In regression analysis, which of the following correlation coefficients represents the strongest relationship between the independent and dependent variables?
- A. -.02
- B. .75
- C. 1.03
- D. -.89
Answer: D
Explanation:
Because the range of values is between -1.0 and 1_0, -.89 suggests a very strong inverse relationship between the independent and dependent variables. A value of -1.0 signifies a perfect inverse relationship, and a value of 1.0 signifies a perfect direct relationship.
NEW QUESTION # 113
What is the primary risk associated with an organization adopting a decentralized structure?
- A. Inconsistency in decision making.
- B. Greater costs of control function.
- C. Lack of resilience.
- D. Inability to adapt.
Answer: A
NEW QUESTION # 114
Net domestic product is composed of the total market value of all?
- A. Final goods and services produced in the economy in 1 year minus the capital consumption allowance.
- B. Goods and services produced in the economy in 1 year minus the capital consumption allowance.
- C. Goods and services produced in the economy in 1 year.
- D. Final goods and services produced in the economy in 1 year.
Answer: A
Explanation:
Net domestic product is the market value of all final goods and services produced within the boundaries of a country within 1 year minus the capital consumption allowance.
NEW QUESTION # 115
At December 31 of Year 1, an entity had a provision of US $40,000 for the "Estimated
Liability under Warranties" account. During Year 2, the entity sold 1,000 new units under warranties reliably estimated at US $100 per unit. The actual parts and labor warranty expenditures for Year 2 were US $90,000. Warranty expense for Year 2 should be
- A. US $40,000
- B. US $90,000
- C. US $50,000
- D. US $100,000
Answer: D
Explanation:
Recognition of provisions is appropriate when the entity has a legal or constructive present obligation resulting from a past event (called an obligating event), it is probable that an outflow of economic benefits will be necessary to settle the obligation, and its amount can be reliably estimated. Accordingly, a provision should be recognized for warranty expense in the period in which the matching revenue is recorded. Thus, the debit to warranty expense and the credit to provision for warranty expense in Year 2 is US $100,0001,000 units x $100).
NEW QUESTION # 116
Which of the following best describes the concept of relevant cost?
- A. A future cost that is the same among alternatives.
- B. A past cost that differs among alternatives.
- C. A past cost that is the same among alternatives.
- D. A future cost that differs among alternatives.
Answer: D
NEW QUESTION # 117
A company's budget for next year contains the following information:
How many equivalent units should the company plan to produce next year?
- A. 1.815
- B. 1,565
- C. 1,800
- D. 1.845
Answer: D
Explanation:
NEW QUESTION # 118
The average labor cost per unit for the first batch produced by a new process is US $120. The cumulative average labor cost after the second batch is US $72 per product. Using a batch size of 100 and assuming the learning curve continues, the total labor cost of four batches will be:
- A. US$17,280
- B. US$10,368
- C. US$4,320
- D. US$2,592
Answer: A
Explanation:
The learning curve reflects the increased rate at which people perform tasks as they gain experience. The time required to perform a given task becomes progressively shorter. Ordinarily, the curve is expressed in a percentage of reduced time to complete a task for each doubling of cumulative production. One common assumption in a learning curve model is that the cumulative average time (and labor cost) per unit is reduced by a certain percentage each time production doubles. Given a US $120 cost per unit for the first 100 units and a US $72 cost per unit when cumulative production doubled to 200 units, the learning curve percentage must be 60% (US $72 + $120). If production is again doubled to 400 units (four batches), the average unit labor cost should be US $43.20 ($72 x 60%). Hence, total labor cost for 400 units is estimated to be US $17,280 (400 units x $43.20).
NEW QUESTION # 119
Which of the following is an established systems development methodology?
- A. Waterfall.
- B. Information Technology Infrastructure Library (ITIL).
- C. COBIT
- D. Projects in Controlled Environments (PRINCE2).
Answer: A
NEW QUESTION # 120
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To be eligible to sit for the IIA-CIA-Part3 exam, candidates must have completed the IIA-CIA-Part1 and IIA-CIA-Part2 exams. The IIA-CIA-Part3 exam consists of 100 multiple-choice questions and is timed for 2.5 hours. The passing score for the exam is 600 out of 800.
IIA-CIA-Part3 exam is the third part of the Certified Internal Auditor (CIA) certification program. This program is recognized globally as the standard for internal auditors and is highly valued by employers. The CIA certification program consists of three parts, with the IIA-CIA-Part3 exam being the final part. Candidates must pass all three parts of the exam to receive the CIA certification.
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