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IIA-CIA-Part3 Exam Prep Guide: Prep guide for the IIA-CIA-Part3 Exam
NEW QUESTION # 165
Which of the following steps in the accounting cycle is completed later than the others?
- A. Journalization
- B. Identification and measurement of transactions.
- C. Adjustments.
- D. Posting.
Answer: C
Explanation:
The order of the steps in the Denting cycle is identification and measurement of transactions and other events required to be required to be, recognized, journalization, posting from the journals to the ledgers the development of a trial balance, adjustments to produce an adjusted trial balance, statement presentation closing, taking a post-closing trial balance optional and making reversing entries optional.
NEW QUESTION # 166
Which of the following statements is true regarding the relationship between an individual's average tax rate and marginal tax rate?
- A. In a regressive personal tax system, an individual's marginal tax rate is normally greater than his average tax rate.
- B. In a progressive personal tax system, an individual's marginal tax rate is normally greater than his average tax rate.
- C. In a regressive personal tax system, an individual's marginal tax rate is normally equal to his average tax rate.
- D. In a progressive personal tax system, an individual's marginal tax rate is normally equal to his average tax rate.
Answer: B
NEW QUESTION # 167
The most direct way to prepare a cash budget for a manufacturing entity is to include:
- A. Projected sales and purchases, percentages of collections, and terms of payments.
- B. Projected purchases, percentages of purchases paid, and net income.
- C. Projected sales, credit terms, and net income.
- D. Projected net income, depreciation, and goodwill amortization.
Answer: A
Explanation:
The most direct way of preparing a cash budget requires incorporation of sales projections and credit terms. collection percentages, estimated purchases and payment terms, and other cash receipts and disbursements. In other words, preparation of the cash budget requires consideration of both inflows and outflows.
NEW QUESTION # 168
If an organization has a high amount of working capital compared to the industry average, which of the following is most likely true?
- A. Cash may be bed up in items not generating financial value.
- B. The organization is efficient in using assets to generate revenue.
- C. Settlement of short-term obligations may become difficult.
- D. Collection policies of the organization are ineffective.
Answer: A
NEW QUESTION # 169
An entity has a US $100,000 liability on the books. In 12 months, US $110.000 will be due including 10% interest. The entity negotiates settlement of the debt today by exchanging customer receivables with a carrying amount of US $90,000. What is the journal entry today?
- A. Liability US $110.000 Receivables US $99.000 Gain 11.000
- B. Liability US $100.000 Receivables US $99.000 Gain 1.000
- C. Liability US $110.000 Receivables US $90,000 Gain 20,000
- D. Liability US $100,000 Receivables US $90,000 Gain 10.000
Answer: D
Explanation:
An entity may derecognize a financial liability when it is extinguished. This condition is met when the debtor discharges the debt by paying the creditor, such as with cash other financial assets receivables, goods, or services. Consequently, the liability should be debited for its US $100.000 balance Receivables with a US $90.000 balance are given up so that account should be credited. The difference is again.
NEW QUESTION # 170
Activity scheduling information for the installation of a new computer system is given below
The earliest completion time for the project is:
- A. A-D-E.
- B. B-E.
- C. A-C.
- D. B-D-C.
Answer: A
Explanation:
The critical path is the longest path because it defines the minimum duration of the project. A-D-E 4 + 6 + 5 = 15) is the critical path.
NEW QUESTION # 171
A principal advantage of an ERP system is:
- A. Centralization of data.
- B. Separate data updating for different functions.
- C. Program-data dependence.
- D. Data redundancy.
Answer: A
Explanation:
An advantage of an ERP system is the elimination of data redundancy through the use of a central database. In principle, information about an item of data is stored once, and all functions have access to it. Thus, when the item such as a price) is updated, the change is effectively made for all functions. The result is reliability data integrity).
NEW QUESTION # 172
A company purchased US $50,000 worth of office supplies on January 1st and had US $15,000 of office supplies still on hand at year-end. If the initial purchase of supplies entry on January 1st was to debit office supplies expense and to credit cash for US $50,000 the adjusting entry on December 31 will be:
- A. Office supplies US $15,000 Office supplies dividends US $15,000
- B. Office supplies dividends US $15,000 Office supplies US $15,000
- C. Office supplies expense US $35,000 Office supplies US $35,000
- D. Office supplies US $35,000 Office supplies dividends US $35,000
Answer: A
Explanation:
Because the initial entry recorded the entire purchase to a nominal account. the year-end adjusting entry must debit a prepaid asset to reflect the remaining supplies on hand of US $15.000. The adjusting entry must also credit reduce) expenses for the US $15.000 of supplies that were not used during the period.
NEW QUESTION # 173
When a right of return exists, an entity may recognize revenue from a sale of goods at the time of sale only if:
- A. The amount of future returns can be reliably estimated.
- B. The buyer resells the goods.
- C. The seller believes returns will not be material.
- D. The seller retains the risks and rewards of ownership.
Answer: A
Explanation:
One condition for condition of revenue from the sale of goods is the transfer of the significant risks and rewards of ownership. Retention of significant risk may occur when, for example, the buyer may rescind the purchase for a reason stipulated in the contract and the buy, is uncertain about the probability of return. However if the entity can reliably estimate future returns and recognize a liability for returns based on experience and other pertinent information, revenue may be recognized at the time of sale if the other conditions for revenue recognition are also met.
NEW QUESTION # 174
A desired result of the sharing of information by all functions and organizations in the supply chain is:
- A. Incompatibility of the information systems of the parties.
- B. Maximization of inventories held by suppliers, manufacturers, and retailers.
- C. Stockouts.
- D. Fewer rush orders.
Answer: D
Explanation:
Sharing information about sales, inventory, pricing, advertising campaigns, and sales forecasts by all functions and organizations in the supply chain moderates demand uncertainty for all parties. The desired results are (1) minimization of inventories held by suppliers, manufacturers, and retailers; (2) avoidance of stockouts; (3) fewer rush orders; and (4) production as needed by retailers.
NEW QUESTION # 175
Which of the following network types should an organization choose if it wants to allow access only to its own personnel?
- A. A local area network.
- B. An extranet
- C. An intranet
- D. The internet
Answer: A
NEW QUESTION # 176
Object technology has become important in companies' strategic use of information systems because of its potential to:
- A. Maintain programs written in procedural languages.
- B. Permit quicker and more reliable development of systems.
- C. Streamline the traditional "waterfall" systems development methodology.
- D. Minimize data integrity violations in hierarchical databases.
Answer: B
Explanation:
An object-oriented approach is intended to produce reusable code. Because code segments can be reused in other programs, the time and cost of writing software should be reduced.
NEW QUESTION # 177
A domestic entity and a foreign entity purchased the same stock on the foreign stock exchange and held the stock for 1 year. The value of the foreign currency weakened against the domestic currency over this period. Comparing the returns of the two companies, what will be the domestic entity's return?
- A. The same.
- B. Higher in the short-run but lower in the long-run.
- C. Lower.
- D. Higher.
Answer: C
Explanation:
The returns on the stock are presumably paid in foreign currency. Hence, the change in the value of the foreign currency relative to the domestic currency does not affect the foreign entity's return. However, the weakening of the foreign currency reduces the amount of domestic currency it will buy, and the domestic entity's return in domestic currency is correspondingly reduced.
NEW QUESTION # 178
An internationally recognized brand name is an entrance barrier to new competitors because new competitors would:
- A. Face increased production costs.
- B. Face increased marketing costs.
- C. Face higher learning costs, which would increase fixed costs.
- D. Have to initiate a price war in order to enter the industry.
Answer: B
NEW QUESTION # 179
Employees at an events organization use a particular technique to solve problems and improve processes. The technique consists of five steps: define, measure, analyze, improve, and control. Which of the following best describes this approach?
- A. Quality circle.
- B. Value chain analysis.
- C. Theory of constraints.
- D. Six Sigma,
Answer: D
NEW QUESTION # 180
Which of the following corporate social responsibility strategies is likely to be most effective in minimizing confrontations with influential activists and lobbyists?
- A. Maintain a comprehensive publicity campaign that highlights the organization's efforts.
- B. Ensure strict compliance with applicable laws and regulations to avoid incidents.
- C. Continually evaluate the needs and opinions of all stakeholder groups.
- D. Increase goodwill through philanthropic activities among stakeholder communities.
Answer: C
NEW QUESTION # 181
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