IIA IIA Certifications IIA-CIA-PART3 Questions & Answers

• Question 371:

  Which of the following budgets must be prepared first?

  A. Cash budget.

  B. Production budget.

  C. Sales budget.

  D. Selling and administrative expenses budget.

  Correct Answer: C

• Question 372:

  In an analysis of alternative credit-management policies, which of the following components will cause the net present value of receivables on credit sales to increase, if everything else remains constant?

  A. A tougher collections policy that reduces the bad debt loss ratio.

  B. A higher cost per unit sold.

  C. A longer average collection period.

  D. An increase in the cost of capital.

  Correct Answer: A

• Question 373:

  Refer to the exhibit.

  

  Presented below are partial year-end financial statement data (000 omitted from dollar amounts) for

  companies A and B:

  If company A has a quick ratio of 2:1, then it has an accounts receivable balance of:

  A. $100

  B. $200

  C. $300

  D. $500

  Correct Answer: A

• Question 374:

  Preferred stock is less risky for investors than is common stock because:

  A. Common stock pays dividends as a stated percentage of face value.

  B. Common stock has priority over preferred stock with regard to earnings and assets.

  C. Preferred dividends are usually cumulative

  D. Preferred stock with no conversion feature has a higher dividend yield than does convertible preferred stock.

  Correct Answer: C

• Question 375:

  Which of the following borrowing options is an unsecured loan?

  A. Second-mortgage financing from a bank.

  B. An issue of commercial paper.

  C. Pledged accounts receivable.

  D. Asset-basedfinancing.

  Correct Answer: B

• Question 376:

  The percentage of sales method, rather than the percentage of receivables method, would be used to estimate uncollectible accounts if an organization seeks to:

  A. Use an aging schedule to more closely estimate uncollectible accounts.

  B. Eliminate the need for an allowance for doubtful accounts.

  C. Emphasize the accuracy of the net realizable value of the receivables on the balance sheet.

  D. Use a method that approximates the matching principle.

  Correct Answer: D

• Question 377:

  Refer to the exhibit.

  

  A company's financial balance sheet is presented below: The company has net working capital of:

  A. $160

  B. $210

  C. $350

  D. $490

  Correct Answer: B

• Question 378:

  What must be monitored in order to manage risk of consumer product inventory obsolescence?

  1.

  Inventory balances.

  2.

  Market share forecasts.

  3.

  Sales returns.

  4.

  Sales trends.

  A. 1 only

  B. 4 only

  C. 1 and 4 only

  D. 1, 2, and 3 only

  Correct Answer: C

• Question 379:

  Which of the following is a characteristic of just-in-time inventory management systems?

  A. Users determine the optimal level of safety stocks.

  B. They are applicable only to large organizations.

  C. They do not really increase overall economic efficiency because they merely shift inventory levels further up the supply chain.

  D. They rely heavily on high quality materials.

  Correct Answer: D

• Question 380:

  The economic order quantity for inventory is higher for an organization that has:

  A. Lower annual unit sales.

  B. Higher fixed inventory ordering costs.

  C. Higher annual carrying costs as a percentage of inventory value.

  D. A higher purchase price per unit of inventory.

  Correct Answer: B