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  1. Home
  2. IIA Certification
  3. IIA-CIA-Part3 Exam
  4. IIA.IIA-CIA-Part3.v2022-03-14.q256 Dumps
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Question 201

Price skimming involves:

Correct Answer: B
Price skimming is used when a new product is introduced at the highest price possible given the benefits of the product. For market skimming to work, the product must appear to be worth its price, the costs of producing a small volume cannot be so high that they eliminate the advantage of charging more, and competitors cannot enter the market and undercut the price.
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Question 202

A value-added tax is collected on the basis of:

Correct Answer: A
A value-added tax is similar to a retail sales tax on consumer goods. It is applied to the difference between the value of an entity's sales and the value of its purchases from other entities, that is. to the value added to the input In effect, a value-added tax is a national tax that penalizes consumption.
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Question 203

An entity experienced sales of US $5 billion, profit before interest and taxes of US $200 million, profit before taxes of US $100 million, and profit of US $70 million. Based on this information and the entity's balance sheet information in Exhibit A. the return on equity ROE is: \

Correct Answer: A
The return on equity equals profit US $70,000,000) divided by equity $500,000,000) ordinary shares / $1,000,000,000 retained earnings).
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Question 204

At December 31, Year 1, an entity had the following equity accounts:

Each of the 40,000 ordinary shares outstanding was issued at a price of US $26. On January 2, Year 2, 2,000 shares were reacquired for US $30 per share. The cost method is used in accounting for these treasury shares. Which of the following correctly describes the effect of the acquisition of the treasury shares?

Correct Answer: D
Using the cost method, the journal entry to record the acquisition of the treasury shares includes a debit to treasury shares for US $60,000. The balance of the treasury shares account is classified as a contra equity item. Thus, the acquisition of the treasury shares reduces total equity by US $600002.000 shares x $30).
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Question 205

Companies that adapt just-in-time purchasing systems often experience

Correct Answer: B
The objective of JIT is to reduce carrying costs by eliminating inventories and increasing the deliveries made by suppliers. Ideally, shipments of raw materials are received just in time to be incorporated into the manufacturing process. The focus of quality control under JIT is the prevention of quality problems. Quality' control is shifted to the supplier. JIT companies typically do not inspect incoming goods; the assumption is that receipts are of perfect quality. Suppliers are limited to those who guarantee perfect quality and prompt delivery.
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