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  1. Home
  2. IIA Certification
  3. IIA-CIA-Part3 Exam
  4. IIA.IIA-CIA-Part3.v2025-01-02.q249 Dumps
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Question 56

The high cost of short-term financing has recently caused an entity to reevaluate the terms of credit it extends to its customers. The current policy is 1/10, net 60. If customers can borrow at the prime rate, at what prime rate must the entity change its terms of credit in order to avoid an undesirable extension in its collection of receivables?

Correct Answer: D
Terms of 1/10, net 60 mean that a buyer can save 1% of the purchase price by paying 50 days early. In essence, not taking the discount results in the buyer's borrowing 99% of the in price for 50 days at a total interest charge of 1% of the invoice price. Because a year has 7.3 50-day per periods 365 50), the credit terms 1/10, net 60 yield an effective annualized interest charge of approximately 7.371 [(I% 99%) 7.3]. If the prime rate were higher than 7.37%, the buyer would prefer to borrow from the vendor i.e., not pay within the discount period) rather than from a bank. Consequently, an 8% prime rate could cause the vendor's receivables to increase. An entity sells 10,000 skateboards a year at US $66 each. All sales are on credit, with terms of 3/10. net 30, which means three percent discount if percent it is made within 10 days; otherwise full payment is due at the end of 30 days. One half of the customers are expected to take advantage of the discount and pay on day 10. The other half are expected to pay on day 30. Sales are ,, ict id to be uniform throughout the year for both types of customers.
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Question 57

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

Correct Answer: B
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Question 58

Many companies recognize three major categories of costs of manufacturing a product. These are direct materials, direct labor, and overhead. Which of the following is an overhead cost in the production of an automobile?

Correct Answer: A
The cost of small tools used in mounting tires cannot be identified solely with the manufacture of a specific automobile. This cost should be treated as factory overhead because it is identifiable with the production process.
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Question 59

Which of the following is the most appropriate beginning step of a work program for an assurance engagement involving smart devices?

Correct Answer: B
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Question 60

Multinational organizations generally spend more time and effort to identify and evaluate:

Correct Answer: C
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