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Home IIA IIA-CIA-Part3

IIA IIA-CIA-Part3 Exam Practice Questions (P. 3)

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Question #21
Preferred stock is less risky for investors than is common stock because:
  1. A
    Common stock pays dividends as a stated percentage of face value.
  2. B
    Common stock has priority over preferred stock with regard to earnings and assets.
  3. C
    Preferred dividends are usually cumulative.
  4. D
    Preferred stock with no conversion feature has a higher dividend yield than does convertible preferred stock.

Correct Answer:
C

Question #22
Which of the following borrowing options is an unsecured loan?
  1. A
    Second-mortgage financing from a bank.
  2. B
    An issue of commercial paper.
  3. C
    Pledged accounts receivable.
  4. D
    Asset-based financing.

Correct Answer:
B

Question #23
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?
  1. A
    A tougher collections policy that reduces the bad debt loss ratio.
  2. B
    A higher cost per unit sold.
  3. C
    A longer average collection period.
  4. D
    An increase in the cost of capital.

Correct Answer:
A

Question #24
Which of the following budgets must be prepared first?
  1. A
    Cash budget.
  2. B
    Production budget.
  3. C
    Sales budget.
  4. D
    Selling and administrative expenses budget.

Correct Answer:
C

Question #25
Which of the following performance measures would be appropriate for evaluating an investment center, which has responsibility for its revenues, costs, and investment base, but would not be appropriate for evaluating cost, revenue, or profit centers?
  1. A
    A flexible budget.
  2. B
    Variance analysis.
  3. C
    A contribution margin income statement by segment.
  4. D
    Residual income.

Correct Answer:
D

Question #26
A capital investment project will have a higher net present value, everything else being equal, if it has:
  1. A
    A higher initial investment level.
  2. B
    A higher discount rate.
  3. C
    Cash inflows that are larger in the later years of the life of the project.
  4. D
    Cash inflows that are larger in the earlier years of the life of the project.

Correct Answer:
D

Question #27
All of the following are possible explanations for a significant unfavorable material efficiency variance except:
  1. A
    Cutbacks in preventive maintenance.
  2. B
    An inadequately trained and supervised labor force.
  3. C
    A large number of rush orders.
  4. D
    Production of more units than planned for in the master budget.

Correct Answer:
D

Question #28
An organization is projecting sales of 100,000 units, at a unit price of $12. Unit variable costs are $7. If fixed costs are $350,000, what is the projected total contribution margin?
  1. A
    $350,000
  2. B
    $500,000
  3. C
    $850,000
  4. D
    $1,200,000

Correct Answer:
B

Question #29
When applied to international economics, the theory of comparative advantage proposes that total worldwide output will be greatest when:
  1. A
    Each nation's total imports approximately equal its total exports.
  2. B
    Each good is produced by the nation that has the lowest opportunity cost for that good.
  3. C
    Goods that contribute to a nation's balance-of-payments deficit are no longer imported.
  4. D
    International trade is unrestricted and tariffs are not imposed.

Correct Answer:
B

Question #30
A brand manager in a consumer food products organization suspected that several days of the point-of-sale data on the spreadsheet from one grocery chain were missing. The best approach for detecting missing rows in spreadsheet data would be to:
  1. A
    Sort on product identification code and identify missing product identification codes.
  2. B
    Review store identification code and identify missing product identification codes.
  3. C
    Compare product identification codes for consecutive periods.
  4. D
    Compare product identification codes by store for consecutive periods.

Correct Answer:
D

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