Cisco
CompTIA
ISC
EC-Council
EXIN
Fortinet
ITIL
Juniper
Microsoft
VMware
Avaya
SAP
Google
NVIDIA
Salesforce
Amazon
Palo Alto Networks
ISC2
Splunk
ServiceNow
All Vendors
  2. Home
  3. Exams
  4. IIA
  5. CIA

IIA CIA Exam
Certified Internal Auditor Exam (Page 48 )

Updated On: 12-Jan-2026
Page 48 of 342
PDF with 1702 Questions

On the year-end financial statements, the company will report cost of goods sold of

  1. US $440, 000
  2. US $620, 000
  3. US $670.000
  4. US $900, 000

Answer(s): A

Explanation:

Cost of goods sold equals begin rag inventory. plus purchases. m us ending inventory. Hence cost of goods sold is US $440, 000$ 140.000 + $530.000 - $230, 000).



An internal auditor performs an analytical procedure to compare the gross margins of various divisional operations with those of other divisions and with the individual division's performance in previous years. The internal auditor notes a significant increase in the gross margin at one division_ The internal auditor does some preliminary investigation and also notes that there were no changes in products, production methods, or divisional management during the year. The most likely cause of the increase in gross margin is

  1. An increase in the number of competitors selling similar products.
  2. A decrease in the number of suppliers of the material used in manufacturing the product
  3. An overstatement of year-end inventory.
  4. An understatement of year-end accounts receivable.

Answer(s): C

Explanation:

An overstatement of year-end inventory results in an increase in the gross marginsales - cost of sales). Overstating ending inventory understates cost of sales. Copper Co. had the pre-closing trial balance at December 31 shown below. Additional information: The balance of opening inventory was US $140, 000.
The long-term debt pays interest at a rate of 10% per annum, payable every 12 months. The debt was issued on July 1 of the current year and originally had 5 years to maturity. The assets classified as property, plant, and equipment have a 10-year estimated useful life and were 1 year old at the start of the current year Straight-line depreciation is used.



The following data are available from the records of a department store for the year ended December 31, Year 1:

Using the retail method to approximate valuation at lower of average cost or net realizable value, the department store's merchandise inventory at December 3-1, Year 1 is

  1. US $8.400
  2. US T3.900
  3. Ur $6.i i lr]
  4. US $5, 600

Answer(s): D

Explanation:

The version of the retail method that approximates a lower-of-average-cost-or-NRV valuation includes markups but not markdowns in the cost-to-retail ratio_ Thus, the cost of the inventory at December 31. Year 1 is US $5, 600.



An entity started in Year 1 with 200 scent. 1 3ndles on hand at a cost of US $3.50 each. These candles sell Lich. The following schedule represents the purchases and sales of candles during Year 1:

If the entity uses periodic FIFO inventory pricing, the gross profit for Year 1 would be

  1. US $2, 755
  2. US $2, 805
  3. US $2, 854
  4. US $2, 920

Answer(s): B

Explanation:

The FIFO method assumes that the first goods purchased are the first goods sold and that ending inventory consists of the latest purchases. Moreover, whether the inventory system is periodic or perpetual does not affect FIFO valuation. The cost of goods sold is US $2.445 {beginning inventory200 units x $3.50) - purchases [(250 units x $3.30)200 units x $3.10) -350 units x $3.00)] - ending inventory250 units x $3.00)}_ Thus, the gross profit for Year 1 using FIFO is US $2.805 [sales750 units x $7.00) - cost of goods sold of $2 445].



An entity had the following selected per-unit data relating to work-in-process:
Selling price US $100
Comparison cost 10
Historical cost 91
Replacement cost 108
Normal gross profit 20
Selling cost 5
In comparison with historical cost, what will be the per-unit impact on gross profit of
measuring ending inventory.

  1. No effect
  2. Reduction of US %6.
  3. Reduction of US $26
  4. Increase of US $5,

Answer(s): B

Explanation:

Inventories are measured at the lower of cost or net realizable valueNRV). NRV equals selling price minus completion and selling costs. Given that historical cost is US $91 and NRV is US $84price of $100 ­ $100 ­ $10 completion cost ­ $5 selling cost, the effect on per-unit gross profit is a reduction of US $6. This amount is the writedown expensed.



Viewing page 48 of 342
Viewing questions 236 - 240 out of 1702 questions



Post your Comments and Discuss IIA CIA exam prep with other Community members:

Join the CIA Discussion