IIA Exam IIA-CIA-Part3-3P Topic 12 Question 27 Discussion

Actual exam question for IIA's IIA-CIA-Part3-3P exam

Question #: 27
Topic #: 12

During an audit of the organization's annual financial statements, the internal auditor notes that the current cost of goods sold percentage is substantially higher than in prior years. Which of the following is the most likely explanation for this increase?

ACost of raw material inventory items is decreasing.

BProcess to manufacture goods is more efficient.

CLabor productivity to produce goods is increasing.

DWrite-off of inventory is increasing.

Show Suggested Answer

Suggested Answer: B

by Belen at Jul 07, 2023, 11:56 PM

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Lorrie

3 days ago

Hmm, I'm not so sure. What if the process to manufacture goods is actually more efficient? That could also explain the increase in cost of goods sold.

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Laura

14 days ago

I'm not sure, but I think D) Write-off of inventory is increasing could also be a possible explanation for the increase in cost of goods sold.

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Vi

15 days ago

I agree with Ashton, because if the process is more efficient, it would lower the cost of goods sold.

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Ashton

16 days ago

I think the answer is B) Process to manufacture goods is more efficient.

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Pok

17 days ago

I think the answer is D. Increasing write-offs of inventory would definitely lead to a higher cost of goods sold percentage.

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Fairy

20 days ago

I disagree, I think the answer is D. If there is an increasing write-off of inventory, it could also explain the higher cost of goods sold percentage.

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Suzan

21 days ago

I agree with Hester, because if the process to manufacture goods is more efficient, it could lead to higher cost of goods sold percentage.

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Hester

23 days ago

I think the answer is B.

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