# A+ answers pf 060322rr & 060323rr

Exam: 060322RR – Business and Finance Basics II

1. Depreciation expense is located on the

A. balance sheet.

B. income statement.

C. the accounts receivable documention.

D. the accounts payable documentation.

2. Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe gets is 8% annually. Using the tables in the Business Math Handbook that accompanies the course textbook,

determine the final value of Joe’s investment at the end of the 20th year on this ordinary annuity.

A. $411,588.00

B. $411,858.00

C. $88,632.90

D. $88,362.90

3. In calculating the daily balance, cash advances are

A. sometimes added in.

B. always subtracted out.

C. always added in.

D. sometimes subtracted out.

4. Ted Williams made deposits of $500 at the end of each year for eight years. The rate is 8%

compounded annually. Using the tables in the Business Math Handbook that accompanies the course textbook, calculate the value of Ted’s annuity at the end of eight years.

A. $2,873.30

B. $5,318.30

C. $4,318.30

D. $2,837.03

5. Megan Mei is charged 2 points on a $120,000 loan at the time of closing. The original price of the home

before the down payment was $140,000. How much do the points in dollars cost Megan?

A. $4,200

B. $2,400

C. $8,200

D. $2,800

6. A truck costs $35,000 with a residual value of $2,000. Its service life is five years. Using the declining balance method at twice the straight-line rate, the book value at the end of year 2 is

A. $35,000.

B. $33,000.

C. $22,000.

D. $12,600.

7. use the following information to answer the question:

Cost of car: $26,000

Residual value: $6,000

Life: 5 years

using the given information, determine the depreciation expense for the first year straight-line method?

A. $4,400

B. $6,000

C. $4,000

D. $5,200

8. Dan Miller bought a new Toyota truck for $28,000. Dan made a down payment of $6,000 and paid

$390 monthly for 70 months. What is the total finance charge?

A. $5,300

B. $27,300

C. $11,300

D. $13,300

9. A truck costs $16,000 with a residual value of $1,000. It has an estimated useful life of five years. If the

truck was bought on July 3, what would be the book value at the end of year 1 using straight-line rate?

A. $16,000

B. $1,500

C. $14,500

D. $12,500

10. Dick Hercher bought a home in Homewood, Illinois, for $230,000. He put down 20% and obtained a mortgage for 25 years at 8%. What is the total interest cost of the loan?

A. $184,000.00

B. $242,144.00

C. $242,411.00

D. $327,372.80

11. Connie made deposits of $2000 at the beginning of each year for four years. The rate she earned is 5% annually. What is the value of Connie’s account in four years?

A. $9,051.20

B. $8,260.00

C. $8,260.20

D. $11,051.00

12. Ben Brown bought a home for $225,000. He put down 20%. The mortgage is at 6 ½% for 30 years.

using the tables in the Business Math Handbook that accompanies the course textbook, determine his monthly payment.

A. $1,319.40

B. $1,216.80

C. $1,139.40

D. $1,319.04

13. use the following information and the tables in the Business Math Handbook that accompanies the course textbook to answer the question.

$140.10 per month

Cash price: $5,600

Down payment: $0

Cash or trade months with bank-approved credit; amount financed: $5,600

Finance charge: $2,806

Total payments: $8,406

What is the APR by table lookup?

A. 17.00%–17.25%

B. 16.75%–17.00%

C. 17.25%–17.50%

D. 16.50%–16.75%

14. Jay Corporation has earned $175,900 after tax. The accountant calculated the return on equity as

12.5%. Jay Corporation’s stockholders’ equity to the nearest dollar is

A. $140,720.

B. $14,720.

C. $140,720,000.

D. $1,407,200.

15. Depreciation expense in the declining-balance method is calculated by the depreciation rate

A. times book value at beginning of year.

B. times accumulated depreciation at year end.

C. plus book value at end of year.

D. divided by book value at beginning of year.

16. Jen purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at 5% for 35 years. What are Jen’s total finance charges?

A. $600,000.00

B. $606,823.20

C. $457,425.60

D. $626,863.20

17. What is a sinking fund?

A. It doesn’t compound its money.

B. It aids in meeting a future obligation.

C. It requires one lump sum payment at the beginning.

D. It’s not really an annuity.

18. When are annuity due payments made?

A. Yearly

B. At the end of the period

C. At the beginning of the period

D. Monthly

19. At the beginning of each year, Bill Ross invests $1,400 semiannually at 8% for nine years. using the tables in the Business Math Handbook that accompanies the course textbook, determine the cash value of

the annuity due at the end of the ninth year.

A. $37,399.68

B. $38,739.68

C. $37,939.86

D. $37,339.68

20. What does an amortization schedule show?

A. The increase in loan outstanding

B. The portion of payment broken down to interest and principal

C. The balance of interest outstanding

D. The increase to principal

21. Federal Express bought material handling equipment for its hub operations that cost $180,000. Using

the MACRS, what is the depreciation expense in year 3 (using a five-year class)?

A. $43,560

B. $34,560

C. $15,360

D. $40,000

22. Graduated payments result in the borrower paying

A. more at the beginning of the mortgage.

B. less at the end of the mortgage.

C. the mortgage at the standard rate.

D. less at the beginning of the mortgage.

23. The average daily balance is equal to the sum of daily balances

A. divided by number of days in billing cycle.

B. multiplied by number of days in billing cycle.

C. minus number of days in billing cycle.

D. plus number of days in billing cycle.

24. At the beginning of each year for 14 years, Sherry Kardell invested $400 that earns 10% annually.

What is the future value of Sherry’s account in 14 years?

A. $12,309

B. $13,100

C. $12,709

D. $14,000

25. Lee Company has a current ratio of 2.65. The acid test ratio is 2.01. The current liabilities of Lee are

$45,000. Assuming there are no prepaid expenses, the dollar amount of merchandise inventory is

A. $90,450.

B. $28,800.

C. $28,008.

D. $90,540.

Exam: 060323RR – Business and Finance Basics III and Statistics

1. What are overhead expenses?

A. They contribute indirectly to the running of a business.

B. They’re directly related to a specific department.

C. They’re directly related to a specific product.

D. They contribute directly to the running of a business.

2. Which one of the following items is subject to sales tax in the District of Columbia?

A. Roast beef

B. Shampoo

C. Tomatoes

D. Milk

3. The tax rate of $.0984 in decimal can be expressed as how many mills?

A. 9,840

B. 98.4

C. 90.84

D. 9.84

4. In terms of premium cost, the most expensive type of insurance is _______ insurance.

A. 20-year endowment

B. 20-payment life

C. straight-life

D. term

5. Matt Miller, age 28, takes out $50,000 of straight-life insurance. His annual premium is $418.20. Using

the tables in the Business Math Handbook that accompanies the course textbook, determine the cash value

of his policy at the end of 20 years.

A. $26,500

B. $26,000

C. $13,250

D. $30,000

6. The building of Jim’s Hardware is assessed at $109,000. The tax rate is $86.95 per $1,000 of assessed

valuation. The tax due is

A. $947.75.

B. $8,695.45.

C. 94,698.23.

D. $9,477.55.

E. $8,659.54.

7. Which one of the following statements is true of specific identification?

A. Flow of goods and flow of cost are the same.

B. The specific purchase invoice prices aren’t used.

C. Ending inventory isn’t associated with specific purchase prices.

D. Low-cost items aren’t used in this method.

8. A bond quote of 82.25 in dollars is equal to

A. $8,025.50.

B. $82.25.

C. $8.25.

D. $822.50.

9. Calculate the optional bodily injury cost for the following:

Class: 10

Optional Bodily Injury: 100/300/50

A. $108

B. $94

C. $144

D. $187

10. Which one of the following statements is true of preferred stock?

A. It never has a preference to dividends over common stockholders.

B. It can be cumulative.

C. It has equal rights to common stock.

D. It never receives dividends in arrears.

11. Total sales of $400,000 that included a 6% sales tax yields actual sales of

A. $377,358.49.

B. $42,800.

C. $37,537.58.

D. $48,200.

12. Which one of the following statements is true about reduced paid-up insurance?

A. It results in a face amount less than the original amount .

B. It buys protection with paying new premiums.

C. It continues for 20 years.

D. It means the original face amount is continued for a certain number of years.

13. Commissions charged on the trading of stock are

A. charged on buying and selling of stock.

B. charged only on sale of stock.

C. charged only on buying of stock.

D. fixed.

14. Mike’s condo has a market value of $310,000. The property in Mike’s area is assessed at 40% of the market value. The tax rate is $145.10 per $1,000 of assessed valuation. The tax for Mike is

A. $17,992.40.

B. $7,999.40.

C. $16,992.40.

D. $7,999.30.

15. To avoid distortion of extreme values, a good indicator would be the

A. median.

B. mode.

C. mean.

D. weighted-mean.

16. The range of 35, 22, 43, 18, 22, 27, 48, 39, 31, and 16 is

A. 22.

B. 29.

C. 30.

D. 32.

17. Jangles Co. earned $1.80 per share. Assuming a closing price of $40, what is the PE ratio? (Round

your answer to the nearest whole number.)

A. 7

B. 72

C. 22

D. 20

18. Find the mean for the following numbers and do not round your answer to the nearest whole number:

38 + 18.05 + 25 + 26 + 46

A. 30.61

B. 21.45

C. 23.74

D. 32.14

19. Suppose Department A is 8,000 square feet, Department B is 5,000 square feet, and Department C is

6,000 square feet. What is the percent of overhead expense applied to Department C? (Round your answer

to the nearest whole percent.)

A. 32%

B. 26%

C. 68%

D. 42%

20. Determine the mode from the following numbers: 71, 3, 13, 33, 3, 71, 14, 33, 13, and 33.

A. 13

B. 71

C. 33

D. 3

21. Stocks are always quoted in

A. decimals.

B. quarter lots.

C. percents.

D. quarters of a dollar.

22. Usually, assessed value is rounded to the nearest

A. percent.

B. tenth.

C. dollar.

D. cent.

23. The tax rate of $.6943 in decimal can be expressed per $100 as

A. $690.3.

B. $6.943.

C. $69.43.

D. $69.43 mills.

24. Jay Miller insured his pizza shop for $200,000 for fire insurance at an annual rate per $100 of $.49. At

the end of 10 months, Jay canceled the policy since his pizza shop went out of business. Using the tables in

the Business Math Handbook that accompanies the course textbook, determine the refund to Jay.

A. $127.40

B. $186.20

C. $852.60

D. $980

25. What is the retail method?

A. It doesn’t require a cost ratio.

B. It eliminates the need to take a physical inventory.

C. It aids a company in not having to calculate an inventory cost for each individual item.

D. It’s not an estimate.