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Professional Admissions Skills Assessment
Sample Questions
The following nine
problems will help as you prepare for the Professional
Admission Skills Assessment. The Skills Assessment will consist
of approximately 50% Financial Accounting questions and 50%
Business Math questions. Questions 1-5 below
test your Financial Accounting skills and refer to the balance
sheet below. Answers and explanations are provided for questions
1-5. Questions 6-9 test
your Business Math skills. Please review your Business Math
notes and text book
to discover solutions and explanations to questions 6-9.
Bob Jones started
a business, Sweeties, 2 years ago running an ice cream truck
for June through August on Cape Cod, Massachusetts. At the
end of each year the only assets left are cash, the truck and
the balance in the equity accounts. On January 1, 2003, the
beginning balances are:
| |
Debit |
Credit |
| Cash |
3,500 |
- |
| Truck |
30,000 |
- |
| Accumulated Depreciation |
- |
12,000 |
| Common Stock |
- |
20,000 |
| Retained Earnings (beginning) |
- |
1,500 |
During 2003,
Sweeties had cash sales of $33,000. The cash cost of goods
sold was $12,000. Other operating expenses paid in cash totaled
$14,000. The depreciation on the truck is $6,000 per year.
Dividends paid in cash to the stockholder were $2,000.
1. What is the ending cash balance at 12/31/03?
a. $8,500
b. $2,500
c. $5,000
d. can not be determined from information provided
2. What
is the amount of net income for
the year ended 12/31/03? a. $7,000
b. $5,000
c. $1,000
d. Net Loss of
$1,000
3. What
is the ending retained earnings
balance at 12/31/03 (the amount
found on the balance sheet)? a. $6,600
b. $6,000
c. ($1,000)
d. $500
4. What
is the ending stockholder's
equity found on the balance sheet
at 12/31/03? a. $26,500
b. $26,000
c. $18,500)
d. $20,500
5. What
is the book value of the truck
on the balance sheet at 12/31/03? a. $30,000
b. $18,000
c. $12,000
d. can not determine
from information provided
6. What is the future value of $250,000
invested at a continuously compounded annual rate of 5%, after
3 years? Round your answer to whole dollars? a. $273,182
b. $250,000
c. $228,786
d. None of the
above
7. A
total of $12,000 is invested in
two funds paying 9% and 11% simple
interest. If the interest for the
first year is $1,180, how much of
the $12,000 is invested at 9%? a. $1,180
b. $5,000
c. $7,000
d. $10,820
8. Which
investment has the lowest effective
annual yield? a. 8% Compounded daily
b. 8% Compounded
continuously
c. 8% Compounded
quarterly
d. 4% Compounded
continuously
9. If
X= YZ + C(9 – A) and X= 10,
C= 3, Y= .5, and A= 3 then what
is the value of Z?
a. 8
b. -8
c. 16
d. -16
Answers
EXPLANATION TO QUESTION #1
Cash Balance:
Beginning Cash 3,500
Cash Sales + 33,000
Cash Expenses - (12,000)
(14,000)
Cash Dividends - ( 2,000)
Ending Cash Balance 8,500
EXPLANATION TO QUESTION #2
Net income Calculation:Revenues 33,000
Cost of Goods sold 14,000
Operating expenses 12,000
Depreciation expense 6,000
Net income 1,000
EXPLANATION TO QUESTION #3
Retained Earnings:Beginning Retained Earnings 1,500
+ Net Income 1,000
- Dividends (2,000)
Ending Retained Earnings 500
EXPLANATION TO QUESTION #4
Stockholder's Equity
Ending Retained Earnings 500
Common Stock 20,000
20,500
EXPLANATION TO QUESTION #5
Book Value of truck at end of year:Cost 30,000
Accumulated Depreciation 18,000
Book value 12,000
Beginning A/D 12,000
+current accum depr. 6,000
ending A/D 18,000
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