1. The acid test ratio does not include A. cash. C. supplies. B. accounts receivable. D. inventory.

2. Nick has a revolving department store credit card account with an annual percentage rate of 15%. Last month’s balance on the account was $423.78. During the current month, he made purchases totaling $123.42 and made a payment of $100. The store uses the unpaid balance method. According to this information, what must be the amount of the finance charge? Round your answer to the nearest cent. A. $5.30 C. $6.36 B. $5.59 D. $6.71

(15%/12) X 423.78 = 5.30

3. Using the information provided in Question 2, what is Nick’s current account balance? A. $380.12 C. $452.50 B. $441.61 D. $453.56

423.78 + 123.42 – 100 + 5.30 = 452.50

4. On a balance sheet, the accounts payable and salaries payable would fall under the category of A. current liabilities. C. current assets. B. investments and other assets. D. long-term liabilities.

5. A company purchased an air conditioning system for $10,200. The shipping charges on the system were $875, and the setup costs were $1,250. The system is expected to last for five years and has a residual value of $2,000. If you use the straight-line method to calculate the depreciation for this air conditioning system, what would be the annual depreciation? A. $2,000 C. $2,065 B. $2,040 D. $2,465

((10200 + 875 + 1250) - 2000) / 5 = 2065

6. The asset turnover of Jerry’s Sleepshop is 3.2. The total assets of Jerry’s are $32,000. What were Jerry’s net sales? A. $96,200 C. $124,000 B. $102,400 D. $124,600

32000 X 3.2 = 102400

7. Imagine that you’re the manager of an auto parts store. Figure A-2 contains your records of annual inventory figures for windshield wipers. Using the FIFO method of inventory pricing, what is the dollar value of ending inventory if there were 300 units on hand on December 31? Round your answer to the nearest dollar. A. $3,188 C. $3,350 B. $3,219 D. $3,600

Use this illustration to answer Questions 7 and 8.

Art’s Auto Parts—Annual Inventory of Windshield Wipers January 1 Beginning Inventory 300 units @ $11.00 March 15 Purchase 150 units @$10.50 June 10 Purchase 200 units @$10.75 September 22 Purchase 175 units @ $10.00 December 10 Purchase 100 units @$12.00

(25 X 10.75) + (175 X 10) + (100 X 12) = 3,218.75

8. Using the information shown in Figure A-2, suppose that the ending inventory on December 31 was 500 units. What would be the dollar value of the ending inventory using the LIFO method of inventory pricing? Round your answer to the nearest dollar. A. $5,450 C. $5,363 B. $5,413 D. $5,225

(300X11) + (150X10.5) + (50X10.75) = 5,412.50

9. The amount financed is equal to the cash price ______down payment. A. multiplied by B. plus the C. less the D. divided by

10. Calculate the monthly payment by loan amortization table: Loan $26,000 Down payment $5,000 11% 36 months A. $3,900.00 C. $687.54 B. $3,150.00 D. $327.40

11. Wallace and Sarah have decided to purchase furniture for their new home. They have two payment options. The first option is to pay a cash payment of $4,200. The second option is to finance the furniture with a two-year installment loan. The loan requires a 12% down payment and 24 equal monthly payments of $195. According to this information, what would be the finance charge on the loan? A. $3,696 C. $504 B. $984 D. $175

Total Payable = 195 X 24 = 4,680 , Amount Owed = 4,200 – (0.12X4,200) = 3,696

So, finance charge = 4680 – 3696 = 984

12. Using the information in Question 11, what is the total deferred payment price of the furniture? A. $4,200 C. $5,184 B. $4,680 D. $5,664

13. Sandy lives in a city that has a state sales tax of 6%. If she purchases a stereo system for $249.50, what will Sandy pay in state sales tax? A. $18.71 C. $12.48 B. $14.97 D. $3.74 0.06 X 249.50 = 14.97

14. What total purchase price does Sandy pay for the stereo system in Question 13? A. $268.71 C. $264.47 B. $268.21 D. $253.24

15. When you’re preparing an income statement, to calculate gross margin, you must subtract A. sales discounts and sales returns and allowances from gross sales. B. cost of goods sold from net sales. C. income tax from income before taxes. D. total operating expenses from net sales.

16. Figure A-3 lists financial information for the month of September for a large clothing store. Using the retail method of inventory, estimate the value of the ending inventory at cost on September 30. A. $12,283 C. $140,432 B. $115,000 D. $143,750

Use this illustration to answer Question 16.

Brandy’s Boutique Financial Highlights for September 1-September 30 Beginning Inventory Cost $575,000 Retail $718,750 Net Purchase (Sept) Cost $60,000 Retail $75,000 Net Sales (Sept) Cost $0 Retail $650,000

17. The method used to calculate depreciation for federal income tax purposes is the A. sum-of-the-years’ digits method. B. declining-balance method. C. units-of-production method. D. modified accelerated cost recovery system method.

18. Jay Corp. bought a machine for $15,000. The machine is expected to produce 10,000 units. The machine has a residual value of $5,000. Assuming the machine produces 400 units during Year 1, what should the depreciation expense be? A. $100 C. $400 B. $300 D. $800 ((15000-5000)/10000)X400 = 400

19. The range of 105, 100, 79, 86, 101, 94, 98, 87, and 83 is A. 26. C. 94. B. 92. D. 96.

20. Which of the following statements regarding term insurance is true? A. It provides temporary protection. B. It builds up cash value. C. It pays more than the face amount. D. It’s more expensive than straight life.

21. Which of the following is the bottom line on the income statement? A. The gross margin C. The total operating expenses B. The final sales D. The net income (or loss)

22. A party supplies store recorded net sales of $423,400 for the year. The store’s beginning inventory at retail was $105,850 and its ending inventory at retail was $127,020. What would be the inventory turnover at retail, rounded to the nearest tenth? A. 1.8 C. 3.6 B. 3.3 D. 4.0 423400 / ((105850+127020)/2) = 3.6

23. Brill Enterprises bought a computer system with a total cost of $6,750. If the system has a useful life of 5 years and a residual value of $1,000, what is the annual depreciation for this computer using the straight-line method? A. $1,350 C. $1,200 B. $1,250 D. $1,150 (6750-1000) / 5 = 1150

24. What is the book value of the computer system in Question 23 after two full years of depreciation? A. $5,600 C. $4,000 B. $4,450 D. $3,700 6750 – (2X1150) = 4450

25. Cassandra is repaying an installment loan of $3,500 with 20 equal monthly payments of $196 each. What is the annual percentage rate of the loan? A. 7.55% C. 12% B. 11.16% D. 13.25% ((196X20) – 3500) / 3500 = 0.12

26. The home of Al Gard is assessed at $70,000. The tax rate is 6.15 mills. What is the tax on Al’s home? A. 43.05 C. 430.50 B. 61.50 D. 615.00 (6.15 / 1000) X 70000 =430.5

27. Last month, Bob took a cruise from Florida to the Bahamas. The cost of his round-trip ticket was $832. The federal excise tax on the cruise was 8%, and Florida has a sales tax rate of 6%. What was the total purchase price of Bob’s ticket? A. $832.00 C. $898.56 B. $881.92 D. $948.48 832 + (0.06 X 832) + (0.08 X 832) = 948.48

28. Look at the line graph shown in Figure A-4. This line graph illustrates the monthly sales for a company that sells music CDs. According to the graph, how many CDs were sold in the month of May? A. 500 C. 1,500 B. 1,000 D. 2,000 CANNOT DO AS NO FIGURE SHOWN

29. Hector Ramirez received three As and one B in his college courses. What is his grade point average? Assume each course is three credits. Assume A = 4, B = 3, C = 2, and D = 1. A. 3.0 C. 3.75 B. 3.25 D. 3.80 (3 X 4) + (1 X 3) / 4 = 3.75

30. Given: Net sales $40,000. Beginning inventory at retail $14,000, ending inventory at retail $20,000. Cost of goods sold $19,500. To the nearest hundredth, the inventory turnover at retail is A. 5.23. C. 3.25. B. 5.15. D. 2.35.

31. Look at the bar graph shown in Figure A-5. This graph illustrates the amount of heating oil that was consumed over the winter months in the Henderson household. According to the graph, during which month did the Hendersons use the largest amount of heating oil? A. January C. November B. February D. December CANNOT DO AS NO FIGURE SHOWN

32. According to the bar graph shown in Figure A-5, what was the smallest amount of heating oil the Hendersons used during any one month? A. 10.0 gallons C. 11.0 gallons B. 10.5 gallons D. 11.5 gallons CANNOT DO AS NO FIGURE SHOWN

33. Sam bought a stereo for a total of $676.24, including state sales tax. The state sales tax rate is 7%. What was the total amount of sales tax on the stereo? A. $632.00 C. $47.34 B. $85.59 D. $44.24 676.24/100 X 7 = 47.34

34. A company’s balance sheet shows total assets of $450,991, total current liabilities of $47,342, and total long-term liabilities of $150,509. Its total stockholder equity must be A. $197,851. C. $300,482. B. $253,140. D. $450,991. 450991-47342-150509 = 253140

35. The circle chart shown in Figure A-6 illustrates the favorite foods of a selected group of five-year-old children. A total of 5,280 children were polled in order to construct this chart. According to the information provided in the chart, how many children chose pizza as their favorite food? A. 211 C. 1,584 B. 739 D. 2,112 0.4 X 5280 = 2112

Use this illustration to answer Question 35.

Pizza 40% Pasta 30% French Fries 14% Cheese 12% Undecided 4%

36. The weighted-average method for pricing inventory is best used A. only for grains. C. for heterogeneous products. B. only for fuels. D. for similar goods.

37. A street vendor recorded the following hot dog sales for the week: 100 on Monday, 87 on Tuesday, 95 on Wednesday, 125 on Thursday, 210 on Friday, 250 on Saturday, and 57 on Sunday. What is the mean sales per day? A. 210 C. 132 B. 185 D. 57 (100 + 87 + 95 + 125 + 210 + 250 + 57) / 7 = 132

38. Leona Merchandising had beginning inventory of $300,000 and ending inventory of $250,000 in the year 2006. If Leona’s cost of goods sold was $1,240,000 in 2006, its inventory turnover was A. 4.51 times. C. 2.25 times. B. 4.13 times. D. 1.85 times. 1,240,000 / ((300000+250000)/2) = 4.51

39. A fire insurance policy has an annual premium of $780. What is the regular refund if the policy is canceled by the insurance company after five months? A. $455.00 C. $156.00 B. $325.00 D. $111.43

40. What is the total amount of tax due on a property with an assessed value of $315,200? The property tax rate is 53.7 mills. A. $169,262.40 C. $5,869.65 B. $16,926.24 D. $315.00 (53.7 / 1000) X 315200 = 16926.24

41. Determine the median of the following numbers: 25, 28, 22, 27, 25, 20, 30, 23, 27, and 29. A. 25 C. 27 B. 26 D. 28

42. Which type of depreciation is not based on pasage of time? A. Straight-line C. Units of production B. Declining balance D. Accumulated

43. Which of the following is a type of vehicle insurance that covers damage sustained by the insured’s vehicle in an accident? A. Collision C. Comprehensive B. Liability D. Deductible

44. Today, a new Ford costs $24,000. In 1970, it cost $6,000. What is the price relative? A. $40 C. $4,000 B. $400 D. $18,000

45. Find the range of the following set of numbers: 247, 562, 498, 149, 568, 327, and 470. A. 498 C. 419 B. 470 D. 403

46. A life insurance policy that pays whether the policyholder lives or dies is called A. premium insurance. C. term insurance. B. straight life insurance. D. 20-year endowment.

47. A computer costs $500 today relative to a cost of $1,500 some ten years ago. The price relative is A. 3.3%. B. 30.3%. C. 33%. D. 33.33%. (500/1500)X100

48. Manuel Juarez has a revolving credit account that uses the average daily balance to calculate finance charges. During April 2007 (a month with 30 days), Manuel had an unpaid balance of $445.12 for 18 days and an unpaid balance of $221.38 for 12 days. Calculate his average daily balance for April 2007. A. $445.12 C. $333.25 B. $355.62 D. $221.38 ((445.12 X 18) + (221.38 X 12)) / (12 + 18)

49. Find the mode of the following list of prices: $1.67, $1.29, $0.79, $1.29, $0.89, $0.89, $0.79, $1.67, $0.79, $0.57, and $0.79. A. $0.57 C. $0.89 B. $0.79 D. $1.67

50. If you buy eight bottles of soda that cost $1.29 each and the sales tax rate is 6%, what will be the total amount of your purchase? Round your answer to the nearest cent. A. $9.71 C. $10.94 B. $10.32 D. $16.32 (1.06 X 1.29) X 8 =10.9392