Professional Admissions Skills Assessment : College and Professional Program Admissions : Undergraduate Programs : The Eller College of Managem...

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
- 1,500
(beginning)

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
Professional Admissions Skills Assessment : College and Professional Program Admissions : Undergraduate Programs : The Eller College of Managem...

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