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Answers

Here are the answers to the quiz with some brief discussion. If you missed more than three questions you should consider reviewing your basic math skills. (If you missed only certain types of problems, use a math resource to study just those types. Usually fractions give the most trouble, because we use them the least.)

  1. 438.56 — The amount of 438.56253... is rounded to 438.56.
  2. 3.133 — In this case the lowest common denominator is 45, or you could also have just multiplied 5 times 9 to obtain a common denominator to add the fractions 4/5 and 21/9. The result of the addition is the fraction 141/45. To convert this to a decimal, divide 141 by 45, which is 3.13333... which rounded to three places is 3.133.
  3. 5.9 months — $42,000 = 3x where x is the finance department monthly cash burn rate. x = $14,000. Therefore the total cash used ("burned") each month is $56,000 and the number of months before until the budget is used up is $328,000 ÷ $56,000 = 5.85714, rounded to 5.9.
  4. - 2.5% — After year 1, net income is 130% from the base amount. 130% is reduced by 25% (in other words, 75% remains of the 130%). This is 97.5%. Therefore, at the end of the two periods, net income has decreased 2.5%.
  5. 125 X .25 = 31.25; 125/.25 = 500
  6. -15; 21 — In the first case, negative amounts are added. In the second case, two negative amounts are multiplied, which results in a positive amount.
  7. 81.25 — 81 + (.75 ÷ 3)
  8. 3:2:1 and 3/6, 2/6, 1/6 in both cases representing A, C, and B.
  9. $30,000 — Because the total amount paid includes the sales tax, it is 108% of the price of the car. The price of the car is $32,400/1.08 = $30,000.
  10. 60% — Ames is now receiving 80% of 75%.
  11. 25% — Going from 40% to 30% of the total is a 25% decrease. In other words, 30% is 75% of 40%. Notice that the problem is not saying that your year 2 budget decreased by 30% from last year, which would be 12% of the total.
  12. A = L + E — This is known as the "accounting equation" and is the fundamental concept behind accounting.
  13. 7/24 decrease — This requires you to convert the fractions to amounts with lowest common denominators in order to compare them. These are 16/24 for the 2/3 and 9/24 for the 3/8.
  14. a) $2,000 discount; b) $40,000 still owing. — The question says that a $48,000 cash payment was made (not $48,000 of the invoice) within the 10 days, so this has to be after applying some amount of discount. Therefore, $48,000 is 96% of what amount? $48,000/.96 = $50,000 of the invoice was paid. This means a $2,000 discount was obtained by paying the $48,000. The balance owing is $90,000 - $50,000 = $40,000.
  15. (T - a)/b = x — Following the basic algebra procedure for isolating an element.

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Worthy & James Publishing is a provider of basic accounting books covering fundamental accounting principles, business accounting, and business math. Topics in financial accounting and business accounting covered include generally accepted accounting principles (GAAP), the accounting cycle needed to prepare financial statements such as the balance sheet, income statement, statement of cash flows, statement of stockholders’ equity, and financial statement analysis using ratios and other procedures. Internal control and cash budgets are included.

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