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ASSOCIATION OF ACCOUNTING TECHNICIANS OF SRI LANKA

LEVEL I EXAMINATION - JANUARY 2023
(102) BUSINESS MATHEMATICS AND STATISTICS
05-03-2023
• Instructions to candidates (Please Read Carefully): Morning
[09.00 – 12.00]
(1) Time: 03 hours.
No. of Pages : 10
(2) All questions should be answered. No. of Questions : 06
(3) Answers should be in one language, in the medium applied for, in the booklets provided.
(4) Submit all workings and calculations. State clearly assumptions made by you, if any.
(5) Use of Non-programmable calculators is only permitted.
(6) Mathematical Tables will be provided.
(7) Action Verb Check List with definitions is attached. Each question will begin with an action verb
excluding OTQ’s. Candidates should answer the questions based on the definition of the verb given
in the Action Verb Check List.
(8) Formulae Sheets are attached.
(9) 100 Marks.

SECTION A
Objective Test Questions (OTQs)
(Total 40 marks)

Question 01
Select the most correct answer for question No. 1.1 to 1.10. Write the number of the selected
answer in your answer booklet with the number assigned to the question.


1.1 3  1


Find “x”.

(1)  (2)   (3)   2 (4)   3
 

(03 marks)

1.2 A person invested Rs.20,000/- at a rate of 8% per annum compounded annually. The total
interest receivable at the end of 3rd year would be (to the nearest integer):

(1) Rs.27,210/- (2) Rs.25,194/- (3) Rs.7,210/- (4) Rs.5,194/-

(03 marks)
1.3 Out of 30 students in a class, it was found that 20 attend English tuition classes, 22 attend
Science tuition classes and 12 attend both English and Science tuition classes:
If a student is selected at random in the class, the probability that a selected student attend
only English tuition classes is:

 
(1) (2) (3) (4)
   
(03 marks)

1.4 The prices of three different commodities in 2019 and 2020 are tabulated below:
Commodity Price (Rs.) - 2019 Price (Rs.) - 2020
A 800 700
B 1,000 850
C 1,200 1,000

The price relative of commodity C (to the nearest integer), using 2019 as the base year is:

(1) 83% (2) 109% (3) 117% (4) 120%

(03 marks)

1.5 The summarized data on advertising cost (x) (Rs.’000) and the number of items sold (y) of a
certain product for the last 8 years are as follows:

6 = 44, 6 = 30, 6 = 160, 6  = 284, 6  = 120

Based on the above data, the correlation co-efficient between x and y is:

(1) -0.28 (2) -0.52 (3) -0.72 (4) -0.82

(03 marks)

1.6 You are given the following frequency distribution:

x 1 - 10 11 - 20 21 - 30 31 - 40 41 - 50 51 - 60
f 5 8 25 32 30 20

The mode of the above frequency distribution is (approximately):

(1) 32.7 (2) 38.3 (3) 30.5 (4) 31.5

(03 marks)

1.7 Consider the following probability distribution of the discrete random variable X:
X 1 2 3 4
Probability P(x) 0.35 0.30 0.20 0.15

The probability that X is less than 3 would be:

(1) 0.30 (2) 0.65 (3) 0.80 (4) 0.95

(03 marks)
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1.8 Namal invested an amount in a bank at an interest rate of 12% per annum. If the interest is
compounded semi-annually, the effective annual interest rate would be:

(1) 6.18% (2) 12.36% (3) 13.42% (4) 25.42%

(03 marks)

1.9 Sarath invested Rs.100,000/- in a fixed deposit of a bank for 2 years at the annual interest
rate of 16% compounded quarterly. The maturity value of the fixed deposit at the end of
the 2nd year would be (to the nearest integer):

(1) Rs.132,000/- (2) Rs.136,857/- (3) Rs.134,560/- (4) Rs.136,049/-

(03 marks)

1.10 The following table provides the average annual sales of bags at a leading retailer over six
years from 2017 to 2022:

Year (x) 2017 2018 2019 2020 2021 2022

Sales (y) 2,050 2,200 2,422 2,075 1,920 1,340

The trend equation of sales has been found to be:

 = 2,439.80 − 145.4

Where ‘y’ is the number of bags sold and ‘x’ is the time.

The predicted annual sales for 2023 (7th year) would be:

(1) 3,458 (2) 2,001 (3) 1,422 (4) 1,567

(03 marks)

Write the answers for question No. 1.11 to 1.13 in your answer booklet with the number assigned
to the question.

1.11 Relate the terms given on the left hand side of the following table with the number of the
appropriate explanation given on the right hand side:

Term Explanation

(1) The ratio between two quantities of the same product

(A) Seasonal variation
observed in two periods.

(B) Base period (2) A series of data points indexed in time order.

(C) Time series (3) Short term repetitive movements.

(D) Quantity relative (4) The period against which all other periods are compared.

(01 mark each, 04 marks)

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1.12 The following table gives the information on monthly income and vehicle ownership of
workers in a company:
Monthly Income Monthly Income
< 50,000 > 50,000
Having an own vehicle 23 27
Not having an own vehicle 30 30

Calculate the number of workers in this company who own a vehicle. (02 marks)

1.13 Find the 12th term of the following geometric series:

3, 6, 12, …………….. (02 marks)

State whether each of the following statements (1.14 and 1.15) is True or False. Write the answer
(True/False) in your answer booklet with the number assigned to the question:

1.14 The most commonly used measures of dispersion are mean and median. (01 mark)

1.15 If the correlation coefficient is positive, both variables move in the same direction.
(01 mark)
(Total 40 marks)
End of Section A

SECTION B
(Total 40 marks)

Question 02

(a) You are given the following simultaneous equations:

2x + 3y = 0
3x + 4y = 5

You are required to:

Calculate the value of ‘x’ and ‘y’. (03 marks)

(b) A, B and C invested money in a business in the ratio of 4 : 3 : 3 respectively. C invested

Rs.1,200,000/- to the business.

You are required to:

Calculate the following:

(i) The total investment made to the business. (02 marks)

(ii) The investment made by A. (02 marks)

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(c) 70% of employees at a manufacturing factory were tested positive for COVID-19. The
number of employees tested negative for COVID-19 were 180.

You are required to:

Calculate the number of employees tested positive for COVID-19 at the factory. (03 marks)
(Total 10 marks)

Question 03

A firm produces Product A. Its monthly variable cost function is 5 + 24 and it has a fixed
cost of Rs.90,000/- per month. The demand function per month is 39 + 5q.

You are required to:

(a) Identify the Total Cost (TC) function and Total Revenue (TR) function. (04 marks)

(b) Identify the Marginal Cost (MC) function of the firm. (02 marks)

(c) Calculate the break-even quantity. (04 marks)

(Total 10 marks)

Question 04

The data in the table below shows the number of online marketing emails sent out per month to
the subscribers and the proportion of subscribers who click and open the email:

No. of marketing e-mails (x) (in.‘000s) 3 4 1 5 4 7 10 8

Proportion : Click and open (y) 0.41 0.59 0.18 0.65 0.57 0.69 0.84 0.64

Using the above data,

You are required to:

(a) Identify the least square regression line given by y = a + bx to predict the proportion of
subscribers who click and open the e-mail. (07 marks)

(b) Calculate the expected proportion of subscribers who click and open the email when 900
e-mails are sent out. (03 marks)
(Total 10 marks)

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 Question 05

The below table represents marks obtained by 160 students in an aptitude test:

Marks No. of Students (f)

30 - 39 13
40 - 49 15
50 - 59 22
60 - 69 25
70 - 79 35
80 - 89 28
90 - 99 22

Using the above data,

You are required to:

Calculate the following:

(a) Median. (03 marks)

(b) Mean. (03 marks)

(c) Standard Deviation. (04 marks)

(Total 10 marks)

End of Section B

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 SECTION C
(Total 20 marks)

Question 06

(A) A loan of Rs.700,000/- was obtained by Amal for 5 years at the interest rate of 8% per
annum and is to be settled in 5 equal annual installments.

You are required to:

(a) Calculate the annual installment of the loan. (03 marks)

(b) Prepare the amortization schedule to illustrate the re-payment of the loan. (03 marks)

(B) The following table represents net cash flows of two (2) projects (Project A and Project B):
Year 0 1 2 3
Project (Rs.) (Rs.) (Rs.) (Rs.)
A (100,000) 60,000 45,000 40,000

B (200,000) 103,000 70,000 50,000

The cost of capital (discounting factor) of the company is 12% per annum.

You are required to:

(a) Calculate the Net Present Value (NPV) of each project. (05 marks)

(b) Identify the best investment option with reasons based on the NPV. (02 marks)

(C) The probability that a student passes a written exam is and a practical exam is . Also a
 
student passes both the written and practical exams has a probability of .


You are required to:

Calculate the probability that the student will pass the written exam given that he passed
the practical exam if a student is selected at random. (03 marks)

(D) The height of soldiers in a regiment are normally distributed with mean height of 170 cm
and a standard deviation of 5 cm.

You are required to:

Calculate the probability that the height of a soldier is more than 180 cm. (04 marks)
(Total 20 marks)
End of Section C
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 ACTION VERBS CHECK LIST
Level of
Description Action Verbs Verb Definitions
Competency
Draw Produce a picture or diagram.
Relate Establish logical or causal connections.
Recall Facts
Knowledge (1)
and Basic State Express details definitely or clearly.
Concepts.
Identify Recognize, establish or select after consideration.
List Write the connected items.

Level of
Description Action Verbs Verb Definitions
Competency
Show validity or otherwise, using knowledge or
Recognize
contextual experience.
Explain &
Comprehension Elucidates Interpret Translate into understandable or familiar terms.
(2) Ideas and Describe Write and communicate the key features.
Information.
Explain Make a clear description in detail using relevant facts.
Define Give the exact nature, scope or meaning.

Level of
Description Action Verbs Verb Definitions
Competency
Reconcile Make consistent / compatible with another.
Graph Represent by graphs.
Assess Determine the value, nature, ability or quality.
Use and Adapt
Application (3) Solve Find solutions through calculations and/or explanation.
Knowledge in
New Prepare Make or get ready for a particular purpose.
Situations.
Demonstrate Prove or exhibit with examples.
Calculate Ascertain or reckon with mathematical computation.
Apply Put to practical use.

Level of
Description Action Verbs Verb Definitions
Competency
Communicate Share or exchange information.
Outline Make a summary of significant features.
Draw Contrast Examine to show differences.
Analysis (4) Connections
Among Ideas Compare Examine to discover similarities.
and Solve
Problems. Discuss Examine in detail by arguments.
Differentiate Constitute a difference that distinguishes something.
Analyze Examine in details to find the solution or outcome.

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 FORMULAE SHEETS
Mathematical Fundamentals: Numerical Descriptive Measures:
Quadratic equation: Mean ̅ :
∑7
The solutions of a quadratic equation, For ungrouped data:
  +  +  = 0 is given by &
∑ 87
 ± √  4
For grouped data:
∑8

2 Median:

Arithmetic sequence: For Ungrouped data Md = (n + 1)th term

2
Term of an arithmetic sequence:
n - Fc
Tn = a + (n - 1) d For Grouped data Md = L1 + 2 XC
fm
The sum of first n terms of an AP:
& Mode:
 
{ 2 + (! − 1))} ∆:
Grouped data M0 = L1 + XC
∆: 0 ∆;

Standard deviation <:

Geometric sequence:
The term of a geometric sequence,
For ungrouped data:
Tn = arn-1
∑(7, 7̅ ); ∑ 7;
The sum of first n terms of a GP: 5 or 5 − ̅ 
& &
{* + , }
 if ">1
{*, } For grouped data:

∑ 8(7, 7̅ ); ∑ 87 ;

{ ,*+ }
{ ,*}
if "<1 5 ∑8
or 5 ∑8
− ̅ 

  ! Otherwise "1
Coefficient of variation (CV):
=>?&@?*@ @ABC?>CD& F
Quantitative Finance:
= x 100
EA?& 7̅
Simple interest:
   (1 + !") 3(Mean - Median)
Coefficient of skewness =
Standard Deviation
Compound Interest:
   {1 + "}& Comparing Two Quantitative Variables:

Discounting: Correlation coefficient (r):

Present Value = Future Value × [! ∑  − ∑  ∑ ]

( 0*)+
5{[! ∑   − (∑ ) ] × [! ∑   − (∑ ) ]}
Repayment of mortgage / Loan:
( & (( − 1) Regression line under least square method (a and b):
'=
{( & − 1} [& ∑ 7G , ∑ 7 ∑ G]
b=
Effective Interest Rate: [& ∑ 7 ; –(∑ 7); ]

EIR = {(1 + ")& − 1} 100% a = I − ̅

9|Page
 FORMULAE SHEETS (Continued)

Comparison over time with Economic variables Time Series:

Index Numbers: Multiplicative Model

J:
Price Relative = JK
× 100 Y T ×S ×C × R
L:
Quantity Relative = × 100 Sets and Probability
LK

Value Relative V / =
∑ J: L:
× 100 ∪ - Union; A∪B defines all elements in A
∑ JK LK
plus all elements in B, no element being
∑ J:
Simple aggregate price index = ∑ JK
× 100 counted twice.

Simple aggregate quantity index =

∑ L:
× 100
∩ - Intersection; A∩B defines all elements
∑ LK
included in both A and B.
J
Average price relative = & ∑ J: × 100 P (A) – Probability of event A
K
P (A/B) – Probability of event A, given B
L
Average quantity relative = & ∑ L: × 100
K General rules:
P (A∪B) = P (A) + P (B) – P (A∩B)
Weighted aggregate indices
1) Base-weighted / Laspeyre’s: \(]∩^)
P (A/B) =
Price index
∑J L
= ∑ J: LK × 100 \(^)
K K
Expectation and Variance of a discrete
∑ L: JK
Quantity index =∑ × 100 random variable:
LK JK

2) Current-weighted / Paasche’s: _()  ∑(`"abcbd × ` aee)  ∑` × 

∑ J: L:
Price index = ∑ JK L:
× 100
f'(()  ∑ `  − (∑ `)
∑L J
Quantity index = ∑ L: J: × 100
K : Normal Distribution:
 Y
X
3) Using standard weights
Price index =
∑ J: O
× 100 <
∑ JK O

∑L O
Quantity index = ∑ L: O × 100
K

Weighted average of relatives

∑[ O ×PQ ]
Price index = × 100
∑O

∑[ O ×PR ]
Quantity index = × 100
∑O

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