[scubacamper]

So I’m going through MCQ’s (not Ninja, I must admit) and I keep getting messed over by changes in calculation methods.

Example:

ACME company borrows from the local bank, a $500,000 loan on August 21, 2003. It’s a 1-year note, payable July 31, 2004 and the bank discounts the note at [XYZ] percentage. What amount of interest payable should be reported on the December 31, 2003 statement?

Now, on most questions, you just assume 12 full calendar mos. to calculate the answer.

But then, there are other times in which the question wants exact calculations – such as in this case. The answer to this question in my MCQ bank was based on 11 and 1/3 mos (based on the standard 30-day month) instead of 12 mos.

Now, I (used to) always default to calculating the most precise answer possible, with the given information – defaulting to use 11.3333 mos instead of 12. But other questions in the past have not used this method and instead, used 12 mos. and of course, I got them wrong because my answer was too precise (especially on TBS’s!). Of course, if I don’t see my answer as one of the MCQ choices, I’ll re-do the math, but that uses up PRECIOUS time!

Obviously, this is quite confusing and reeeeeally frustrating – which method do I use?? Precise or not-so-precise?! How do I know which one to use?

B TBD
A TBD
R 57
F 62, 70, 65

[Anonymous]

Check the dates in the questions and use 360 days unless the problem says 365. Using months is probably what is tripping you up.

[Author]

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