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ASSOCIATION OF ACCOUNTING TECHNICIANS OF SRI LANKA

LEVEL I EXAMINATION - JANUARY 2024
(102) BUSINESS MATHEMATICS AND STATISTICS
18-02-2024
 Instructions to candidates (Please Read Carefully): Morning
[09.00 – 12.00]
(1) Time: 03 hours.
No. of Pages : 09
(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

The factors of the above expression are:

(1) (2)

(3) 3(x + 5)2 (4)

(03 marks)

1.2 Suthakar invested Rs.400,000/- in a fixed deposit at the annual interest rate of 8%
compounded annually. The total interest on the investment at the end of 4th year would be
(to the nearest integer):

(1) Rs.144,196/- (2) Rs.128,000/- (3) Rs.187,731/- (4) Rs.103,884/-

(03 marks)
1.3 You have given the following information:

P( ) = 0.40 P(Y) = 0.55 P = 0.85

Based on the above information, the is:

(1) 0.30 (2) 0.10 (3) 0.45 (4) 0.64

(03 marks)

1.4 The quantity (in kilograms) of four types of rice (P, Q, R, S) used by a family in 2022 and
2023 are tabulated below:
Type of rice
Year P Q R S

2022 25 28 30 40
2023 30 28 35 50

The quantity relative of type S rice, considering year 2022 as the base year is:

(1) 80% (2) 56% (3) 225% (4) 125%

(03 marks)

1.5 The summary of statistics relating to variables x and y are as follows:

Based on the above data, the correlation co-efficient between “x” and “y” would be:

(1) -0.7955 (2) -0.7575 (3) -0.7759 (4) -0.7795

(03 marks)

1.6 The following table shows the number of government employees who went abroad during
the year 2023, and their ages collected from the records of a state organization:
Age (in years) 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54
No. of Workers 20 35 20 10 10 5

The median age of the employees who went abroad is (to the nearest integer):

(1) 25 (2) 37 (3) 26 (4) 34

(03 marks)

1.7 The table below shows the probability distribution of the discrete random variable X:
x 66 67 68 69 70 71
0.2 0.1 0.15 a 0.25 0.05

The value of “a” would be:

(1) 0.15 (2) 0.20 (3) 0.25 (4) 0.30

(03 marks)

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1.8 Thamosha wanted to invest Rs.55,000/- in a bank at a rate of 16% per annum. If the
interest is compounded quarterly, the annual effective interest rate would be:

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

(03 marks)

1.9 Ranjan borrowed a loan of Rs.2,000,000/- from a bank to start a business. He agreed to
repay the loan over 5 years in equal annual installments at 12% per annum. The annual
installment, of the loan would be (to the nearest integer):

(1) Rs.486,618/- (2) Rs.554,785/- (3) Rs.640,000/- (4) Rs.304,927/-

(03 marks)

1.10 Quarterly sales figures of a tea factory from 2016 to 2023 were used to determine the
following seasonal indices:
Season 1st quarter 2nd quarter 3rd quarter 4th quarter
Seasonal Index 1.12 0.88 0.95 1.05

If the estimated trend value for the 4th quarter of 2023 was 1,265, the forecasted sales
value for the 4th quarter is (to the nearest integer):

(1) 1,205 (2) 1,328 (3) 1,202 (4) 1,331

(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
(A) Fisher’s Index (1) Present value of cash flows over a period of time.
(B) Net Present Value (2) The index that base year quantities must be chosen as weights.
(C) Seasonal Variation (3) The geometric mean of Laspeyres and Paasche’s index.
(D) Laspeyre’s price Index (4) Repeated movements involved in a period of time.
(01 mark each, 04 marks)

1.12 The following bar chart shows the number of minutes a student watched TV over the last
6 days:
Minutes

Friday
Thursday
Wednesday
Tuesday
Monday
Sunday

0 10 20 30 40 50 60 70 80 90

Find the total number of minutes the student watched TV on Tuesday and Thursday.
(02 marks)
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1.13 Find the 10th term of the following arithmetic series:

0, , , , …………….. (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 According to the regression model given by y = 3 – 2x, when a unit increases in the
variable x, 2 units increase in the variable y. (01 mark)

1.15 The correlation coefficient between two variables is -0.95, and it is interpreted as a strong
negative linear correlation between the variables. (01 mark)
(Total 40 marks)
End of Section A

SECTION B
(Total 40 marks)

Question 02
(a) Profit of a company increases every year by 15% than previous year’s profit. The company
earned a profit of Rs.500,000/- in first year.
You are required to:
Calculate the profit earned by the company in 4th year. (03 marks)

(b) Anura purchased 61 shares from company A and 80 shares from company B at a total cost
of Rs.7,042/-. Wasana purchased 61 shares from company A and 14 shares from company
B at a total cost of Rs.3,346/-
You are required to:
Calculate the cost (price) of a share of each company. (04 marks)

(c) Nuwan plans to buy a phone charger for Rs.840/- without VAT. This is subjected to Value
Added Tax (VAT) at 15%.
You are required to:
Calculate the total amount payable by Nuwan to buy the phone charger. (03 marks)
(Total 10 marks)

Question 03
The Total Cost (TC) function and the Demand (P) function of a firm per month are given by the
following equations:
TC = 1

P =

Where “q” is the number of units produced during the month.

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You are required to:

(a) Identify the Total Revenue (TR) function and Marginal Cost (MC) function of the firm.
(04 marks)

(b) Calculate the Marginal Cost (MC) of the firm when the firm produces 50 units (02 marks)

(c) Calculate the Break-Even Quantity. (04 marks)

(Total 10 marks)

Question 04
The owner of a restaurant wanted to expand its dishes offered to customers. Therefore, he
varied the number of dishes on the menu in each week and asked his customers to rate their
satisfaction.
Each week he noted the number of dishes offered, (x), and the average customer satisfaction
rating on a scale of 1 to 10, (y), where 10 means excellent. The data obtained for 8 weeks are
summarized in the below table:
No. of Dishes (x) 15 18 22 23 24 20 17 16
Customer Satisfaction Rating (y) 10 8 6 6 7 8 9 10

Using the above data:

You are required to:

(a) Identify the least squares regression line given by to represent the relationship
between number of dishes and customer satisfaction. (08 marks)

(b) Calculate the expected rating of customer satisfaction if he offered 19 dishes in a particular
week. (02 marks)
(Total 10 marks)

Question 05
The following table shows the rainfall (in millimeters) during the month of November 2023:
Rainfall (mm) 50 - 59 60 - 69 70 - 79 80 - 89 90 - 99 100 - 109
No. of Days (f) 3 4 2 9 5 7

Using the above data,

You are required to:
Calculate the following measures of rainfall:
(a) Mode. (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) Manoj obtained a loan from a bank for 4 years at a rate of 12% per annum and it is to be
re-paid in equal annual installments of Rs.65,848/-.
You are required to:
(a) Calculate the amount of the loan obtained by Manoj. (03 marks)

(b) Prepare the amortization schedule to illustrate the repayments of the loan. (03 marks)

(B) Mallika is planning to select an investment plan from 2 options (A and B). Initial investment
cost of the option A and B are Rs.1,800,000/- and Rs.1,400,000/- respectively. Net cash
inflows for next 3 years of both options are as follows:
Year
1 2 3
Option
A 400,000 800,000 1,000,000
B 500,000 600,000 800,000

The discounting factor (cost of capital) of the company is 10% per annum.
You are required to:
(a) Calculate the Net Present Value (NPV) of each option. (05 marks)

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

(C) You are given the following information on how the bottles made of following 3 types of
plastic are disposed:
Type of No. of Bottles
Plastic Correctly Disposed Incorectly Disposed
A 12 5
B 8 7
C 6 12

You are required to:

(a) Calculate the probability that a randomly selected bottle is made from Plastic A.
(02 marks)
(b) Calculate the probability that a randomly selected bottle is made from Plastic B given
that it is disposed incorrectly. (02 marks)

(D) The weekly overtime payment of 2,000 minor staff in a company is normally distributed
with a mean payment of Rs.7,020/- and a standard deviation of Rs.90/-.
You are required to:
Calculate the number of minor staff whose weekly overtime payment is more than
Rs.7,200/-. (03 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 𝑥 :

𝑥
The solutions of a quadratic equation, For ungrouped data:
𝑎𝑥 𝑏𝑥 𝑐 is given by 𝑛
𝑓𝑥
For grouped data:
𝑏± 𝑏 𝑎𝑐 𝑓
𝑥
𝑎 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:
𝑛
𝑆 { 𝑎 𝑛 𝑑} ∆1
Grouped data M0 = L1 + XC
∆1 + ∆2
Geometric sequence:
Standard deviation 𝜎:
The term of a geometric sequence,
For ungrouped data:
Tn = arn-1

The sum of first n terms of a GP: 𝑥− 𝑥 2 𝑥2

or 𝑥
𝑛 𝑛
{𝑟 𝑛 − }
𝑆 𝑎 if 𝑟>
{𝑟− } For grouped data:

{ −𝑟 𝑛 } 𝑓 𝑥− 𝑥 2 𝑓𝑥 2
𝑆 𝑎 if 𝑟< or 𝑥
{ −𝑟} 𝑓 𝑓

𝑆 𝑛𝑎 Otherwise 𝑟
Coefficient of variation (CV):
Quantitative Finance: 𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝜎
= x 100
𝑀𝑒𝑎𝑛 𝑥
Simple interest:
𝑆 𝑋 𝑛𝑟 3(Mean - Median)
Coefficient of skewness =
Standard Deviation
Compound Interest:
𝑆 𝑋{ 𝑟}𝑛 Comparing Two Quantitative Variables:

Discounting: Correlation coefficient (r):

Present Value = Future Value × [𝑛 𝑥𝑦 𝑥 𝑦]

+𝑟 𝑛
{[𝑛 𝑥 𝑥 ] × [𝑛 𝑦 𝑦 ]}
Repayment of mortgage / Loan:
𝑆𝑅 𝑛 𝑅 Regression line under least square method (a and b):
𝐴
{𝑅𝑛 } [𝑛 𝑥𝑦 − 𝑥 𝑦]
b=
Effective Interest Rate: [𝑛 𝑥2 – 𝑥 2]

EIR = { 𝑟 𝑛
} a=𝑦 𝑏𝑥

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 FORMULAE SHEETS (Continued)

Comparison over time with Economic variables Time Series:

Index Numbers: Multiplicative Model

𝑝1
Price Relative = 𝑝0
× 100 T ×S ×C × R
𝑞
Quantity Relative = 𝑞1 × 100 Sets and Probability
0

Value Relative V /0 =
𝑝1 𝑞1
× 100 - Union; A B defines all elements in A
𝑝0 𝑞0
plus all elements in B, no element being
Simple aggregate price index =
𝑝1
× 100 counted twice.
𝑝0

Simple aggregate quantity index =

𝑞1
× 100
- Intersection; A B defines all elements
𝑞0
included in both A and B.

Average price relative = 𝑛

𝑝1
× 100 P (A) – Probability of event A
𝑝0
P (A/B) – Probability of event A, given B
𝑞1
Average quantity relative = 𝑛 × 100
𝑞0 General rules:
P (A B) = P (A) + P (B) – P (A B)
Weighted aggregate indices
1) Base-weighted / Laspeyre’s: 𝑃 𝐴 𝐵
P (A/B) =
Price index =
𝑝1 𝑞0
× 100 𝑃 𝐵
𝑝0 𝑞0
Expectation and Variance of a discrete
𝑞1 𝑝0
Quantity index = 𝑞0 𝑝0
× 100 random variable:

2) Current-weighted / Paasche’s: 𝐸 𝑋 𝑝𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦 × 𝑝𝑎𝑦 𝑜𝑓𝑓 ) 𝑝×𝑥

𝑝1 𝑞1
Price index = × 100
𝑝0 𝑞1
𝑉𝐴𝑅 𝑋 𝑝𝑥 𝑝𝑥
𝑞1 𝑝1
Quantity index = × 100
𝑞0 𝑝1 Normal Distribution:
3) Using standard weights 𝑥 𝜇
𝑝1 𝑤 𝑍
Price index = × 100 𝜎
𝑝0 𝑤

𝑞1 𝑤
Quantity index = 𝑞0 𝑤
× 100

Weighted average of relatives

[ 𝑤 ×𝐼𝑝 ]
Price index = ×
𝑤

[ 𝑤 ×𝐼𝑞 ]
Quantity index = ×
𝑤

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