Contractor Exam Questions

will709

Looking for a SMART person

I am preparing for my Va contractors Exam that is given by PSI. I have two of their exam questions and school answers. I can NOT figure out how the school came up with their answers - PLEASE help anyone!!!!

1-What is the average collection period ratio for a firm that has $365,000 in annual revenues, $6600 in current receivables, and net income of $32,000??
a-4.8
b-6.6
c-11.4
4-55.3
SCHOOL ANSWER 11.4 - THIS IS DRIVING ME CRAZY

2-How much is an employer who withheld employee Medicare and Social Security taxes of $765 REQUIRED to send to the IRS????
a-$145
b-$620
c-$765
d-$1330
SCHOOL ANSWER $1330 - I am completely LuLU at this point

tinner666

#2 is REAL simple. Employer is MATCHING withholding. DON'T forget to ADD that into your OH!
#1, I don't recall. Too muddled now to refigure it too.

__________________
Frank Slate Roof Repairs, Richmond, Va.

Ed the Roofer

# 1 is $ 365,000.00 divided by $ 32,000.00 = 11.40625, rounded to 11.4

# 2 is wrong. The matching amount of $ 765.00 would be $ 765.00 X 2 = $ 1,530.00

Interpret the question in another way, and rephrase the question tor read: How much of the employers own funds will need to be sent to the government, if the withheld amount from one employees check was $ 765.00.

In that instance, the matching amount of the employers own funds answer would be $ 765.00

edit:
They may be breaking down the funds that go to different entities.
medicare and social security. I think it is 1.3 % to medicare and the balance to social security, but since these sums get lumped together, it comes out as a withheld amount from the employees check of 7.65 % with an equal matching 7.65 % from the employer.

Ed The Mathemetician

Kgmz

#2 doesn't make any sense to me either. But how old are these sample questions? They could be using some old tax rates or something.

Current tax rates for SS and Med are 6.2 and 1.45 for both parties which does equal 7.65 and would be perfect for solving the problem. But the correct answer of 1330 has a difference of 565 from the 765 which doesn't make sense.

I am wondering if there is a typo here or on the original sample question?

1530 instead of 1330.

I would be asking for clarification from the testers.

L. B. Condulet

Question number 1 is phrased incorrectly and you are given insufficient data to answer the question.

collection ratio

Definition

The average time period for which receivables are outstanding. Equal to accounts receivable divided by average daily sales. also called collection ratio. also called average collection period.

tinner666

Well, darn it! I didn't pay attention to the fact that the sums didn't add up. Shame on me! Dang it!

That is odd. I know that I passed the test, but don't remember the details.

__________________
Frank Slate Roof Repairs, Richmond, Va.

Pavola

I'd have to verify this, but I believe you're only matching the SS tax and not the Med. tax. I think the SS tax is 6.2% and the Med. - 1.45% So, at 7.65% they were basing the tax ($765) on a 10K payroll. The way I figured it out it come to $1385, close but still off. So I'd guess the actual tax rate is different from what I remember.

Ed the Roofer

It is, for sure a matching 7.65 %.

Ed

joasis

This post is a great example of the BS behind some tests for contractors. I do not figure payroll, my accountant does it for me, and I know the basics, but why that question. Why not one based on the law, like what must you do to verify employee's legal status to work?

I would far rather see a question asking how or where to find information on load and span calculations, soil compaction, or a thousand other things a contractor should know.

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L. B. Condulet

Absolutely. Or how about how to determine your overhead costs and how to price yourself accordingly.

will709

thanks to all that replied about the exam questions for the Virginia Contractors exam.

I have verified that there is a typo for #2 - the answer should have been $1530 as Kgmz indicated.

As for question #1 - it is true that 365000 divided by 32000 equals 11.4 which make no sense to me. The definition by L.B. Condulet - "accounts receivable divided by average daily sales" is the definition I know - which should produce an answer of 6.6 (( Dailey sales=365000/365=1000, ratio=6600/1000=6.6)

I tried to discuss these issues with PSI on line folks (they administer the contractor tests for the state of Virginia) - they all stoned walled me by saying that "the answers and questions were developed by professionals and that all their material is correct" ;they would accept no discussion or rebuttals.

Anyone with similar experiences with PSI please share them with us contractors.