6.John and Mary Customer have submitted their current personal tax return that contains the following information on various forms and schedules:

Interest	6,000
Sole proprietor income	10,500
Capital losses	2,000
Total tax	14,000
Taxes withheld	14,600
Sales proceeds	5,000
Depreciation	950

Based on the information provided, what is the couples cash flow?

A.$137,850

B.$136,450

C.$135,500

D.$130,850

7.Which of the following is NOT a form of global cash flow analysis used in banking:

A.Public companies with concentrated shareholder positions.

B.Real estate investors with multiple holdings.

C.Professional clients with business interests.

D.Subchapter S corporations and their shareholders.

8.When underwriting the annual debt service requirement for a business line of credit, it is prudent to use the

A.interest actually paid over the last 12 months.

B.average interest actually paid over the last 36 months.

C.anticipated interest to be paid over the next 12 months.

D.interest that would be paid over the next 12 months assuming a fully extended line.

9.When considering Form 1040 capital gains as a source of cash in the global cash flow formula, the

A.reported gain should not be used as a source of cash, whether recurring or nonrecurring.

B.reported gain should be used as a source of cash only if subsequent asset sales are likely to take place.

C.asset selling prices should be used as a source of cash if sales proceeds were not reinvested in another asset.

D.asset selling price minus the gain should be excluded to isolate the recaptured depreciation amount.

10.Once a problem loan has been identified, which of the following best describes the order in which a resolution should be reached?

A.Identify the cause/s of the problem, determine resources available to cure the problem, and implement a plan to address the problem.

B.The borrower and banker recognize a problem, then examine internal operations and external factors to determine the cause, and assess resources available to address the problem.

C.After identifying a problem and determining the cause/s (internal operations and/or external factors), the banker develops a plan to address the problem.

D.After the internal operational issues and external factors that led to a problem are determined, the banker determines whether to call an event of default.

11.You have just completed a cash flow for a customer that shows the following results:

Schedule A, Itemized deductions	(9,500)
Schedule B, Interest & dividends	3,000
Schedule D, Capital gains	2,000
Schedule E, Operating income	6,750
Schedule K-1, Partnership	(1,250)
Schedule A, Consumer debt service	(500)
Schedule E, Rental property debt service	(7,000)

What is the customers personal debt service coverage ratio?

A.2.84x

B.2.74x

C.2.34x

D.1.84x

12.Which of the following interest amounts, reported on the Form 1040 Schedule B (Interest and Ordinary Dividends), should be excluded in the global cash flow formula?

A.Accrued interest on discounted bonds.

B.Interest from partnerships or other pass-through entities.

C.Interest received from your own financial institution.

D.Verified interest received from your own private mortgages.

13.All of following statements are part of the definition of global cash flow EXCEPT:

A.It quantifies cash inflows and outflows for individuals and their closely held businesses.

B.The goal is to surface contingent risks that could negatively impact debt service.

C.Both business and personal debt service is included in debt service.

D.The tool provides a roadmap that addresses all situations.

14.Cash flow from items reported on page 1 of the Form 1040 includes which of the following?

A.Partnership income.

B.Capital losses.

C.Net operating losses.

D.Unemployment compensation.

15.ABC Corporation has encountered financial difficulty in the past year and experienced substantial management turnover during that time. Although loan payments remain current and the bank has attempted to work with the new management team to identify causes of the performance problems, the company has decided to file bankruptcy. Which of the following effects of the bankruptcy is LEAST likely to affect the bank?

A.Monthly loan payments received prior to the filing must be returned.

B.No legal actions to collect the loan may be taken.

C.Additional collateral assigned in the last three months may be voided.

D.The bank may not setoff its claims against the companys accounts at the bank.

16.Which of the following events is most likely to lead to business failure?

A.Recruiting a new CEO from a major industry competitor.

B.Failing to achieve budgeted sales growth in one year.

C.Receiving a term loan from the majority shareholders.

D.Controlling personnel costs by hiring family members.

17.A customer submitted a personal financial statement when requesting a new, unsecured personal loan. In addition to the information below, the statement notes the existence of a personal guaranty in the amount of $20,000. The residence was purchased two months ago for $820,000. What would the customers adjusted net worth be?

Cash	400	Mortgage Debt	600,000
Money Market Accounts	600	Note & Bills Payable	100,000
Personal Residence	820,000	700,000
Personal Property	200,000
Net Worth	321,000
$1,021,000	$1,021,000

A.$321,000

B.$301,000

C.$121,000

D.$101,000

18.When the tax return indicates alimony, which of the following additional expenses should the analyst be alert for?

A.Medical expenses.

B.Mortgage interest.

C.Child support.

D.Rent expense.

19.The basis for reporting assets on personal financial statements is

A.Historical cost.

B.Current fair market value.

C.Taxable basis.

D.Amortized cost.

20.Which of the following tax payments for salaried individuals is determined from Form W-2?

A.Estimated tax payments.

B.Social Security tax payments.

C.Alternative minimum tax payments.

D.Capital gains tax payments.