Bell SOCA MCQ

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The University of Adelaide *

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4070BWT

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Business

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Feb 20, 2024

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21/09/2023, 13:29 Online Assessment https://www.aamctraining.edu.au/InternationalCourse/ExaminationManagement/ResultManagement.aspx 1/7 Learning Centre Logout THANK YOU FOR COMPLETING THE MULTI-CHOICE TEST! S.NO. Question Answer Given 1 This SOCA has been designed for training purposes only. A SOCA found in many workplaces will be more comprehensive. You must open and read the Bell Case Study Scenario in the Resources tab of your Learning Centre before attempting the following SOCA questions. Yes, I have accessed and read the Bell Case Study Scenario and have it open to refer to. Student Number : 61627 Student Name : Daniel Wu Course : FNS50322 Diploma of Finance and Mortgage Broking Management Assessment : Bell SOCA MCQ Total Questions : 26 Marks Obtained : 26 Result: Satisfactory Attempts:2/5 Back to Content And Assessments Dashboard Back to Learning Centre - Online Course Content

21/09/2023, 13:29 Online Assessment https://www.aamctraining.edu.au/InternationalCourse/ExaminationManagement/ResultManagement.aspx 2/7 2 Select the one correct statement that lists the goals Michelle and Matthew (preferred name Matt) Bell have told you in their Case Study Scenario. The accountant has suggested they borrow in the company name. Borrow the full cost of the tipper and equipment $143,755.37. The fees will be paid from their business savings of $113,000. The Bells want a residual ‘balloon’ at end of the loan to keep the repayments low and with a competitive interest rate. They are keen on a five 5-year term. Fixed rates are important to Matthew to avoid any rate increases over the life of the loan. Michelle requires monthly payments as it is easier to manage. 3 Matt’s Pergola and Landscaping Balance Sheet for the year ending 20XX, shows cash at bank of $113,000. Refer to the Bell Case Study Scenario to read the specialist advice from the accountant and answer the question. Select the one correct answer that tells you why the Bells are not using the $113,000 in the business account towards the purchase of the tipper and equipment. The accountant has advised the Bells not to use the cash from the business. She has advised them to consider purchasing commercial premises in 6 months and that they keep the cash in the business and retain the business profits. The accountant is keen to talk about establishing a trust to distribute profits and possibly hold the new commercial premises. This will maximise the tax advantages for the business. 4 Refer to the Bell Comparison Report in the Case Study Scenario. List the one correct answer that lists the lenders that accept trusts as a borrowing entity. Pepper Money and Westpac 5 Refer to the Profit and Loss Statement for the year ended 30 June 20XX. Select the profit from the year ending 20XX that you will use in the servicing capacity for Matt’s Pergola and Landscaping Pty Ltd. $233,544.00 6 Refer to Profit and Loss Statement year ending 20XX. Select the one correct list of addbacks you could use when completing a servicing capacity for Matt’s Pergola and Landscaping Pty Ltd from the list of expenses. Depreciation – Plant $1,245 Depreciation - M/V commercial 8,031 M/V commercial – Interest $3,001

21/09/2023, 13:29 Online Assessment https://www.aamctraining.edu.au/InternationalCourse/ExaminationManagement/ResultManagement.aspx 3/7 7 Refer to the Bell Comparison Report in the Case Study Scenario. The Bells have mentioned in the interview, they would like to borrow in the company name. Select the correct explanation you would give to Matthew and Michelle regarding the implications of borrowing in a company name and the securities the lender may require. The Bells will not have to make payments from their personal income; Will use the company income to make the payments; Will have the tax benefits within the company; Will have to provide Company guarantees and a registered company charge; Will have to provide personal/directors guarantees. The security required by the lender will be the Tipper and equipment, the charge over the business, the Company guarantee, and the personal/directors guarantees. 8 Michelle and Matt are unsure of the difference between a chattel mortgage, hire purchase and lease. Refer to the lender policy and product information in the Bell Case Study Scenario to research and select the three correct explanations of a Chattel Mortgage. A chattel mortgage lets the Bells own the tipper and equipment immediately, with the ability to pay it off over the selected fixed term. The Bells could agree on monthly payments to match their repayments to the cash flow of the business. The Bells may opt to pay lower instalments and clear the balance with a ‘balloon’ payment at the end of the finance term. At that point, the Bells are free to sell the asset to cover the balloon payment. 9 Refer to the lender policy and product information in the Bell Case Study Scenario and research the impact on their financial situation. Select two correct statements that explain the impact a Chattel Mortgage would have on the Bells’ financial situation. The interest payments will generally be tax deductible, and the Bells may be able to claim a deduction for depreciation of the asset. There is no GST on loan repayments. The clients may be able to claim depreciation.

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21/09/2023, 13:29 Online Assessment https://www.aamctraining.edu.au/InternationalCourse/ExaminationManagement/ResultManagement.aspx 4/7 10 Refer to the Bell Case Study Scenario and read the lender policy and product information under the ‘Research provided by the broker’. Select one correct risk that can apply for Chattel Mortgage. The Bells will not be able to sell the tipper until the loan is fully repaid. The Bells may obtain an approval from a lender to pay out the balance of the loan, and probably pay an early termination fee. 11 Michelle and Matt are unsure of the difference between a chattel mortgage, hire purchase and lease. Refer to the lender policy and product information in the Bell Case Study Scenario to research and select the three correct explanations of a Hire Purchase. The Lender will purchase the assets from Isuzu Trucks and Equipment Pty Ltd and the Bells will buy it from the lender in instalments over an agreed term. With a hire purchase agreement, the Bells can expect to pay an initial deposit, normally around 10% and follow with a series of repayments, with or without a balloon payment at the end. When the Bells make the final payment, the ownership of the asset will pass onto them. The Bells will be free to use or do of it as they wish. The Bells will have full use of the equipment, as well as all the risks, maintenance and benefits of ownership. 12 Refer to the lender policy and product information in the Bell Case Study Scenario and research the impact on their financial situation. Select two correct statements that explain the impact a Hire Purchase would have on the Bells’ financial situation. The Bells will be able to claim a tax benefit for depreciation of the asset amount. If the Bells use their net profit from the business to purchase the asset outright, they would not incur any lender fees and charges. 13 Refer to the Bell Case Study Scenario and read the lender policy and product information under the ‘Research provided by the A hire purchase is best suited for medium value and lifespan of the security, which is unlikely to become obsolete during the

21/09/2023, 13:29 Online Assessment https://www.aamctraining.edu.au/InternationalCourse/ExaminationManagement/ResultManagement.aspx 5/7 broker’. Select one correct risk that can apply for Hire Purchase. term of the loan. The risk for the Bells will be reduced as the tipper and equipment is new. 14 Michelle and Matt are unsure of the difference between a chattel mortgage, hire purchase and lease. Refer to the lender policy and product information in the Bell Case Study Scenario to research and select the three correct explanations of a Lease. The lender will purchase the tipper and equipment direct from Isuzu Trucks and Equipment Pty Ltd. The lender will rent it to the Bells for the duration of the agreement. In return, the Bells will pay regular lease payments, with or without a balloon payment at the end. The Bells will not own the asset during the agreement, but will be responsible for the maintenance, damage and running costs. At the end of the lease, the lender usually has a variety of options: Return the asset to the lender. Make an offer to buy the equipment from the lender. Lease the asset for another period, usually at a very low cost. 15 Refer to the lender policy and product information in the Bell Case Study Scenario and research the impact on their financial situation. Select two correct statements that explain the impact a Lease would have on the Bells’ financial situation. The Bells can claim a GST credit for the GST included in the lease charges if the vehicle is being leased to them while carrying on their business. The Bells will need to end the finance lease agreement and take out a new one if they decide to cancel the lease. Early termination may incur substantial fees. 16 Refer to the Bell Case Study Scenario and read the lender policy and product information under the ‘Research provided by the broker’. Select one correct risk that can apply for a Lease. In a lease Matthew and Michelle will be responsible for the maintenance, damage and running costs of the tipper and equipment. Even though they do not own the tipper and equipment if there was damage or high maintenance costs Matthew and Michelle would have to pay that cost.

21/09/2023, 13:29 Online Assessment https://www.aamctraining.edu.au/InternationalCourse/ExaminationManagement/ResultManagement.aspx 6/7 17 Which product would best suit the Bells’ requirements? Select the one correct answer. The Chattel mortgage would best suit the Bells as the tipper and equipment would be in their business name, with a balloon payment, interest payments will be tax deductible, and the Bells may be able to claim a deduction for the depreciation of the assets. 18 Refer to the Bell Comparison Report under the heading 'Recommendation and overview'. Select the recommended loan. Westpac Equipment Finance 19 Refer to the Bell Comparison Report under the heading 'Recommendation and overview'. Select the recommended loan amount. $143,755.37 20 Refer to the Bell Comparison Report under the heading 'Recommendation and overview'. Select the recommended loan term. 5 years 21 Refer to the Bell Comparison Report under the heading 'Recommendation and overview'. Select the monthly repayment. $1,405.00 22 Matt and Michelle are keen for you to explain why you have chosen this lender. Refer to the Bell Comparison Report in the Case Study Scenario. Select the one correct reason why you are recommending the product. Westpac Equipment Finance, there is a comparative saving of $1,925.80 and no upfront lender fee. A competitive base interest rate of 4.81% and true interest rate of 5.03%. A residual ‘balloon payment’ is available. The finance allows for a company to borrow. 23 Refer to the Bell Comparison Report. You explained the reasons to the Bells why you have chosen that product. Select the one Westpac has no upfront lender fee, no monthly fee and a saving of $1,925.80 over the term of the loan. We understand

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21/09/2023, 13:29 Online Assessment https://www.aamctraining.edu.au/InternationalCourse/ExaminationManagement/ResultManagement.aspx 7/7 explanation that Matt and Michelle could give you to confirm their level of financial understanding. that this product has the best comparative saving. 24 There are approximately seven acknowledgements a client will need to sign in order for a broker to submit their loan. Select three acknowledgements the Matt and Michelle must sign prior to a loan being lodged by the broker. We are requesting the broker to submit a loan application on our behalf. This document is a reliable reflection of my financial position and that there is nothing else to declare that may reasonably affect my application for credit. We have received and accepted the terms and conditions. 25 Refer to the Bell Case Study Scenario and check which of the three signatures matches Matt's driver's licence. A 26 Matt and Michelle need to acknowledge the SOCA by signing, dating and entering their legal names. Check the Bell Case Study Scenario and select the one correct listing of their legal names. Matthew Bell and Michelle Bell

Bell SOCA MCQ

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