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punitkaur
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Topic: Kaplan 800 DS
PostTue Nov 03, 2009 2:20 pm
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The average (arithmetic mean) monthly balance in Company X's petty cash account on any given date is the average of the losing balances posted on the last business day of each of the past 12 months. On March 6, 1990, the average monthly balance was 692.02. What was the average monthly balance as of June 23rd, 1990?

1)As of June 23,1990, the total of all closing balances posted on the last business day of each of the last 12 months was $45.64 less than it had been on March 6, 1990

2)The closing balances posted on the last business days of March, April, and May 1990 were $145.90,$3000.00 and $725.25 respectively.


OA is A. While I agree with OA, I am not sure if I understand the explanation provided in book for 2. It says 2 does not include closing balances posted on the last business days of March-May 1989, so it alone is insufficient to answer.
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PostTue Nov 03, 2009 2:44 pm
punitkaur wrote:
The average (arithmetic mean) monthly balance in Company X's petty cash account on any given date is the average of the losing balances posted on the last business day of each of the past 12 months. On March 6, 1990, the average monthly balance was 692.02. What was the average monthly balance as of June 23rd, 1990?

1)As of June 23,1990, the total of all closing balances posted on the last business day of each of the last 12 months was $45.64 less than it had been on March 6, 1990

2)The closing balances posted on the last business days of March, April, and May 1990 were $145.90,$3000.00 and $725.25 respectively.
Let's start by deconstructing the question stem; a good general rule for DS is that the longer the stem, the more time you should spend thinking about it.

The average monthly balance on March 6, 1990, is the average of the closing balances for March 1989-February 1990.

The average monthly balance on June 23, 1990, is the average of the closing balances for June 1989-May 1990.

What's the difference between the two? The first includes March, April and May 1989; the second includes March, April and May 1990 instead.

(1) gives us the difference between the second year and the first, allowing us to calculate the June 23, 1990, average monthly balance - sufficient.

(2) gives us March, April and May 1990, which is a good start, but not enough.

If we had the difference between March, April and May 1990 and those same months in 1989, we could answer the question. However, without info about those months in 1989, we have no idea what the year-over-year change is.

For example, if those 3 months in 1989 had the exact same balances as in 1990, then the answer would be $692.02.

If those 3 months in 1989 had lower balances, then the answer would be more than $692.02.

If those 3 months in 1989 had higher balances, then the answer would be less than $692.02.

(1) is sufficient, (2) isn't: choose A.
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punitkaur
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PostTue Nov 03, 2009 2:55 pm
Thanks Stuart! Really helped.
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