Engineering Economics (1 to 80)

1. The paper currency issued by the central Bank, which forms part of the country's money

supply.

A. Bank note

B. Check

C. Coupon

D. T-bills

A. Bank note *

2. Reduction in the level of national income and output usually accompanied by the fall in the

general price level.

A. Deflation

B. Depreciation

C. Devaluation

D. Inflation

A. Deflation *

3. It is a series of equal payments occurring at equal interval of time.

A Amortization

B. Annuity

C. Dept

D. Deposit

B. Annuity *

4. The place where buyers and sellers come together.

A. Business

B. Buy and sell section

C. Market

D. Recreation center

C. Market *

5. A market whereby there is only one buyer of an item for which there are no goods substitute.

A. Monopoly

B. Monopsony

C. Oligopoly

D. Oligopsony

B. Monopsony *

6. It is a series of equal payments occurring at equal interval of time where the first payment is

made after several periods, after the beginning of the payment.

A. Annuity due

B. Deferred annuity

C. Ordinary annuity

D. Perpetuity

B. Deferred annuity *

7. The total income equals the total operating cost.

A. Balanced sheet

B. Break even - no gain no loss

C. Check and balance

D. In-place value

B. Break even - no gain no loss *

8. Kind of obligation which has no condition attached.

A. Analytic

B. Gratuitous

C. Private

D. Pure

B. Gratuitous *

9. Direct labor costs incurred in the factory and direct material costs are the costs of all

materials that go into production. The sum of these two direct costs is known as

A. GS and A expenses

B. Operating and maintenance costs

C. O and M costs

D. Prime cost

D. Prime cost *

10. An index of short term paying ability is called

A. acid-test ratio

B. current ratio

C. profit margin ratio

D. receivable turn-over

A. acid-test ratio *

11. An artificial expenses that spreads the purchase price of an asset or another property over a

number of years.

A. Amnesty

B. Bond

C. Depreciation

D. Sinking fund

C. Depreciation *

12. Estimated value at the end of the useful life.

A. Book value

B. Fair value

C. Market value

D. Salvage value

D. Salvage value *

13. Consists of the actual counting or determination of the actual quantity of the materials on

hand as of a given date.

A. Material count

B. Material update

C. Physical inventory

D. Technological assessment

C. Physical inventory *

14. Additional information of prospective bidders on contact documents issued prior to bidding

date.

A. Bid bulletin

B. Delict

C. Escalatory

D. Technological assessment

A. Bid bulletin *

15. A series of uniform accounts over an infinite period of time.

A. Annuity

B. Depreciation

C. Inflation

D. Perpetuity

D. Perpetuity *

16. The quantity of a certain commodity that is offered for sale at a certain price at a given place

and time.

A. Demand

B. Goods

C. Stocks

D. Supply

D. Supply *

17. Work-in process is classified as

A. an asset

B. an expenses

C. An owner's equity

D. a liability

A. an asset *

18. What is the highest position in the corporation?

A. Board of Directors

B. Chairman of the Board

C. President

D. Stockholders

B. Chairman of the Board *

19. Type of ownership in business where individuals exercise and enjoy the right in their own

interest.

A. Equitable

B. Public

C. Private

D. Pure

C. Private *

20. Decrease in the value of a physical property due to the passage of time.

A. Depletion

B. Depreciation

C. Inflation

D. Recession

B. Depreciation *

21. An association of two or more individuals for the purpose of operating a business as

co-owners for profit.

A. Company

B. Corporation

C. Partnership

D. Sole proprietorship

C. Partnership *

22. We may classify an interest rate, which specifies the actual rate of interest on the principal

for one year as

A. effective rate

B. exact interest rate

C. nominal rate

D. rate of return

A. effective rate *

23. It is defined to be the capacity of a commodity to satisfy human want.

A. Discount

B. Luxury

C. Necessity

D. Utility

D. Utility

24. It is the amount which a willing buyer will pay to a willing seller for a property where each

has equal advantage and is under no compulsion to buy or sell.

A. Book value

B. Fair value

C. Market value

D. Salvage value

C. Market value *

25. This occurs in a situation where a commodity or service is supplied by a number of vendors

and there is nothing to prevent additional vendors entering the market.

A. Elastic demand

B. Monopoly

C. Oligopoly

D. Perfect competition

D. Perfect competition *

26. These are products or services that are desired by human and will be purchased if money is

available after the required necessities have been obtained.

A. Luxuries

B. Necessities

C. Product goods and services

D. Utilities

A. Luxuries *

27. These are products or services that are required to support human life and activities that will

be purchased in somewhat the same quantity even though the price varies considerably.

A. Luxuries

B. Necessities

C. Product goods and services

D. Utilities

B. Necessities *

28. A condition where only few individuals produce a certain product and that any action of one

will lead to almost the same action of the others.

A. Monopoly

B. Oligopoly

C. Perfect competition

D. Semi-monopoly

B. Oligopoly *

29. Grand total of the assets and operational capability of a corporation.

A. Authorized capital

B. Investment

C. Money market

D. Subscribed capital

A. Authorized capital *

30. The worth of the property equals to the original cost less depreciation.

A. Book value

B. Face value

C. Market value

D. Scrap value

A. Book value *

31. Money paid for the use of borrowed capital.

A. Credit

B. Interest

C. Discount

D. Profit

B. Interest *

32. Liquid assets such as cash and other assets that can be converted quickly into cash, such as

accounts receivable and merchandise are called

A. current assets

B. Fixed assets

C. total assets

D. None of the above

A. current assets *

33. The length of time which the property may be operated at a point.

A. Economic life

B. Operating life

C. Physical life

D. All of the above

A. Economic life *

34. The provision in the contract that indicates the possible adjustment of material cost and

labor cost.

A. Contingency clause

B. Escalatory clause

C. Main clause

D. Secondary clause

B. Escalatory clause *

35. The present worth of all depreciation over the economic life of the item is called

A. book value

B. capital recovery

C. depreciation recovery

D. sinking fund

C. depreciation recovery *

36. Gross profit, sales less cost of goods sold, as percentage of sale is called

A. gross margin

B. net income

C. profit margin

D. rate of return

A. gross margin *

37. Worth of the property as shown in the accounting records of an enterprise.

A. Book value

B. Fair value

C. Market value

D. Salvage value

A. Book value *

38. Those funds that are required to make the enterprise or project a going concern.

A. Current accounts

B. Initial investment

C. Substantial capital

D. Working capital

D. Working capital *

39. A market situation where there is only one seller with many buyer.

A. Monopoly

B. Monopsony

C. Oligopoly

D. Oligopsony

A. Monopoly *

40. A market situation where there are few sellers and few buyers.

A. Bilateral oligopoly

B. Bilateral oligopsony

C. Oligopoly

D. Oligopsony

A. Bilateral oligopoly *

41. A market situation where there is one seller and one buyer.

A. Bilateral monopoly

B. Bilateral monopsony

C. Monopoly

D. Monopsony

A. Bilateral monopoly *

42. A market situation where there are only two buyers with many sellers.

A. Duopoly

B. Duopsony

C. Oligopoly

D. Oligopsony

B. Duopsony *

43. The cumulative effect of elapsed time on the money value of an event, based on the earning

power of equivalent invested funds capital should or will earn.

A. Interest rate

B. Present worth factor

C. Time value of money

D. Yield

C. Time value of money *

44. Defined as the future value minus the present value.

A. Capital

B. Discount

C. Interest

D. Rate of return

B. Discount *

45. The flow back of profit plus depreciation from a given project is called

A. cash flow

B. capital recovery

C. earning value

D. economic return

A. cash flow *

46. The profit derived from a project or business enterprise without consideration of obligations

to financial contributors or claims of other based on profit.

A. Earning value

B. Economic return

C. Expected yield

D. Yield

B. Economic return *

47. The payment for the use of borrowed money is called

A. interest

B. loan

C. maturity value

D. principal

A. interest *

48. The interest rate at which the present work of the cash flow on a project is zero of the

interest earned by an investment.

A. Effective rate

B. Nominal rate

C. Rate of return

D. Yield

C. Rate of return *

49. The ratio of the interest payment to the principal for a given unit of time and usually

expressed as a percentage of the principal.

A. Interest

B. Interest rate

C. Investment

D. All of the above

B. Interest rate *

50. The true value of interest rate computed by equations for compound interest for a 1 year

period is known as

A. effective interest

B. expected return

C. interest

D. nominal interest

A. effective interest *

51. The intangible item of value from the exclusive right of a company to provide a specific

product or service in a stated region of the country.

A. Book value

B. Franchise value

C. Goodwill value

D. Market value

B. Franchise value *

52. The recorded current value of an asset is known as

A. book value

B. present value

C. salvage value

D. scrap value

A. book value *

53. Scrap value of an asset is sometimes known as

A. book value

B. future value

C. replacement value

D. salvage value

D. salvage value *

54. Sometimes called second hand value.

A. Book value

B. Going value

C. Salvage value

D. Scrap value

C. Salvage value *

55. An intangible value which is actually operating concern has due to its operation.

A. Book value

B. Fair value

C. Going value

D. Goodwill value

C. Going value *

56. The value which a disinterested third party, different from the buyer and seller, will

determine in order to establish a price acceptable to both parties.

A. Fair value

B. Franchise value

C. Goodwill value

D. Market value

A. Fair value *

57. A type of annuity where the payments are made at the end of each payment period starting

from the first period.

A. Annuity due

B. Deferred annuity

C. Ordinary annuity

D. Perpetuity

C. Ordinary annuity *

58. It is a series of equal payments occurring at equal intervals of time where the first payment

is made after several periods, after the beginning of the payment.

A. Deferred annuity

B. Delayed annuity

C. Progressive annuity

D. Simple annuity

A. Deferred annuity *

59. A type of annuity where the payments are made at the start of each period, beginning from

the first period.

A. Annuity due

B. Deferred annuity

C. Ordinary annuity

D. Perpetuity

A. Annuity due *

60. Which is NOT an essential element of an ordinary annuity?

A. the amounts of all payments are equal.

B. The payments are made at equal interval of time.

C. The first payment is made at the beginning of each period.

D. Compound interest is paid on all amounts in the annuity.

C. The first payment is made at the beginning of each period. *

61. A is a periodic payment and I is the interest rate, then present worth of a perpetuity =

A. Ai

B. Ain

C. An

/i

D. A/i

D. A/i *

62. A mathematical expression also known as the present value of an annuity of one called

A. demand factor

B. load factor

C. present worth factor

D. sinking fund factor

C. present worth factor*

63. As applied to a capitalized asset, the distribution of the initial cost by a periodic changes to

operation as in depreciation or the reduction of a dept by either periodic or irregular

prearranged program is called

A. amortization

B. annuity

C. annuity factor

D. capital recovery

A. amortization*

64. The reduction of the value of an asset due to constant use and passage of time.

A. Book value

B. Depletion

C. Depreciation

D. Scrap value

C. Depreciation *

65. A method of computing depreciation in which the annual charge is a fixed percentage of the

depreciated book value at the beginning of the year to which the depreciation applies.

A. Declining balance method

B. Sinking fund method

C. Straight line method

D. SYD method

A. Declining balance method *

66. A method of depreciation whereby the amount to recover is spread uniformly over the

estimated life of the asset in terms of the periods or units of output.

A. Declining balance method

B. Sinking fund method

C. Straight line method

D SYD method

C. Straight line method *

67. Which of the following depreciation methods cannot have a salvage value of zero?

A. Declining balance method

B. Sinking fund method

C. Straight line method

D. SYD method

A. Declining balance method *

68. A method of depreciation where a fixed sum of money is regularly deposited at compound

interest in a real or imaginary fund in order to accumulate an amount equal to the total

depreciation of an asset at the end of the asset's estimated life.

A. Declining balance method

B. Sinking fund method

C. Straight line method

D. SYD method

B. Sinking fund method *

69. The function of interest rate and time that determines the cumulative amount of a sinking

fund resulting from specific periodic deposits.

A. Capacity factor

B. Demand factor

C. Present worth factor

D. Sinking fund factor

D. Sinking fund factor *

70. The first cost of any property includes

A. the original purchase price and freight and transportation charges

B. installation expenses

C. initial taxes and permits fee

D. all of the above

D. all of the above *

71. In SYD method, the sum of years digit is calculated using which formula with n = number

of useful years of the equipment.

A. n(n-1)

2

B. n(n+1)/2

C. n(n+1)

D. n(n-1)

B. n(n+1)/2 *

Apply summation of arithmetic progression (average of first and last term times nth term)

72. Capitalized cost of any property is equal to the

A. annual cost

B. first cost + cost of perpetual maintenance

C. first cost + interest of the first cost

D. first cost + salvage value

B. first cost + cost of perpetual maintenance *

73. The lessening of the value of an asset due to the decrease in the quantity available

(referring to the natural resources, coal, oil, etc).

A. Depletion

B. depreciation

C. Incremental cost

D. Depreciation

A. Depletion *

74. Is the simplest form of business organization.

A. Corporation

B. Enterprise

C. Partnership

D. Sole proprietorship

D. Sole proprietorship *

75. An association of two or more persons for a purpose of engaging in a profitable business.

A. Corporation

B. Enterprise

C. Partnership

D. Sole proprietorship

C. Partnership *

76. A distinct legal entity which can practically transact any business transaction which a real

person could do.

A. Corporation

B. Enterprise

C. Partnership

D. Sole proprietorship

A. Corporation *

77. Double taxation is a disadvantage of which business organization?

A. Corporation

B. Enterprise

C. Partnership

D. Sole proprietorship

A. Corporation *

78. Which is NOT a type of business organization?

A. Corporation

B. Enterprise

C. Partnership

D. Sole proprietorship

B. Enterprise *

79. What is the minimum number of incorporators in order that be organized?

A. 3

B. 5

C. 10

D. 7

B. 5 *

80. In case of bankruptcy of a partnership,

A. the partners are not liable for the liabilities of the partnership.

B. the partnership assets (excluding the partners' personal assets) only will be used to pay

the liabilities.

C. the partners personal assets are attached to the debt of the partnership.

D. the partners may sell stock to generate additional capital.

C. the partners personal assets are attached to the debt of the partnership. *