Engineering Economics (81 to 160)

81. Which is TRUE about partnership?

A. It has a perpetual life.

B. It will be dissolved if one of the partners ceases to be connected with the partnership.

C. It can be handed down from one generation of partners to another.

D. Its capitalization must be equal for each partner.

B. It will be dissolved if one of the partners ceases to be connected with the partnership. *

82. Which is TRUE about corporation?

A. It is not the best form of business organization.

B. The minimum number of incorporators to start a corporation is three.

C. Its life is dependent on the lives of the incorporators.

D. The stockholders of the corporation are only liable to the extent of their investments.

D. The stockholders of the corporation are only liable to the extent of their investments. *

83. Represent ownership, and enjoys certain preferences than ordinary stock.

A. Authorized capital stock

B. Common stock

C. Incorporator's stock

D. Preferred stock

D. Preferred stock *

84. Represent the ownership of stockholders who have a residual claim on the assets of the

corporation after all other claims have been settled.

A. Authorized capital stock

B. Common stock

C. Incorporator's stock

D. Preferred stock

B. Common stock *

85. The amount of company's profits that the board of directors of the corporation decides to

distribute to ordinary shareholders.

A. Dividend

B. Par value

C. Return

D. Share stock

A. Dividend *

86. A certificate of indebtness of a corporation usually for a period not less than 10 years and

guaranteed by a mortgage on certain assets of the corporation.

A. Bond

B. Common stock

C. Preferred stock

D. T-bill

A. Bond *

87. A form of fixed-interest security issued by central or local government, companies, banks or

other institutions. They are usually a form of long-term security, buy may be irredeemable,

secured or unsecured.

A. Bonds

B. Certificate of deposit

C. T-bills

D. All of these

A. Bonds *

88. A type of bond where the corporation pledges securities which it owns (i.e., stocks, bonds of

its subsidiaries).

A. Collateral trust bond

B. Coupon bond

C. Mortgage bond

D. Registered bond

A. Collateral trust bond *

89. A type of bond which does not have security except a promise to pay by the issuing

corporation.

A. Collateral trust bond

B. Debenture bond

C. Mortgage bond

D. Registered bond

B. Debenture bond *

90. A type of bond issued jointly by two or more corporations.

A. Collateral trust bond

B. Debenture bond

C. Joint bond

D. Registered bond

C. Joint bond *

91. A type of bond whose guaranty is in lien on railroad equipments.

A. Debenture bond

B. Equipment obligations bond

C. Infrastructure bond

D. Registered bond

B. Equipment obligations bond *

92. If the security of the bond is a mortgage on certain specified asset of a corporation, this bond

is classified as

A. coupon bond

B. joint bond

C. mortgage bond

D. registered bond

C. mortgage bond *

93. A type of bond where the corporation's owners name are recorded and the interest is paid

periodically to the owners with their asking for it.

A. Incorporated bond

B. Preferred bond

C. Registered bond

D. All of these

C. Registered bond *

94. Bond to which are attached coupons indicating the interest due and the date when such

interest is to be paid.

A. Collateral trust bond

B. Coupon bond

C. Mortgage bond

D. Registered bond

B. Coupon bond *

95. An amount of money invested at 12% interest per annum will double in approximately

A. 4 years

B. 5 years

C. 6 years

D. 7 years

C. 6 years *

96. The 72 rule of thumb is use to determine

A. how many years money will triple

B. how many years of money will double

C. how many years to amass 1 million

D. how many years to quadruple the money

B. how many years of money will double *

97. To triple the principal, one must use

A. derivatives

B. implicit functions

C. logarithms

D. integration

C. logarithms *

98. A currency traded in a foreign exchange market for which the demand is consistently high in

relation to its supply

A. Certificate of deposit

B. Hard currency

C. Money market

D. Treasury bill

B. Hard currency *

99. Everything a company owns and which has a money value is classified as an asset. Which of

the following is classified as an asset?

A. Fixed assets

B. Intangible assets

C. Trade investments

D. All of these

D. All of these *

100. Which an example of an intangible asset?

A. Cash

B. Furnitures

C. Investment in subsidiary companies

D. Patents

D. Patents *

101. Lands, buildings, plant and machinery are examples of

A. current assets

B. fixed assets

C. intangible assets

D. trade investments

B. fixed assets *

102. An increase in the value of a capital asset is called

A. capital expenditure

B. capital gain

C. capital stock

D. profit

B. capital gain*

103. The reduction in the money value of a capital asset is called

A. capital expenditure

B. capital loss

C. deficit

D. loss

B. capital loss *

104. It is a negotiable claim issued by a bank in lieu of a term deposit.

A. Bond

B. Capital gain

C. Certificate of deposit

D. Time deposit

C. Certificate of deposit *

105. Any particular raw material or primary product (e.g. cloth, wood, flour, coffee...) is called

A. commodity

B. necessity

C. stock

D. utility

A. commodity *

106. It denotes the fall in the exchange rate of one currency in terms of others. The term usually

applies to floating exchange rates.

A. Currency appreciation

B. Currency devaluation

C. Currency depreciation

D. Currency float

C. Currency depreciation *

107. The deliberate lowering of the price of a nation's currency in terms of the accepted standard

(Gold, American dollar or the British pound).

A. Currency appreciation

B. Currency devaluation

C. Currency depreciation

D. Currency float

B. Currency devaluation *

108. The residual value of a company's assets after all outside liabilities (shareholders excluded)

have been allowed for.

A. Dividend

B. Equity

C. Par value

D. Return

B. Equity *

109. A saving which takes place because goods are not available for consumption rather than the

consumer really want to save.

A. Compulsory saving

B. Consumer saving

C. Forced saving

D. All of these

C. Forced saving *

110. A document that shows proof of legal ownership of a financial security.

A. Bank note

B. Bond

C. Check

D. Coupon

D. Coupon *

111. Defined as the capacity of commodity to satisfy human want.

A. Discount

B. Luxuries

C. Necessity

D. Utility

D. Utility *

112. It is the profit obtained by selling stocks at a higher price than its original purchase price.

A. Capital gain

B. Debenture

C. Goodwill

D. Internal rate of return

A. Capital gain *

113. The quantity of a certain commodity that is offered for sale at a certain price at a given time

and place.

A. Demand

B. Market

C. Supply

D. Utility

C. Supply *

114. The quantity of a certain commodity that is bought at a certai8n price at a given time and

place.

A. Demand

B. Market

C. Supply

D. Utility

A. Demand *

115. "When one of the factors of production is fixed in quantity or is difficult to increase,

increasing the other factors of production will result in a less than proportionate increase in

output".

A. Law of demand

B. Law of diminishing return

C. Law of supply

D. Law of supply and demand

B. Law of diminishing return *

116. "When free competition exists, the price of a product will be that value where supply is

equal to the demand".

A. Law of demand

B. Law of diminishing return

C. Law of supply

D. Law of supply and demand

D. Law of supply and demand *

117. An accounting term that represents an inventory account adjustment.

A. Cost of good sold

B. Overhead

C. Payback

D. Variance

A. Cost of good sold *

118. The simplest economic order quantity (EOQ) model is based on which of the following

assumptions?

A. Shortages are not allowed.

B. Demand is constant with respect to time.

C. Reordering is instantaneous. The time between order placement and receipt is zero.

D. All of the choices

D. All of the choices *

119. In economics, a "short-term" transaction usually has a lifetime of

A. 3 months or less

B. 1 year or less

C. 5 years or less

D. 10 years or less

C. 5 years or less *

120. In the cash flow, expenses incurred before time = 0 is called

A. disbursements

B. first costs

C. receipts

D. sunk costs

D. sunk costs *

121. An imaginary cost representing what will not be received if a particular strategy is rejected.

A. Initial cost

B. Opportunity cost

C. Replacement cost

D. Sunk cost

B. Opportunity cost *

122. In replacement studies, the existing process or piece of equipment is known as

A. asset

B. challenger

C. defender

D. liability

C. defender *

123. In replacement studies, the new process or piece of equipment being considered for

purchase is known as

A. asset

B. challenger

C. defender

D. liability

B. challenger *

124. ______ means that the cost of the asset is divided into equal or unequal parts, and only one

of these parts is taken as an expense each year.

A. Artificial expense

B. Capitalizing the asset

C. Depreciating the asset

D. Expensing the asset

B. Capitalizing the asset *

125. Indicate the CORRECT statement about depreciation.

A. The depreciation is not the same each year in straight line method.

B. The declining balance method can be used even if the salvage value is zero.

C. The sum-of-years' digit method (SYD), the digits 1 to (n + 1) is summed.

D. Double declining balance depreciation is independent of the salvage value.

D. Double declining balance depreciation is independent of the salvage value. *

126. An artificial deductible operating expense designed to compensate mining organizations for

decreasing mineral reserves.

A. Deflation

B. Depletion

C. Inflation

D. Reflation

B. Depletion *

127. The change in cost per unit variable change is known as

A. fixed cost

B. incremental cost

C. semi-variable cost

D. sunk cost

B. incremental cost *

128. What type of cost increases step-wise?

A. Direct labor cost

B. Operating and maintenance cost

C. Semi-variable cost

D. Supervision cost

C. Semi-variable cost *

129. Which of the following is NOT a variable cost?

A. Cost of miscellaneous supplies

B. Income taxes

C. Insurance cost

D. Payroll benefit costs

C. Insurance cost *

130. Which of the following is NOT a fixed cost?

A. Depreciation expenses

B. Janitorial service expenses

C. Rent

D. Supervision costs

D. Supervision costs *

131. The annual costs that are incurred due to the functioning of a piece of equipment is known

as

A. General, selling and administrative expenses

B. Operating and maintenance costs

C. Prime cost

D. Total cost

B. Operating and maintenance costs *

132. The sum of the direct labor cost and the direct material cost is known as

A. indirect manufacturing expenses

B. marketing cost

C. prime cost

D. total cost

C. prime cost *

133. Research and development costs and administrative expenses are added to the factory cost

to give the ___________ of the product.

A. manufacturing cost

B. marketing cost

C. prime cost

D. total cost

A. manufacturing cost *

134. The sum of the prime cost and the indirect manufacturing cost is known as

A. factory cost

B. manufacturing cost

C. research and development cost

D. total cost

A. factory cost *

135. The manufacturing cost plus selling expenses or marketing expanses equals

A. administrative cost

B. indirect production cost

C. miscellaneous cost

D. total cost

D. total cost *

136. Which of the following is NOT a direct labor expense?

A. Assembly

B. Inspection

C. Supervision

D. Testing

C. Supervision *

137. All are administrative expense EXCEPT:

A. Accounting

B. Data processing

C. Marketing

D. Office supplies

C. Marketing *

138. On of the following is NOT a selling or marketing expense. Which one?

A. Advertising

B. Commission

C. Insurance

D. Transportation

C. Insurance *

139. Research and development expenses includes all EXCEPT one. Which one?

A. Drafting

B. Laboratory

C. Prototype

D. Testing

B. Laboratory *

140. Which is not a factory overhead expense?

A. Expediting

B. Pension, medical, vacation benefits

C. Quality control and inspection

D. Testing

D. Testing *

141. Bookkeeping consists of two steps, namely recording the transactions and categorization of

transactions. Where are the transactions (receipts and disbursements) recorded?

A. Columnar

B. Journal

C. Ledger

D. Statement of account

B. Journal *

142. The following are ledger accounts EXCEPT:

A. Asset accounts

B. Bank accounts

C. Liability accounts

D. Owner's equity accounts

B. Bank accounts *

143. The journal and the ledger together are known simply as _____________ of the company.

A. accounting system

B. balance sheet

C. bookkeeping system

D. the books

D. the books *

144. The basic accounting equation is

A. Assets = Liability + Owner's equity

B. Liability = Assets + Owner's equity

C. Owner's equity = Assets + Liability

D. Owner's equity = Liability - Assets

A. Assets = Liability + Owner's equity *

145. The ability to convert assets to cash quickly is known as

A. insolvency

B. leverage

C. liquidity

D. solvency

C. liquidity *

146. The ability to meet debts as they become due is known as

A. insolvency

B. leverage

C. liquidity

D. solvency

D. solvency *

147. What is considered as an index of short-term paying ability?

A. Acid test ratio

B. Current ratio

C. Gross margin

D. Return of investment

B. Current ratio *

148. An acid test ratio is a ratio of

A. gross profit to net ratio

B. net income before taxes to net sales

C. net income to owner's equity

D. quick assets to current liabilities

D. quick assets to current liabilities *

149. The ratio of the net income to the owner's equity is known as

A. gross margin

B. price-earning ratio

C. Profit margin ratio

D. return of investment

D. return of investment *

150. Payback period is the ratio of

A. cost of goods sold to average cost of inventory on hand

B. gross profit to net sales

C. initial investment to net annual profit

D. net income before taxes to net sale

C. initial investment to net annual profit *

151. A secondary book of accounts, the information of which is obtained from the journal.

A. Balance sheet

B. Ledger

C. Trial balance

D. Worksheet

B. Ledger *

152. The present worth of cost associated with an asset for an infinite period of time is referred

to as

A. annual cost

B. capitalized cost

C. increment cost

D. operating cost

B. capitalized cost *

153. A stock of a product which is held by a trade or government as a means of regulating the

price of that product.

A. Buffer stock

B. Hoard stock

C. Stock pile

D. Withheld stock

A. Buffer stock *

154. A negotiable claim issued by a bank in lieu of a term deposit is called

A. Certificate of deposit

B. Cheque

C. Currency

D. T-bills

A. Certificate of deposit *

155. A form of business firm which is owned and run by a group of individuals for their mutual

benefit.

A. Cooperative

B. Corporation

C. Enterprise

D. Partnership

A. Cooperative *

156. A document which shows the legal ownership of financial security and entitled to payments

thereon.

A. Bond

B. Consol

C. Contract

D. Coupon

D. Coupon *

157. A government bond which have an indefinite life rather than a specific maturity.

A. Debenture

B. Consol

C. Coupon

D. T-bill

B. Consol *

158. Refers to the order quantity that minimizes the inventory cost per unit time.

A. Economic order quantity

B. Private order quantity

C. Public order quantity

D. Social order quantity

A. Economic order quantity *

159. What is referred to as an individual who organizes factors of production to undertake a

venture with a view to profit?

A. Agent

B. Commissioner

C. Entrepreneur

D. Salesman

C. Entrepreneur *

160. The money that is inactive and does not contribute to productive effort in an economy is

known as

A. frozen asset

B. hard money

C. idle money

D. soft money

C. idle money *