ME591D

QUIZ #3 BASIC SCIENCES (ENGINEERING ECONOMICS)

NAME: DATE:
STUDENT NO.: SCORE:

I. Encircle the letter of the correct answer. No erasure. Erasures will not be credited.

1. The worth of a property which is equal to the original cost less depreciation.
A. earning value B. scrap value C. book value D. face value
2. That kind of obligation which has no condition attached?
A. analytical B. gratuitous C. private D. pure
3. The difference between sales revenue and the cost of goods sold.
A. rate of return B. net income
C. gross profit D. gross national product
4. The first cost of any property includes ________
A. installation expenses
B. original purchase price and freight and transportation charges
C. initial taxes and permits' fee
D. all of the above
5. A type of annuity where the payments are made at the start of each period, beginning from the first period.
A. annuity due B. ordinary annuity C. deferred annuity D. perpetuity
6. The value of the stock as stated on the stock certificate.
A. par value B. market value C. book value D. scrap value
7. Which of the following terms is not related to ethics?
A. honesty B. morality C. profitability D. integrity
8. The exclusive right of a company to provide a specific product/service in a given region of the country.
A. outlet B. franchise C. branch D. extension
9. A condition where only few individuals produce a certain product that action of one will lead almost the same action by the other.
A. oligopoly B. semi monopoly C. monopoly D. cartel

10. The length of time during which it is capable of performing the function for which it was designed and manufactured.
A. business life B. economic life C. physical life D. insular life
11. The personnel required for a mechanical plant with 500 kW capacities is _"
A. RME B. CPM C. PME D. MPE

13. A situation in which rival firms drive prices down through attempts to undercut each other prices is called
A. price war B. price control C. price maneuver D. oligopoly
14. The place where currency traded in a foreign exchange market for which the demand is consistently high in relation to its supply.
A. money market B. foreign bill C. treasury bill D. hard currency
15. A form of fixed-interest security issued by central or local governments, companies, banks and other institutions. They are
usually formed of long-term security, but maybe irredeemable, incurred or unsecured.
A. bonds B. T-bill C. cash deposit D. all of these
16. The amount of the company's profit that the Board of Directors of the corporation decides to distribute to ordinary shareholders.
A. dividend B. par value C. share stock D. return

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

A. coupon B. bond C. bank note D. check

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

A. depreciation B. inflation C. recession D. depletion
19. It is a series of equal payment occurring at equal interval of time where the first payment is delayed after several periods, after
the beginning of the payment
A. deferred annuity B. delayed annuity C. progressive annuity D. simple annuity
20. Under the law is the ability of a person to take a recognized legal action. Also, it is natural power or competency to perform an
act, as capacity to contract and ete.
A. supra B. surety C. capacity D. vendee

21. The interest-earning fund in which equal deposits are made at equal intervals of time for the purpose of gradually accumulating
a specific sum of money required at same future date.
A. amortization B. sinking fond C. annuity D. capitalized cost
22. 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. utilities B. necessities
C. luxuries D. product good and services

23. The amount earned by one unit of principal during a unit of time.
A. rate of interest B. cash C. Rate of Return D. receivables

24. A method of depreciation whereby the amount to recover is spread over the estimated life of
the asset in terms of the periods or units of output is called _____
A. SOYD Method B. Declining Balance Method
C. Straight Line Method D. Sinking Fund Method
25. Funds supplied by others on which a fixed rate of interest must be paid and the debt be repaid at a specific place and time.
A. discount B. cash flow C. working capital D. borrowed capital
26. What must two investments with the same present worth and unequal lives have?
A. Different salvage returns B. Different equivalent uniform annual cash flows
C. Identical tax consequences D. Identical salvage values
27. Total amount spent on a physical property until the property is put in operation.
A. First cost B. marginal cost C. sunk cost D. increment cost
28. Gross, profit, sales less cost of goods sold as a percentage of sales called
A. gross margin B. ROI (Rate Of Return) C. profit margin D. price earnings

29. The acquisition of all or a greater part of stock and fixtures of a business in a manner other than in the ordinary course of its
business.
A. tenement B. appeal C. chattel D. bulk sale

30. A general term for various analytical measurements of profitability related to the input resources. Rate earned on average
common stock holders equity and Rate earned on average total assets.
A. lease B. bill of exchange
C. Return on Investment (ROI) D. breach

31. To render void or null, reduce to nothing, cancel, invalid

A delict B. ejectment C. duress D. annulment

32. The act of charging two or more buyers or sellers of different prices for the same product where the elasticity of supply or
demand at each price level differs among market is known as .
A. price optimization B. price discrimination C. price manipulation D. price war

33. A type of bond where the corporation pledges and are secured by assets which it owns (i.e. stocks, bonds of its subsidiaries).
A mortgage bond B. collateral trust bond C. debenture bond D. register bond

34. A situation whereby payment is made for work net done. The term also applies to the case where more workers are used than
are a reasonable requirement for efficient operation.
A. feather bedding B. downtime pay
C. check-in pay D. moon lighting

35. It is where buyers and sellers come together.

A. business B. market C. recreation center D. mall

36. 69Method of paying a debt by installment usually, but not necessarily. by equal payments and by equal periods of time.
A. amortization B. interest due C. annuity due D. balance due

37. A financial summary showing the relationship among assets, liabilities and ownership in the corporation on a specific date.
A. audit statement B. balance sheet statement
C. income statement D. credit-debit statement

38. The difference between the present worth and the worth at some time in the future.
A. discount B. investment C. amortization D. depletion
39. The output or sales at which income is sufficient to equal the operating cost.
A. cash flow B. break even C. investment D. depreciation

40. An accounting book where the original record of all transactions are on its content.
A. journal B. ledger C. income statement D. balance sheet

41. Occurs when one of the parties fails to satisfy all of its obligations under a contract
A. breach of contract B. negligence C. tort D. force majeure

42. An index of short term paying ability is called _____.

A. cash index B. maturity index C. current ratio D. cut off index

43. What is the acid test ratio?

A. The ratio of owner's equity to total current liabilities.
B. The ratio of current assets (exclusive of inventory) to total current liabilities.
C. The ratio of all assets to total liabilities.
D. The ratio of gross margin to operating sales, and administrative expenses.

44. Type of annuity in which the schedule of payments is postponed, that is, the first payment is made after several periods.
A. deferred annuity B. annuity due C. ordinary annuity D. perpetuity

45. The span of life of an equipment during which it produces a product and it is designed to produce at a profit
A. economic life B. write-off period C. physical life D. maturity life
46. The price that can be obtained from the sale of the property after it has been used.
A scrap value B. interest C. book value D. salvage value
47. Parties whose consent or signature in a contract is not considered intelligent.
A. minors B. dead persons C. senior citizens D. demented persons
48. The ratio of the output power in Watts and the product of Volts and Amperes.
A. capacity factor B. power factor C. load factor D. demand factor
49. A foreign Mechanical Engineer will be allowed to practice in the Philippines if the country where he is a citizen or subject also
allows Filipino engineers to practice, this is called .
A foreign repatriation B. foreign exchange
C. foreign policy D. foreign reciprocity

50. A system used to record historical financial transactions, the resultant records of which are used for product costing, satisfaction
of statutory requirements, reporting of profit for income tax purposes, and general company management
A. bookkeeping system B. cost accounting system
C. cash and accrual system D. periodic inventory system
51. The decrease in value of property due to the gradual extraction of its contents.
A. depletion B. depreciation C. amortization D. asset
52. A depreciation model where the value of an asset decreases at a decreasing rate.
A. SOYD B. Sinking fund
C. Straight line depreciation D. Declining balance

53. Which of the following methods of advertising is most likely to violate ethical standard for engineering design firms?
A. Yellow pages (phone book) advertising
B. Radio or television advertising
C. Company brochures using self-laudatory language
D. Distribution of company calendars to clients
54. The ratio of kilowatt rating of a motor to its kilowatt ampere rating.
A. generator efficiency B. motor efficiency
C. power factor D. capacity factor
55. The annual change that is made for the maintenance of investments in wasting assets.
A. maintenance cost B. depletion
C. depreciation D. annual cost
56. The interest charges under the condition that interest in any time is charged only to the capital
A. compound interest B. simple interest
C. declining balance D. rate of return
57. Maximum plant capacity in which a CPM is allowed to operate, tend or maintain.
A. 100 kW B. 300 kW C. 200 kW D. 500 kW
58. All funds which are required to make a business enterprise a going concern.
A. working capital B. investment C. sales D. interest
59. Under the Code of Ethics, the mechanical engineer should recognize as one of the major resources of our country.
A. people B. labor C. machine D. technology
59. The length of time during the property may be operated at a profit
A. length of time B. economic life C. physical life D. life
60. A situation where a commonly service is supplied by a number of vendors and there is nothing to prevent additional vendors
entering the market
A. perfect competition B. anarchy C. monopoly D. oligopoly
61. A court writ issued to compel the performance of a public or official duty owed by the person to whom the order is directed.
A. arrest B. mandamus C. bail D. payee
62. A formal written promise to pay a certain amount of money at a specified future date.
A. letter B. promissory note C. summons D. payor
63. Association of two or more individuals for the purpose of operating a business as co-owners of a profit
A organization B. partnership C. company D. corporation
64. An index of short-term paying ability is called __ --'
A. receivable turnover B. profit margin ratio C. current ratio D. acid-test ratio
65. What is the work in-process classified as?
A. an asset B. a revenue C. a liability _D. an expense
66. Indicates that a person does not have the ability, due to his mental condition, to know the nature of his act
A. emancipation B. injunction C. non compos mentis D. estate
67. A collateral agreement in a transaction, which gives one of the parties, or both, the right to choose a course of action. Example,
option to buy a thing within a specific period.
A. executed B. inventory C. option D. interest
68. Statute limiting the time period in which a lawsuit may be brought
A. stipulation R tender of payment C. statute of limitations D. nullity

69. It is the return of the land or property to the state if there is no person legally entitled to inherent it
A. asset B. liability C. escheat D. cash
70. Consist of the totality of property belonging to a deceased person, which must be administered and distributed in accordance
with a last will and testament and/or the laws on succession
A. payee B. title C. tax D. estate
71. Used in sales or ordinary contracts, describes any person who requires property or negotiable instruments in good faith and for
valuable consideration.
A. liability B. bonafide purchaser for value
C. asset D. owner
72. A fixed sum agreed upon, at the outset of a contractual arrangement, as a proper compensation to be paid to the injured party in
the event of breach.
A. capacity B. liability
C. depreciation D. liquidated damages
73. The ability of a company to meet it's obligations as they come due.
A. due Process B. liquidity C. auction D. lien
74. Periodic allocation of the cost of tangible noncurrent operating assets over the periods benefit by use of the asset.
A. asset B. ownership C. liability D. depreciation
75. A depreciation method providing decreasing periodic charges for depreciation by applying a constant percentage to a declining
asset book value.
A. declining-balance methods B. Sinking fund Method
C. replacement cost D. Double declining balance method
76. Penal provision of a contract to compensate for the losses incurred by one party due to the failure to comply with the
contract provisions,
A decision page B. liquidated damages C. force majeure D. quasi-effects
77. Consists of the actual counting or determination of the actual quantity of the materials on hand as of a given date.
A. physical inventory B. material update C. material assessment D. material count

78. To be binding and enforceable written contract: documents must satisfy the best requirements, thus, there must be clear,
specific and definite offer with no room for misunderstandings; there must be some form of conditional future consideration (i.e.
payment);
A. there must be a third party B. there must be an acceptance of the offer
C. there must be a bond D. there must be an arbitrator

79. The Economic Order Quantity (EOQ) is defined as the order quantity which minimizes the inventory cost per unit time. Which of
the following is not an assumption of the basic (EOQ) with no shortages?
A. The demand rate is uniform and constant,
B. There is a positive cost on each unit invention.
C. There is no upper bound on the quantity ordered.
D. The entire recorder quantity is delivered instantaneously.

80. What is the acid test ratio?

A the ratio of owner's equity to total current liabilities
B. the ratio of all assets to total liabilities
C. the ratio of gross margin to operating sales and administrative expenses
D. the ratio of current assets (exclusive of inventory) to total current liabilities

81. When using net present worth calculations to compare two projects, which of the following could invalidate the calculations?
A. Mutually exclusive projects
B. Evaluation over different time periods
C. Non-conventional cash flows
D. Difference in the magnitude of the projects

82. 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. variable assets

83. A situation whereby payment is made for work not done. The term also applies to the case where more workers are used than
are a reasonable requirement for efficient operation.
A check-in pay B. feather bedding C. downtime pay D. moon lighting

84. In a business environment, balancing the books means reconciling checkbooks and bank statements and posting all accounting
entries in such a way as to maintain the equality of the basic accounting equation.
A Plant, property and equipment and other assets
B. assets = current liabilities + owner's equity
C. owner's and stockholder's equity and liability
D. assets = liabilities + owner's equity

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

A. authorized capital B. investment C. earning value D. money market

86. A tax on imports.

A. import tariff B. import quote C. value added tax D. capital account

87. The difference between the starting and ending inventory valuations, a term that represents an inventory account adjustments is
called ____.
A. cost of goods sold B. perpetual inventory C. physical inventory D. periodic inventory

88. A term used to describe payment of an employee from time spent on the property of the employer though not actually
working at the job, e.g. time spent changing clothes to get ready for work or time spent traveling from the plant entrance to the
place of work.
A. portal-to-portal pay B. downtime pay C. call pay D. lost time pay

89. How is the material purchase price variance defined?

A. (quantity issued - standard quantity) (standard price)
B. (actual price- standard price) (quantity used)
C. (quantity purchased - quantity used) (actual price)
D. (quantity purchased x actual price) - (quantity purchased x standard price)

90. Those funds that are required to make the enterprise or project a going concern.
A. circulating capital B. accumulated amount
C. banking D. principal or present worth

91. Additional information to prospective bidders on contract documents issued prior to bidding date.
A. delicta B. escalatory clause C. technological info D. bid bulletin

92. A diagram drawn to help visualize and simplify problem having diverse receipts and disbursements.
A. budget B. investment C. year-end chart D. cash flow
93. A legally binding environment or promise to exchange goods or services.
A. contract B. barter C. memorandum D. pro-forma
94. The peso amount as earned from investment or project is called _____.
A. ROI B. surplus C. interest D. ROR

95. The present worth of all depreciation over the economic life of the item is called
A maintenance B. capital recovery C. depreciation recovery D. annuity

96. Modes of extinguishing obligations when creditor abandons his right to collect
A. condonation B. forfeiture C. debt cancellation D. not liquidated

97. A provision in the contract that indicates the possible adjustment of material cost and labor cost.
A. secondary clause B. specification
C. escalatory clause D. general provision

98. Instead of the profits being paid out to the stockholders or owners as dividends, they are retained in the business and used to
finance expansion. This is called
A. retained earnings B. flow back C. bond D. deposit

99. Fall after the increase reaches a certain variable amount

A. inflation B. Law of supply and demand
C. Law of diminishing returns D. process factor
100. Ratio of annual revenues to the annual expenses.
A. benefit ratio B. rate of return C. benefit cost ratio D. income ratio