ELEMENTS IN ENGINEERING ECONOMICS d.

Balance sheet

1. The hire of any person to do whatever work he is

skilled in doing 8. What is borrower of a particular loan almost
a. Promotion cost always required to do during repayment?
b. Material cost a. Pay exactly the same amount of interest
c. Salary cost each payment
d. Labor cost b. Pay exactly the same amount of principal
2. When using net present worth calculations to each payment
compare two projects, which of the following c. Repay the load over an agreed-upon
could invalidate the calculations? amount of time
a. Non-conventional cash flows d. All of these
b. Mutually exclusive projects 9. Which of the following is true regarding the
c. Evaluation over different time periods minimum attractive rate of return used in judging
d. Difference in the magnitude of the proposed investments?
projects a. It is the same for every organization.
3. It is a sharp sudden increase in money or credit b. It is larger than the interest rate used to
or both without corresponding increase in discount expected cash flow from
business transactions. investments.
a. Deflation c. It is frequently a policy decision made by
b. Subrogation an organization’s management.
c. Inflation d. It is not relevant in engineering economy
d. Resultant studies.
4. Each period, two type of financial statements are 10. A company is planning to grow 30% during the
typically generated. These are: next fiscal year. What has to increase if the
a. Common size financial statement company is to achieve their goal?
b. Cost of sales statements a. The ratio of sales to total assets
c. Statement of changes in financial b. The ratio of total assets to equity
position c. Combination of A, B and D
d. Balance sheet and the profit and loss d. Equity
statements 11. __________ is simply a measure of how much a
5. The length of time, usually in years, for the product costs to make.
cumulative net annual profit to equal the initial a. Gross margin
investment. b. Next expense
a. Pay-back period c. Sales
b. Break-even point d. Gross sales
c. Receivable turn-over 12. The type of organization where the assistant of
d. Break-even point the executive are appointed to attend to function
6. The decrease in value of a certain property due as a staff.
to the gradual extraction of the contents: a. Cartel
a. Depreciation b. Corporation
b. Diminishing returns c. Line and staff
c. Depression d. Line organization
d. Depletion 13. Reduction in the level of national income and
7. Which of the following is not considered? output usually accompanied by a fall in the
a. Manufacturing cost general price level.
b. Profit and loss statement a. Deflation
c. Schedule expenses b. Inflation
 c. Depreciation d. Labor cost
d. Devaluation

14. A formal organization of producers within an 21. A series of equal payments occurring at equal
industry forming a perfect collusion purposely periods of time:
formed to increase profit and block new comers a. Perpetuity
from the industry. b. Annuity
a. Competitors c. Amortization
b. Corporation d. Installments
c. Monopoly 22. Decrease in value of a physical with passage of
d. Cartel time:
15. The paper currency issued by the Central Bank a. Interest
which forms part of the country’s money supply. b. Depletion
a. T-bills c. Valuation
b. Coupon d. Depreciation
c. Bank note 23. Association of two or more individuals for the
d. Check purpose of operating a business as co-owners of
16. Worth of property as shown on the accounting a profit:
records of an enterprise. a. Organization
a. Use value b. Partnership
b. Fair value c. Corporation
c. Market value d. Company
d. Book value 24. Type of ownership in business where individuals
17. Form of business/company ownership. exercise and enjoy rights in their own interest.
a. Corporation a. Equitable
b. Partnership b. Public
c. Single proprietorship c. Private
d. All of these d. Pure
18. Profit margin ratio is the percentage of each peso 25. Penal provision of a contract to compensate for
of sales that is net income and the profit margin the losses incurred by one-party due to the
is equal to: failure to comply with contract provisions.
a. Price earnings a. Dacion-en-pago
b. Net income before taxes/net sales b. Force majeure
c. Net income owners’ equity c. Quasi-delicts
d. Rate of return d. Liquidated damages
19. Financial statement which compare the revenues
of the period with the expenses incurred to gain 26. The highest space in the organizational chart of a
those revenues: corporation is always occupied by:
a. Liquidated damages a. President
b. Book value b. Board of Directors
c. Statement of assets & liabilities c. Chairman
d. Profit and loss d. Stock holders
20. Cost of things that are neither labor nor material. 27. In a business environment, balancing the books
a. Investment means reconciling checkbooks and bank
b. Construction cost statements and posting all accounting entries in
c. Expenses
 such a way as to maintain the equality of the b. Total assets
basic accounting equation. c. Fixed assets
a. Plant, property and equipment and other d. Liquid Asset
assets 34. Which of the following methods is most suited in
b. Assets = current liabilities + owners evaluating/comparing alternatives with different
equity (finite) lives?
c. Assets = liabilities + owner’s equity a. Uniform annual cost method
d. Owners and stockholders equity and b. Present worth method
liability c. Urgency rating method
28. The balance sheet is a statement showing the d. Rate of return method
financial status of the company at any given time. 35. Those funds that are required to make the
Which of the statements is not a part of the enterprise or project a going concern:
balance sheet? a. Principal or present worth
a. Liabilities b. Banking
b. Asset c. Accumulated amount
c. Cost of goods cold d. Working capital
d. Net worth 36. These refers to the goods and services that are
29. Cash money credit necessary to establish and required to support human life, needs and
operate an enterprise. activities.
a. Funds a. Necessity
b. Capital b. Producer Goods and Services
c. Assets c. Engineering Economy
d. Liabilities d. Needs and Wants
30. Intangible assets of a corporation or company. 37. The goods and services that are desired by
a. Investment human and will be acquired only after all the
b. Dacion-en-pago necessities have been satisfied.
c. Equity a. Needs
d. Patents b. Necessity
31. A civil wrong committed by one person causing c. Luxuries
damage to another person or his property or d. Wants
reputation. 38. The sum of money recorded as receipts or
a. Tort disbursements in a projects financial records.
b. Negligence a. Assets
c. Material breach b. Book Value
d. Fraud c. Project Cost
32. What is the acid test ratio? d. Cashflow
a. The ratio of owner’s equity to total 39. The future value in n periods of a present amount
current liabilities. would be symbolically written as ____________.
b. The ratio of all assets to total liabilities. a. P(F/P,i%,n)
c. The ratio of gross margin to operating b. F(F/P,i%,n)
sales and administrative expenses. c. P(P/F,i%,n)
d. The ratio of current assets (exclusive of d. F(P/F,i%,n)
inventory) to total current liabilities. 40. The present worth of a future amount in m
33. Liquid assets such as cash and other assets that periods from now would be symbolically written
can be converted quickly into cash, such as as _______________.
accounts receivables, and merchandise are a. P(F/P,i%,n)
called: b. P(F/P,i%,n)
a. Current asset c. P(P/F,i%,n)
 d. F(P/F,i%,n) b. Luxury
41. The uniform series compound amount factor. c. Supply
a. (P/F,i%,n) d. Demand
b. (F/A,i%,n) 49. The interest on a loan or principal that is based
c. (P/A,i%,n) only on the original amount of the loan or
d. (P/A,i%,n) principal.
42. (F/P,i%,n) a. Annuity
a. Uniform series present worth factor b. Simple Interest
b. Single payment present worth factor c. Supply
c. Single payment compound amount factor d. Demand
d. Capital recovery factor
43. The single payment present worth factor.
a. (P/F,i%,n)
b. (F/A,i%,n) 50. Ordinary simple interest is based on _________.
c. (P/A,i%,n) a. 360 days
d. (P/A,i%,n) b. 365 days
44. A fund or account into which annual deposits of A c. 366 days
are made in order to accumulate F at t=n in the d. 10 months
future. 51. The interest of loan or principal which is based
a. Interest not only on the original amount of the loan or
b. Income principal but the amount of loan or principal plus
c. Annuity the previous accumulated interest.
d. Sinking fund a. Rate of Discount
45. Refers to the exchange mechanism that brings b. Discount
together the sellers and the buyers of the c. Sinking Fund
product. d. Compound Interest
a. Market 52. The cost of borrowing money.
b. Buyers and Consumers a. Rate of Discount
c. Mall b. Rate of Interest
d. Exchange c. Rate of Return
46. Refers to the market situation in which any given d. Nominal interest
product is supplied by a very large number of 53. Defined as the actual or exact rate of interest
vendors and there is no restriction against earned on the principal during an on-year period.
additional vendors from entering the market. a. rate of discount
a. Monopoly b. nominal rate of interest
b. Perfect Competition c. effective rate of interest
c. Monopsony d. exact interest
d. Oligopoly 54. Series of equal payments occurring at equal
47. There are so few suppliers of a product or interval of time.
service that the action of one will inevitably result a. annuity
in a similar action by the other suppliers. b. depreciation
a. natural monopoly c. book value
b. Perfect Competition d. bond
c. Monopsony 55. Type of annuity where the payments are made at
d. Oligopoly the beginning of each period starting from the
48. The need, want or desire for a product backed by first period.
the money to purchase it. a. deferred annuity
a. Panic Buying b. annuity due
 c. ordinary annuity c. Maintenance Accelerated Cost Recovery
d. perpetuity System
56. Type of annuity without a fixed time span but d. Maintenance Annual Cost Recovery
continues indefinitely. System
a. deferred annuity 63. The difference between the original purchase
b. annuity due price and the accumulated depreciation.
c. ordinary annuity a. Salvage Value
d. perpetuity b. Book Value
57. The sum of its first cost and the present worth of c. Capitalized Cost
all cost replacement, operation, and maintenance d. EUAC
for a long time or forever. 64. The bondholders actual rate of return from the
a. deferred annuity bond, considering the purchase price, interest
b. perpertual maintenance payments and face value payments.
c. capitalized cost a. Bond face value
d. annual cost b. Bond Value
58. A financial security note issued by businesses or c. Bond rate
corporation and by the government as a means d. Bond yield
of borrowing long term fund. 65. The adjusted value for inflation where i is the
a. bond effective annual interest rate.
b. collateral a. d = i-f-if
c. bond rate b. d = i+f-if
d. annual cost c. d = i+f+if
59. The reduction or fall in the value of an asset or d. d = i/(f+if)
physical property during the course of its working 66. Used to evaluate alternatives that are mutually
life and due to the passage of time. exclusive and that have the same lives.
a. book value a. capital recovery method
b. scrap value b. present worth method
c. sinking value c. annual cost method
d. depreciation d. rate of return
60. In this method, it is assumed that the annual cost
of depreciation is a fixed percentage of the book
value at the beginning of the year.
a. declining balance method 67. Alternatives that accomplish the same purpose
b. straight line method but that have unequal lives must be compared by
c. sinking fund method the ______________.
d. SOYD a. capital recovery method
61. A firmed owned by a group of ordinary b. present worth method
shareholders and the capital of which is divided c. annual cost method
up to the number of shares. d. rate of return
a. Firm 68. This will invalidate the calculation when using the
b. Sole proprietorship net present worth calculations to compare two
c. Corporation projects.
d. Partnership a. the initial cost of the project
62. MACRS stands for _________________. b. Magnitude difference of the projects
a. Modified Annual Cost Recovery System c. evaluating over different time periods
b. Modified Accelerated Cost Recovery d. cashflows
System 69. “Work in process” can be classified as _______.
a. revenue
 b. Costs and expenses c. atomistic competition
c. liability d. nuclear competition
d. asset 78. The amount of product made available for sale.
70. The situation where the income is just enough to a. product demand
cover the fixed and variable expenses. b. price
a. break-even c. luxury
b. bankrupt d. supply
c. return 79. The difference between the future and present
d. break-even cost value.
71. A firmed that is owned and controlled by two or a. interest
more persons. b. rate of return
a. sole-proprietorship c. bond
b. association d. Capitalized cost
c. corporation 80. A type of annuity where the first payment does
d. partnership not begin until later date in the cashflow.
72. This is due to the reduction of the physical ability a. annuity due
of an asset to produce results. b. deferred annuity
a. Physical Depreciation c. perpetuity
b. Physical Depreciation Charge d. Ordinary annuity
c. Physical Depreciation Cost 81. The opposite of perfect competition.
d. Functional Depreciation a. monopoly
73. This is due to the decrease in the demand for the b. monopsony
function that the equipment or asset designed to c. oligopoly
offer. d. duopoly
a. Physical Depreciation 82. The discount on one unit of principal per unit of
b. Physical Depreciation Charge time.
c. Physical Depreciation Cost a. rate of discount
d. Functional Depreciation b. discount interest
74. Exact simple interest is based on __________. c. principal discount
a. 360 days d. discount
b. 365 days 83. Declining balance method is also known as
c. 366 days constant percentage method or ___________.
d. actual number of days a. Madison Formula
75. In an oligopoly market situation there are ______ b. Eulers Formula
sellers and __________ buyers. c. Matheson Formula
a. few, many d. Gauss Formula
b. many, many 84. Uniform gradient uniform series factor.
c. few, few a. G/F, i%,n
d. many, few b. F/G, i%,n
76. In a bilateral market situation there are _______ c. G/A, i%,n
sellers and _________ buyers. d. A/G, i%,n
a. one, two 85. Capital recovery factor.
b. few, many a. A/P, i%, n
c. one, one b. P/G, i%,n
d. many, few c. A/A, i%,n
77. Perfect competition is also known as d. P/F, i%,n
a. duopsony
b. balance competition