MCQs in Engineering Economics Part V

(Last Updated On: December 8, 2017)

MCQs in Engineering Economics Part 5

This is the Multiples Choice Questions Part 5 of the Series in Engineering Economics as one of the General Engineering and Applied Sciences (GEAS) topic. In Preparation for the ECE Board Exam make sure to expose yourself and familiarize in each and every questions compiled here taken from various sources including past Board Questions in General Engineering and Applied Sciences (GEAS), Engineering Economy Books, Journals and other Engineering Economy References.

Online Questions and Answers in Engineering Economics Series

Following is the list of multiple choice questions in this brand new series:

Engineering Economics MCQs
PART 1: MCQs from Number 1 – 50                        Answer key: PART I
PART 2: MCQs from Number 51 – 100                   Answer key: PART II
PART 3: MCQs from Number 101 – 150                 Answer key: PART III
PART 4: MCQs from Number 151 – 200                 Answer key: PART IV
PART 5: MCQs from Number 201 – 250                 Answer key: PART V
PART 6: MCQs from Number 251 – 300                 Answer key: PART VI
PART 7: MCQs from Number 301 – 350                 Answer key: PART VII
PART 8: MCQs from Number 351 – 400                 Answer key: PART VIII
PART 9: MCQs from Number 401 – 450                 Answer key: PART IX
PART 10: MCQs from Number 451 – 500                 Answer key: PART X

Continue Practice Exam Test Questions Part V of the Series

Choose the letter of the best answer in each questions.

201. What is the ratio of the quick assets to current liabilities?

  • A. Profit margin ratio
  • B. Price-earnings ratio
  • C. Return of investment ratio
  • D. Quick ratio

202. What is a measure of the average speed with which accounts receivable are collected?

  • A. Profit margin ratio
  • B. Receivables turnover
  • C. Return of investment ratio
  • D. Average age of receivables

203. Receivable turnover is the ratio of:

  • A. Net credit sales to average net receivables
  • B. Market price per share to earnings per share
  • C. Cost of goods sold to average cost of inventory on hand
  • D. Common shareholders’ equity to number of outstanding shares

204. What is the ratio of the net income to owner’s equity?

  • A. Gross margin
  • B. Return of investment ratio
  • C. Book value per share of common stock
  • D. Inventory turnover

205. What is the ratio of the market price per share to earnings per share called?

  • A. Gross margin
  • B. Price-earnings ratio
  • C. Book value per share of common stock
  • D. Inventory turnover

206. What is the profit margin ratio?

  • A. The ratio of the net income before taxes to net sales
  • B. The ratio of gross profit to net sales
  • C. The ratio of common shareholders’ equity to the number of outstanding shares
  • D. The ratio of cost goods sold to average cost of inventory on hand

207. What is a gross margin?

  • A. The ratio of net income before taxes to net sales
  • B. The ratio of gross profit to net sales
  • C. The ratio of common shareholders’ equity to the number of outstanding shares
  • D. The ratio of cost of goods sold to average cost of inventory on hand

208. Which of the following is a book value share of common stock?

  • A. The ratio of net income before taxes to net sales
  • B. The ratio of gross profit to net sales
  • C. The ratio of common shareholders’ equity to the number of outstanding shares
  • D. The ratio of cost of goods sold to average cost of inventory on hand

209. What is an inventory turnover?

  • A. The ratio of net income before taxes to net sales
  • B. The ratio of gross profit to net sales
  • C. The ratio of common shareholders’ equity to the number of outstanding shares
  • D. The ratio of cost of goods sold to average cost of inventory on hand

210. The average age of receivables is computed using which formula?

  • A. 365 / receivable turnovers
  • B. 365 / average net receivable
  • C. 365 / inventory turnover
  • D. 365 / average cost of inventory on hand

211. What is a method of determining when the value of one alternative becomes equal to the value of another?

  • A. Specific identification method
  • B. Average cost method
  • C. Break-even analysis
  • D. Incremental value method

212. The days supply of inventory on hand is calculated using which formula?

  • A. 365 / receivable turnovers
  • B. 365 / average net receivable
  • C. 365 / inventory turnover
  • D. 365 / average cost of inventory on hand

213. What is defined as the length of time usually in years, for cumulative net annual profit to equal the initial investment?

  • A. Return of investment period
  • B. Turnover period
  • C. Break-even period
  • D. Payback period

214. What is defined as ratio of its return to its cost?

  • A. Return of an investment
  • B. Value of an investment
  • C. Breakeven point of an investment
  • D. Term of an investment

215. Which of the following is an accelerated depreciation method?

  • A. Straight line method and sinking fund method
  • B. Straight line method and double declining balance method
  • C. Double declining balance method and SYD method
  • D. SYD method and sinking fund method

216. What is an accelerated depreciation method?

  • A. It is one that calculates a depreciation amount greater than a straight line amount
  • B. It is one that calculates a depreciation amount lesser than a straight line amount
  • C. It is one that calculates a depreciation amount equal to straight line amount
  • D. It is one that calculates a depreciation not in any way related to straight line amount

217. What refers to the reduction in the level of a national income and output usually accompanied by a fall in the general price level?

  • A. Deflation
  • B. Inflation
  • C. Devaluation
  • D. Depreciation

218. A formal organization of producers within an industry forming a perfect collusion purposely formed to increase profit and block new comers form the industry is called ______.

  • A. Monopoly
  • B. Cartel
  • C. Corporation
  • D. Competitors

219. The paper currency issued by the central bank which forms part of the country’s money supply is called ______.

  • A. T-bills
  • B. Bank notes
  • C. Check
  • D. Coupon

220. “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 diminishing return
  • B. Law of supply
  • C. Law of demand
  • D. Law of supply and demand

221. What is the ratio of the market price per share to the earnings per share?

  • A. Inventory turnover
  • B. Price-earnings
  • C. Book value per share of common stock
  • D. Profit margin

222. What is the ratio of the net income to owner’s equity?

  • A. Return on investment
  • B. Inventory turnover
  • C. Profit margin
  • D. Price-earnings

223. What refers to the ration of the net income before taxes to net sales?

  • A. Receivable turnover
  • B. Acid test ratio
  • C. Return on investment
  • D. Profit margin

224. What refers to the buying or selling of goods between two or more markers in order to take profitable advantage of any differences in the prices quoted in these markets?

  • A. Cartel
  • B. Arbitrage
  • C. Black market
  • D. A priori

225. The suspension of repayment of debt or interest for a specified period of time is called ______.

  • A. Moratorium
  • B. Escrow
  • C. Numeraire
  • D. Porcupine

226. The discount of one unit of principal for one unit of time.

  • a. Rate discount
  • b. Nominal discount
  • c. Actual discount
  • d. Sales discount

227. An annuity whereby the payment is postponed for a certain period of time is?

  • a. Ordinary annuity
  • b. Suspended annuity
  • c. Deferred annuity
  • d. Annuity due

228. The actual interest earned by a given principal is known as?

  • a. Compounded interest
  • b. Nominal interest
  • c. Simple interest
  • d. Effective interest

229. A bond where the security behind it are the equipment of the issuing corporation.

  • a. Debenture
  • b. Mortgage
  • c. Collateral
  • d. Lien

230. Characterized by a few supplies of a product/services that the action by one will almost inevitably result in the similar action by the other.

  • a. Monopoly
  • b. Oligopoly
  • c. Competition
  • d. Necessity

231. It is the worth of a property as shown on the accounting records.

  • a. Resale value
  • b. Face value
  • c. Book value
  • d. Written value

232. The decrease in the value of a property due to gradual extraction of its contents.

  • a. Depreciation
  • b. Depletion
  • c. Devaluation
  • d. Deviation

233. It is usually determined by a disinterested third party to establish a price good enough to both the seller and the buyer.

  • a. Fair value
  • b. Market value
  • c. Common value
  • d. Safe value

234. The exclusive right of a company to provide a specific product or services in a given region of the country.

  • a. Outlet
  • b. Branch
  • c. Extension
  • d. Franchise

235. It is the sum of the first cost and the present worth of all costs or replacement, operation and maintenance.

  • a. Total cost
  • b. Capitalized cost
  • c. Initial cost
  • d. Variable cost

236. A certificate of indebtedness of a corporation usually for a period not less than 10 years and guaranteed by a mortgage on certain assets of the corporation or its subsidiaries.

  • a. Collateral
  • b. Bond
  • c. Mortgage
  • d. Contract

237. What the property is worth to the owner as an operating unit.

  • a. Utility value
  • b. Present value
  • c. Salvage value
  • d. Resale value

238. Occurs when a commodity or service is supplied by a number of vendors and there is nothing to prevent additional vendors entering the market.

  • a. Free market
  • b. Perfect competition
  • c. Open market
  • d. Law of supply and demand

239. In making economy studies a minimum required profit on the invested capital is included as a cost. A method called as __________.

  • a. Rate of return
  • b. Annual cost pattern
  • c. Present worth pattern
  • d. Capital cost

240. Annuity is required over 10 years to equate to a future amount of P 15, 000 with i=5%

  • a. P 1, 192.57
  • b. P 1, 912.75
  • c. P 1, 219.60
  • d. P 1, 921.65

241. A debt of P 1000 is to be paid off in 5 equal yearly payments, each combining an amortization installment and interest at 4% on the previously unpaid balance of the debt. What should be the amount of each payment?

  • a. P 220.50
  • b. P 224.62
  • c. P 242.61
  • d. P 222.50

242. P 1000 is deposited in a bank at 7% interest. What is the value of the money after 25 years, assuming that nothing was deposited after the initial deposit?

  • a. P 5, 247.63
  • b. P 5, 437.34
  • c. P 5, 427.43
  • d. P 5, 720.51

243. What is the interest due on a P 1500 note for 4 years and 3 month, if it bears 12% ordinary simple interest?

  • a. P 756
  • b. P 765
  • c. P 675
  • d. P 576

244. A P 1000-bond which will mature in 10 years and with a bond rate of 10% payable annually is to be redeemed at P 1040 at the end of this period. If it is sold now at P 1,120. Determine the yield at this price.

  • a. 4.68 %
  • b. 6.48 %
  • c. 8.64 %
  • d. 8.46 %

245. A company sets aside P 300,000 each year as a fund for expansion. If the fund earns 9% compounded annually, determine how long will it take before a building costing P 3, 000, 000 can be built?

  • a. 7.34 years
  • b. 7.44 years
  • c. 7.20 years
  • d. 7.54 years

246. 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.

247. An amortization of a debt is in a form of a gradient series of P5,000 on the first year, P4,500 on the second year, P4,000 on the third year, P3,500 on the fourth year. What is the equivalent uniform periodic payment if interest is 5%?

  • A. P4,280.47
  • B. P4,378.17
  • C. P4,259.68
  • D. P4,325.12

248. 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. Straight line method
  • B. Sinking fund method
  • C. Declining balance method
  • D. SYD method

249. 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

250. 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. Straight line method
  • B. Sinking fund method
  • C. Declining balance method
  • D. SYD method

Complete List of MCQs in General Engineering and Applied Science per topic

MCQs in Engineering Economics Part V
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