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Engineering Econ and Financial Management
Engineering Econ and Financial Management
Engineering Econ and Financial Management
On December 31, Veroya’s assets, liabilities, revenues and expenses were: Insurance
Expenses $3,000 Accounts Payable $4,000 Miscellaneous Expenses 900 Accounts Receivable 5000 Rent Expenses 2500 Cash 14000
Salaries Expense 19000 Equipment 11000 Supplies Expense 1,200 Notes Payable 4,600 Services Performed 45,000 Supplies on hand
700 95. On December 31, if net income equals $15,000 and the ending owner’s equity is $20,000, and Forbes invested an additional
$2,600 in his business, while withdrawing $6,000 during the year, the beginning owner’s equity for this year was:
a. $7,100
b. $7,400
c. $8,400
d. $7,430
2. What do you call the market situation whereby there is only one buyer of an item for which there are no goods substitute?
a. Monopsony
b. Monopoly
c. Oligopoly
d. Oligopsony
3. What market value exists where there is only one buyer and only one seller?
a. Monopsony
b. Monopoly
c. Bilateral Monopsony
d. Bilateral Monopoly
4. What market situation exists where there are few sellers and few buyers?
a. Oligopoly
b. Oligopsony
c. Bilateral Oligopoly
d. Bilateral Oligopsony
6. Is an artificial being created by operation of law, having the right of succession and the process, attributes and properties expressly
authorized by the law or incident to its existence.
a. Corporation
b. Property
c. Partnership
d. Organization
7. Double taxation is a disadvantage of which business organization?
a. Sole Proprietorship
b. Partnership
c. Corporation
d. Enterprise
8. Share of participation
a. Franchise
b. Partnership
c. Stock
d. Corporation
9. A form of business organization in which a person conducts his business alone and entirely for his own profit, being solely responsible
for all its activities and liabilities.
a. Sole Proprietorship
b. Entrepreneurship
c. Partnership
d. Corporation
12. A loan for P40,000 is to be paid in 4 years at the amount of P55,000. What is the effective rate of money?
a. 8.14%
b. 8.24%
c. 8.28%
d. 8.44%
13. How long will it take money to double itself if invested at 8% compounded annually?
a. 8 years
b. 10 years
c. 9 years
d. 7 years
14. A student plan to deposit P2,500 in the bank now and another P6,000 for the next 2 years. If he plans to withdraw P7,000 three years
from after his last deposit for the purpose of buying shoes, what will be the amount of money left in the bank after one year of his
withdrawal? Effective annual interest rate is 10%.
a. P5,153.5025
b. P5,513.5025
c. P5,351.5025
d. P5,322.5025
15. What is the present worth of two P500 payments at the end of the third year and fourth year? The annual interest rate is 8%.
a. P764.43
b. P678.34
c. P510.23
d. P467.43
16. A credit plan charges interest rate of 24% compounded monthly. Find the its effective rate.
a. 27.25%
b. 26.82%
c. 28.23%
d. 30.32%
17. Iexcel CIE Review Center is planning to put up its own building. Two proposals being considered are: - The construction of the
building now to cost P600,000 - The construction of a smaller building now to cost P300,000 and at the end of 5 years, an extension to be
added to cost P200,000 - What is the difference in amount between the two proposals, if interest rate is 20%, depreciation to be neglected
and by how much?
a. P217,253.89
b. P 218,890.32
c. P216,890.32
d. P219,624.49
18. A machine has an initial cost of P 80000 and a salvage value of P 10000 after 10 years. What is the straight line method depreciation
rate as a percentage of the initial cost?
a. 7.75%
b. 8.75%
c. 9.75%
d. 10.75%
19. A machine costing P 45000 is estimated to have a book value of P4400 when retired at the end of 6 years. Depreciation cost is
computed using a constant percentage of the declining book value. What is the annual rate of depreciation in %?
a. 30.752%
b. 31.251 %
c. 32.125 %
d. 33.751%
20. A company purchases an asset for P 20,000 and plans to keep it for 20 years. If the salvage value is zero at the end of 20th year, what
is the depreciation in the 3rd year? Use SYD method.
a. P1,857.14
b. P1,587.14
c. P1,741.286
d. P1,714.286
21. The first cost of a certain equipment is P 324000 and a salvage value of P 50000 at the end of its life 4 years. If money is worth 6%
compounded annually, find the capitalized cost.
a. P562,198.67
b. P550,980.33
c. P545,045.23
d. P54,1033.66
22. How long (in years) will it take the money to quadruple if it earns 9% compounded semi-annually?
a. 16.30 years
b. 13.15 years
c. 10.30 years
d. 15.75 years
23. Calculate the rate of return for an investment with the following characteristics. Initial Cost: P40,000 Project Life: 8 years Salvage
Value: P10,000 Annual Receipts: P7500 Annual Disbursements: P3,000
a. 1.96%
b. 2.65%
c. 2.29%
d. 2.74%
24. A company produces a gear that is commonly used by several lawnmower manufacturing companies. The base cost of operation
(rent, utilities, etc) is P550,000 per year. The cost of manufacturing is P1.35 per gear. If these gear are sold at P7.35 each, how many
must be sold each year to break even?
a. 89,667
b. 90,000
c. 91,667
d. 92,001
25. Instead of paying P10,000 in annual rent for office space at the beginning of each year for the next 10 years, a construction firm has
decided to take out a 10 year, P100,000 loan for a new building at 6% interest. The firm will invest P10,000 of the rent saved and earn
18% annual interest on that amount. What will be the difference between the firm’s annual revenue and expenses?
a. The firm will need extra P3,300 extra
b. The firm will need extra P1,800 extra
c. The firm will break even
d. The firm will have P1600 left over
26. A proposed manufacturing plant will require a fixed capital investment of P6M and an estimated working capital of P1M. Annual
depreciation is estimated to be 5% of the fixed capital investment. If the annual profit is P3M, determine the rate of return on the total
investment and the minimum payback period.
d. None of the above
27. First Benchmark Publishing’s gross margin is 50% of sales. The operating costs of the publishing are estimated at 15% of sales. If the
company is within the 40% tax bracket, determine the percent of sales is their profit after taxes?
a. 21%
b. 20%
c. 19%
d. 18%
28. A feasibility study shows that a fixed capital investment of P10, 000,000 is required for a proposed construction firm and an
estimated working capital of P2, 000,000. Annual depreciation is estimated to be10% of the fixed capital investment. Determine the rate
of return on the total investment if the annual profit is P3, 500,000.
a. 28.33%
b. 29.17%
c. 30.12%
d. 30.78%
29. The monthly demand for ice cans being manufactured by Ms. Moncayo is 3200 pieces. With a manual operated guillotine, the unit
cutting cost is P25.00. An electrically operated hydraulic guillotine was offered to Ms. Moncayo at a price of P275, 000.00 and which
cuts by 30% the unit cutting cost. Disregarding the cost of money, how many months will Ms. Moncayo be able to recover the cost of the
machine if he decides to buy now?
a. 10 months
b. 11 months
c. 12 months
d. 13 months
30. A college freshman borrowed P4, 000 from a bank for his tuition fee and promised to pay the amount for one year. He received only
the amount of P3, 920 after the bank collected the advance interest of P80.00. What was the rate of discount?
a. 2.67%
b. 4.00%
c. 3.15%
d. 2.00%
31. A man invested P110,000 for 31 days. The net interest after deducting 20% withholding tax is P890.36. Find the rate of return
annually.
a. 11.50%
b. 11.75%
c. 11.95%
d. 12.32%
32-34: The first cost of a machine is P1, 800,000 with a salvage value of P300,000 at the end of its life of 5 years. Determine the total
depreciation after 3 years. 32. Using Straight Line Method
a. P800, 000
b. P900, 000
c. P600, 000
d. P700, 000
32-34: The first cost of a machine is P1, 800,000 with a salvage value of P300,000 at the end of its life of 5 years. Determine the total
depreciation after 3 years. 33. Using Sum of Years Digit Method
a. P1, 150,000
b. P1, 300,000
c. P1, 200,000
d. P1, 350,600
35. IExcel Manufacturing produces coffee dispensers at a labor cost of P280 each, material cost of P100 each and variable cost of P4.50
each. If the item has a unit price of P900, how many units must be manufactured each month for the company to break-even if the
monthly overhead is P450,000.
a. 872.9
b. 297
c. 873
d. None of the above
36. A bill for motorboat specifies the cost as P1,200 due at the end of 100 days but offers a 4% discount for cash in 30days. What is the
highest rate, simple interest at which the buyer can afford to borrow money in order to take advantage of the discount?
a. 18.4%
b. 20.9%
c. 19.6%
d. 21.4%
37-39. When compounded Bi-monthly, P15000 becomes P22, 318.30 after 5years. 37. What is the nominal rate of interest?
a. 7%
b. 9%
c. 8%
d. 10%
37-39. When compounded Bi-monthly, P15000 becomes P22, 318.30 after 5years. 38. What is the equivalent rate if it is compounded
quarterly?
a. 7.03%
b. 9.03%
c. 8.03%
d. 10.03%
37-39. When compounded Bi-monthly, P15000 becomes P22, 318.30 after 5years. 39. What is the effective rate if it is compounded
quarterly?
a. 7.28%
b. 9.28%
c. 8.28%
d. 10.28%
42. Stan Moneymaker has the opportunity to purchase a certain bond that matures in eight years and has a face value of Php100,000.
This means that Stan will receive Php100,000 cash when the bond’s maturity date is reached. The bond stipulates a fixed nominal
interest rate of 8% per year, but the interest payments are made to the bondholder quarterly. Stan would like to earn a 10% nominal
interest (compounded quarterly) per year on his investment rates if the economy have risen since the bond was issued. How much should
Stan be willing to pay for the bond?
a. Php89,075.4110
b. Php98,075.4110
c. Php98,057.4110
d. Php89,057.4110
43. What is a method of computing depreciation in which the annual change is a fixed percentage of the depreciated book value at the
beginning of the year to which the depreciation applies?
a. Straight line method
b. SYD method
c. Sinking fund method
d. Declining Balance method
44. What refers to 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. Return on investment
b. Yield
c. Interest rate
d. Rate of return
45. What bond whose security is a mortgage on a certain specified assets of the corporation?
a. Registered Bond
b. Collateral Trust Bond
c. Mortgage bond
d. Debenture Bond
47. A bond without any security behind them except a promise to pay by issuing corporation is called _____________.
a. Joint Bond
b. Debenture Bond
c. Trust Bond
a. Common Bond
48. Refers to a series of equal payments occurring at equal interval of time where the first payment is made after several periods from the
first period.
a. Deferred annuity
b. Annuity due
c. Ordinary annuity
d. Perpetuity
49. Which one refers to an annuity where the payments are made at the start of each period, beginning from the first period?
a. Deferred annuity
b. Annuity due
c. Ordinary annuity
d. Perpetuity
50. A method of computing 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
51. Salvage value is sometimes known as ___________.
a. Scrap value
b. Going value
c. Junk value
d. Second-hand value
52. Which of the following is not available in the financial statements of a company?
a. Total sales
b. Total profit and loss
c. Loss from fire
d. None of the above
55. The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as
a. Current assets
b. Fixed assets
c. Intangible assets
d. Investments
56. The financial statement or statements that pertain to a stated period of time is (are) the:
a. balance sheet
b. balance sheet and journals
c. balance sheet and income statement
d. income statement
57. The length of time which the property may be operated at a profit.
a. Life span
b. Economic life
c. Operating life
d. Profitable life
59. The amount received from the sale of an addition unit of a product.
a. Marginal Cost
b. Marginal Revenue
c. Extra Profit
d. Prime Cost
63. 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
66. 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
69. When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as
a. Accounting ratio
b. Financial ratio
c. Costing ratio
d. None of the above
70. Which of the following falls under Profitability ratios? A) General Profitability ratios B) Overall Profitability ratios C)
Comprehensive Profitability ratios
a. A and B
b. A and C
c. B and C
d. None of the above
72. Given Sales is 120,000 and Gross Profit is 30,000, the gross profit ratio is
a. 24%
b. 25%
c. 40%
d. 44%
73. Net operating profit ratio determines ___________ while net profit ratio determines
a. Overall efficiency of the business, working efficiency of the management
b. Working efficiency of the management, overll efficiency of the business
c. Overall efficiency of the external market, working efficiency of the internal management
d. None of the above
74. Net Profit ratio is calculated by
a. (Gross Profit/Gross sales)*100
b. (Gross Profit/Net sales)*100
c. (Net Profit/Net sales)*100
d. None of the above
75. If sales is Php 500,000 and net profit is Php120,000 Net Profit ratio is
a. 24%
b. 416%
c. 60%
d. None of the above
76. If sales is Php 1,000,000, sales returns is Php 50,000, Profit Before Tax is Php 200,000, Income tax is 40%, Net profit ratio is
a. 12.63%
b. 20.54%
c. 10.32%
d. 50.26%
78. Determine Operating ratio, if operating expenses is Php 60,000, Sales is Php 940,000, Sales Return is Php 40,000 and Cost of net
goods sold is Php 660,000.
a. 80%
b. 15%
c. 25%
d. 11%
79. Which of the following is expenses ratio? A) Administrative expenses ratio B) Selling and Distribution expenses ratio C) Factory
expenses ratio D) Finance Expenses ratio
a. A, B and D
b. A, C and D
c. A, B and C
d. A, B , C, D
82. Determine Working capital turnover ratio if, Current assets is Php 150,000, current liabilities is Php 100,000 and Cost of goods sold
is Php 300,000
a. 5 times
b. 6 times
c. 3 times
d. 1.5 times
86. All are classified under direct labor expenses EXCEPT one. Which one?
a. Inspection cost
b. Testing cost
c. Assembly cost
d. Supervision cost
87. What is a measure of the average speed with which accounts receivable are collected?
a. Current ratio
b. Quick ratio
c. Acid test ratio
d. Receivable turnover
88. The ratio of the net income before taxes to net sales is called ______.
a. Current ratio
b. Inventory turnover
c. Profit margin ratio
d. Price-earnings ratio
90. A brand new company has a building costing Php1,000,000, machinery costing Php500,000, cash of Php70,000, and a bank loan of
Php700,850. What is the owner’s equity?
a. Php869,150
b. Php969,150
c. Php889,150
d. Php899,150
94. Use the following information to answer the next four questions. Felix Veroya is the owner of his own business. On December 31,
Veroya’s assets, liabilities, revenues and expenses were: Insurance Expenses $3,000 Accounts Payable $4,000 Miscellaneous Expenses
900 Accounts Receivable 5000 Rent Expenses 2500 Cash 14000 Salaries Expense 19000 Equipment 11000 Supplies Expense 1,200
Notes Payable 4,600 Services Performed 45,000 Supplies on hand 700 93. On December 31, total assets are equal to:
a. $25,700
b. $19,700
c. $22,100
d. $30,700
95. Use the following information to answer the next four questions. Felix Veroya is the owner of his own business. On December 31,
Veroya’s assets, liabilities, revenues and expenses were: Insurance Expenses $3,000 Accounts Payable $4,000 Miscellaneous Expenses
900 Accounts Receivable 5000 Rent Expenses 2500 Cash 14000 Salaries Expense 19000 Equipment 11000 Supplies Expense 1,200
Notes Payable 4,600 Services Performed 45,000 Supplies on hand 700 94. On December 31, net income is equal to:
a. $18,400
b. $45,000
c. $17,400
d. none of the above
96. Felix Veroya is the owner of his own business. On December 31, Veroya’s assets, liabilities, revenues and expenses were: Insurance
Expenses $3,000 Accounts Payable $4,000 Miscellaneous Expenses 900 Accounts Receivable 5000 Rent Expenses 2500 Cash 14000
Salaries Expense 19000 Equipment 11000 Supplies Expense 1,200 Notes Payable 4,600 Services Performed 45,000 Supplies on hand
700 96. On December 31, current assets equal:
a. $9,000
b. $19,700
c. $19,000
97. IExcel provided services for customers of Php17,000 in cash. What is the entry?
Question 98: 98. Generally when an expense is involved in a transaction, an expense will be
a. Debited
b. Credited
c. Debited and Credited
d. None of the above
a. Debited
b. Credited
c. Debited and Credited
d. None of the above
99. In determining the cost involved in fabricating sub-assembly B within a company, the following data have been gathered: Direct
material - P0.30 per unit Direct labor - P0.50 per unit Testing set-up - P300.00 per set-up It is decided to subcontract the manufacturing
of assembly B to an outside company. For an order of 100 units, what is the cost per unit that is acceptable to the company?
a. P3.8
b. P4.0
c. P4.1
d. P4.2
100. If gross margin is Php40000 and revenue is Php55000, then cost of goods sold would be
a. PHP -18,000
b. PHP 15,000
c. PHP18,000
d. PHP -15,000