Economics_Important_Terms.pdf

A type of bond issued jointly by two or more corporations. Bond to which are attached coupons indicating the interest due and A. Money market the date when such interest is to be paid....

A type of bond issued jointly by two or more corporations. Bond to which are attached coupons indicating the interest due and A. Money market the date when such interest is to be paid. B. Hard currency A. Joint bond C. Treasury bill B. Debenture bond A. Registered bond D. Certificated of deposit C. Registered bond B. Coupon bond D. Collateral trust bond C. Mortgage bond Ans. B D. Collateral trust bond Ans. A Everything a company owns to which has a money value is classified Ans. B as an asset. Which of the following is classified as an asset? A type of bond whose guaranty is in lien on railroads equipments. An amount of money invested at 12% interest per annum will A. Intangible asset A. Equipment obligation bond double in approximately B. Fixed asset B. Debenture bond C. Trade investments C. Registered bond A. 4 years D. All of these D. Insfrastructure bond B. 5 years C. 6 years Ans. D Ans. A D. 7 years Which of the example of an intangible asset? If the security of the bond is a mortgage on certain specified asset of Ans. C a corporation, this bond is classified as A. Cash The 72 rule is used to determine B. Investment in subsidiary companies A. Registered bond C. Furnitures B. Mortgage bond A. How many years money will triple D. Patents C. Coupon bond B. How many years money will double D. Joint bond C. How many years to amass 1 million Ans. D D. How many years to quadruple the money Ans. B Land buildings, plants and machinery are examples of Ans. B A type of bond where the corporation’s owners name are recorded A. Current assets and the interest is paid periodically to the owners with their asking To triple the principal one must use B. Trade investments for it. C. Fixed assets A. Integration D. Intangible assets A. Registered bond B. Derivatives B. Preferred bond C. Logarithms Ans. C C. Incorporators bond D. Implicit functions D. All of these An increase in the value of a capital asset is called Ans. C Ans. A A. Profit A currency traded in a foreign exchange market to which the B. Capital gain demand is consistently high in relation to its supply. C. Capital expenditure 1  D. Capital stock Ans. D Ans. C Ans. B The deliberate lowering of the price of a nation’s currency in terms Defined as the capacity of commodity to satisfy human want. of the accepted standard (Gold, American dollar or the British The reduction in the money value of a capital asset is called pound). A. Discount B. Necessity A. Capital expenditure A. Currency appreciation C. Luxuries B. Capital loss B. Currency float D. Utility C. Loss C. Currency devaluation D. Deficit D. Currency depreciation Ans. B Ans. B Ans. C It is the profit obtained by selling stocks at a higher price than its original purchase price. It is negotiable claim issued by bank in lieu of a team deposit. The residual value of a company’s assets after all outside liabilities (shareholders excluded)m have been allowed for. A. Debenture A. Time deposit B. Goodwill B. Bond A. Divided C. Capital gain C. Capital gain B. Equity D. Internal rate of return D. Certificate of deposit C. Return D. Par value Ans. C Ans. D Ans. B The quantity of a certain commodity that is offered for sale at a Any particular raw materials or primary product (e.g. cloth, wool, certain price at a given time and place. flour, coffee..) is called A saving which takes place because good are not available for consumption rather than the consumer really want to save. A. Demand A. Utility B. Supply B. Necessity A. Compulsory saving C. Utility C. Commodity B. Consumer saving D. Market D. Stock C. Forced saving D. All of these Ans. B Ans. C Ans. C The quantity of a certain commodity that is bought at a certain price If denotes the fall in the exchange rate of one currency in terms of at a given time and place. others. The term usually applies to floating exchange rates. A document that shows proof of legal ownership of a financial security. A. Demand A. Currency appreciation B. supply B. Currency devaluation A. Bond C. market C. Currency float B. Bank note D. Utility D. Currency depreciation C. Coupon D. Check Ans. A 2 “When free competition exists, the price of a product will be that Ans. D D. Asset value where supply is equal to the demand Ans. B A. Law of diminishing return B. Law of supply In replacement studies, the new process or piece of equipment being C. Law of demand considered for purchase is known as. D. Law of supply and demand In economics, a “short – term” transaction usually has a lifetime of A. Challenger Ans. D A. 3 months or less B. Defender B. 1 year or less C. Asset “When one of the factors of production is fixed in quantity or is C. 5 years or less D. Liability difficult to increase, increasing the others factors of production will D. 10 years or less result in a less than proportionate increase in output.” Ans. A Ans. C A. Law of diminishing return _______ means that the cost of the asset is divided into equal or B. Law of supply In the cash flow, expenses incurred before time = 0 is called unequal parts, and only one of these parts is taken as an expense C. Law of demand each year. A. Receipts D. Law of supply and demand B. Disbursements A. Capitalizing the asset Ans. A C. Sunk costs B. Expensing the asset D. Firsts costs C. Depreciating the asset An accounting term that represents an inventory account D. Artificial expense adjustments. Ans. C Ans. A A. Cost of goods sold An imaginary cost representing what will not be received if a B. Variance particular strategy is rejected. Indicate the CORRECT statement about depreciation. C. Overhead A. Sunk cost A. The depreciation is not the same each year in straight line D. Payback B. Opportunity cost method. Ans. A C. Replacement cost B. The declining balance method can be used even if the D. Initial cost salvage calue is zero. The simplest economic order quantity (EOQ) model is based on C. The sum-of-years’ digit method (SYD), the digits 1 to (n + which of the following assumptions. Ans. B 1) is summed. D. Double declining balance depreciation is independent of A. Shortages are not allowed. In replacement studies, the existing process or piece of equipment is the salvage value. B. Demand is constant with respect to time. known as C. Reordering is instantaneous. The time between order Ans. D A. Challenger placement and receipt is zero. B. Defender An artificial deductible operating expense designated to compensate D. All of the choices C. Liability mining organizations for decreasing mineral reserves. 3  A. Deflation The annual costs that are incurred due to the functioning of a piece The manufacturing cost plus selling expenses equals B. Reflation of equipment is known as C. Depletion A. Total cost D. Inflation A. General, selling and administrative expenses B. Indirect production cost B. Prime cost C. Administrative cost Ans. C C. Operating and maintenance costs D. Miscellaneous cost D. Total cost The change in cost per unit variable change is known as Ans. A Ans. C A. Sunk cost Which of the following is NOT a direct labor expense? B. Incremental cost The sum of the direct labor cost and the direct material cost is C. Fixed cost known as A. Inspection D. Semi-variable cost B. Testing A. Prime cost C. Supervision What type of cost increases step-wise? B. Total cost D. Assembly C. Indirect manufacturing expenses A. Supervision cost D. Total cost Ans. C B. Direct labor cost C. Semi-variable cost Ans. A All are administrative expenses EXCEPT: D. Operating and maintenance cost Research and development costs and administrative expenses are A. Marketing Ans. C added to the factory cost to give the _______ of the product. B. Accounting C. Data processing Which of the following is NOT a variable cost? A. Total cost D. Office supplies B. Marketing cost A. Cost of miscellaneous supplies C. Manufacturing cost Ans. A B. Income taxes D. Prime cost C. Payroll benefit costs One of the following is NOT a selling or marketing expense. Which D. Insurance costs Ans. C one? Ans. D The sum of the prime cost and the indirect manufacturing cost is A. Advertising known as B. Commission Which of the following is Not a fixed cost? C. Insurance A. Factory cost D. Transportation A. Rent B. Research and development cost B. Janitorial service expenses C. Manufacturing cost Ans. C C. Supervision costs D. Total cost D. Depreciation expenses Research and development expenses includes all EXCEPT one. Ans. A Which one? Ans. C 4  A. Testing B. The books Ans. A B. Drafting C. Bookkeeping system C. Prototype D. Balance sheet An acid test ratio is a ratio of D. Laboratory Ans. B A. Gross profit to net sales Ans. D B. Net income before taxes to net sales The basic accounting equation is C. Quick assets to current liabilities Which is not a factory overhead expense? D. Net income to owner’s liabilities A. Assets = Liability + Owner’s equity A. Pension, medical, vacation benefits B. Liability = Assets + Owner’s equity Ans. C B. Expediting C. Owner’s equity = Assets + Liability C. Quality control and inspection D. Owner’s equity = Liability – Assets The ratio of the net income to the owner’s equity is known as D. Testing Ans. A A. Price-earning ratio Ans. D B. Profit margin ratio The ability to convert assets to cash quickly is known as C. Return of investment Bookkeeping consists of two steps, namely recording the D. Gross margin transactions and categorization of transactions. Where are the A. Solvency transactions (receipts and disbursements? Recorded? B. Liquidity Ans. C C. Leverage A. Journal D. Insolvency Payback period is the ratio of B. Ledger C. Columnar Ans. B A. Initial investment to net annual profit D. Statement of account B. Cost of goods sold to average The ability to meet debts as they become due is known as Cost of inventory on hand Ans. A C. gross profit to net sales A. Solvency D. net income before taxes to net sales The following are ledger accounts EXCEPT: B. Leverage C. Insolvency Ans. A A. Asset accounts D. Liquidity B. Bank accounts A secondary book of accounts the information of which is obtained C. Liability accounts Ans. A from the journal D. Owner’s equity accounts What is considered as an index of short-term paying ability? A. Balance sheet Ans. B B. Ledger A. Current ratio C. Worksheet The journal and the ledger together are known simply as _____ of the B. Acid test ratio D. Trial balance company. C. Gross margin D. Return of investment Ans. B A. Accounting system 5 The present worth of cost associated with an asset for an infinite A document which shows the legal ownership of financial security The money that is inactive and does not contribute to productive period of time is referred to as and entitled to payments thereon. effort in an economy is known as A. Annual cost A. Coupon A. Idle money B. Capitalized cost B. Contract B. Hard money C. Increment cost C. Bond C. Soft currency D. Operating cost D. Consol D. Frozen asset Ans. B Ans. A Ans. A A stock of a product which is held by a trade body or government as A government bond which have an indefinite life rather than a In counting the number of days when computing simple interest, a means of regulating the price of that product. specific maturity A. The first day is included A. Stock pile A. Coupon B. The last day is excluded B. Hoard stock B. T-bill C. The first day is included and the last day is excluded C. Buffer stock C. Debenture D. The first day is excluded and the last day is included D. Withheld stock D. Consol Ans. D Ans. C Ans. D In the so-called “Banker’s Rule”, A negotiable claim issued by a bank in lieu of a term deposit is called Refers to the orders quantity that minimizes the inventory cost per unit time. A. The number of days in 1 year is 360 days A. Cheque B. The number of days in 1 year is 365 days B. T-bills A. Economic order quantity C. The number of days in each month is 30 days C. Currency B. Social order quantity D. The number of days in 1 year is 366 days D. Certificate of deposit C. Public order quantity D. Private order quantity Ans. A Ans. D Ans. A To discount an amount F for n conversion periods means A form of business firm which is owned and run by a group of individuals for their mutual benefit What is referred to as an individual who organizes factors of A. To find the present value on a day which is n periods after production to undertake a venture with a view to profit? F is due A. Cooperative B. To find the present value on a day which is n periods B. Corporation A. Agent before F is due C. Enterprise B. Entrepreneur C. To find the present value on a day which is (n-1) periods D. Partnership C. Salesman before F is due D. Commissioners D. To find the present value on a day which is (n+1) periods Ans. A before F is due Ans. B Ans. B 6 In the formula for compound interest, F= P (1+i)n, the value (1+i)n D. Contingent annuity B. Sinking fund is called ____. C. Mutual fund Ans. D D. Corporate fund A. Discount factor B. Interest factor What do you call the time between successive payment dates of an Ans. B C. Accumulation factor annuity? D. Increase factor What is the term for the borrowed principal usually mentioned in a A. Period interval typical bond? Ans. C B. Annuity period C. Payment interval A. Bond rate To find the present worth of a future amount in compound interest, D. Annuity term B. Face value we use the formula P=F(1+i)-n. What do you call the factor (1+i)- C. Coupon rate n? Ans. C D. Coupon value A. Discount The time from the beginning of the first payment interval to the Ans. B B. Accumulation factor need of the last one is called the _____ of the annuity. C. Interest factor Any date on which a coupon of a bond becomes due will be referred D. Reduction factor A. Period to as a _____. B. Term Ans. A C. Nature A. Maturity date D. Type B. Term of the bond C. Coupon date Ans. B D. Due date What refers to an equation stating that the sum of the values, on a certain comparison date, of one set of obligations is equal to the sum What refers to the extinction of the debt by any satisfactory set of Ans. C of the value of another set of this date? payments? If P is the price of a bond and V is its redemption value, what do you A. Equality of value A. Liquidation call the value P-V? B. Equation of value B. Liability discharge C. Equality equation C. Discharging debt A. Par value D. Similarity equation D. Amortization of debt B. Face value C. Premium Ans. B Ans. D D. Bond discount What is an annuity whose payments extend over a period of time Ans. C whose length cannot be foretold accurately? What do you call a fund, usually by periodic deposits, to insure the When can we say that the bond is purchased at a discount? A. Annuity certain accumulation of money to provide for possible large payments? B. Annuity uncertain A. When the price of the bond is greater than the redemption C. Incremental annuity A. Escrow fund value. 7  B. When the price of the bond is less than the redemption B. Quoted price What is a bond whose face value is redeemable in installments, with value. C. Accrued price interest payable periodically as due on outstanding principal? C. When the price of the bond is equal than the redemption D. Flat price value. A. Annuity bond D. When the price of the bond is either equal to or greater Ans. D B. Serial bond than the redemption value. C. Treasury bond What do you call the difference between the flat price of the D. Government bond Ans. B bond and the quoted price of the bond? Ans. B When can we say that the bond is purchased at a premium? A. Par value B. Accrued interest What is the term for the sum of depreciation charges to date? A. When the price of the bond is greater than the redemption C. Bond rate value. D. And-interest price A. Accrued depreciation B. When the price of the bond is less than the redemption B. Applied depreciation value. The quoted price of a bond is sometimes called _______. C. Accumulated depreciation C. When the price of the bond is equal than the redemption D. All of the above value. A. Par value D. When the price of the bond is either equal to or greater B. Face value Ans. A than the redemption value. C. An-interest price D. Coupon price The difference between the value of an asset and its salvage or scrap Ans. A value at the end of the year is called ____. Ans. C Which of the following will happen if bond is bought at a discount? A. Depreciation The yield of a bond is obtained by which of the following formulas: B. Accrued value A. Each coupon payment is too small to pay all interest due on C. Book value the investor’s principal. A. Average investment__ D. Wearing value B. Each coupon payment is greater than the interest due on Average annual interest the investor’s principal. Ans. D C. The unpaid interest on each coupon date will not be B. Average annual interest_ Average investment What is a life annuity? considered as a new investment in the bond. D. The difference between the coupon payment and the A. A sequence of payment for a certain person which stops interest due is a partial repayment of principal. C. Par value_ Flat value when person dies. B. A sequence of payment intended for a life insurance of a Ans. A D. Par value_ person. In the sale of a bond, the actual purchase price on any day is called Flat value C. A sequence of payment for a certain person which ____. continues indefinitely. Ans. B D. It is the same as perpetuity. A. Face value Ans. A 8 What term is usually used by the banks to represent the effective Net sales interest rate per period? D. Gross profit_____ Ans. D Current liabilities A. Yield B. Nominal rate A receivable turnover is calculated using which of the following Ans. A C. Fixed rate formulas? D. Net rate The book value per share of common stock is the ratio of the A. Net income__ common shareholders’ equity to ______. Ans. A Owner’s equity A. Average shared The acid test ratio is also known as quick ratio. Which one B. Net credit sales___ B. Number of outstanding shares represents the quick ratio? Average net receivables C. Total subscribed shared D. Authorized capital stock A. Quick assets_____ C. Gross profit__ Current liabilities Current liabilities Ans. B B. Net credit sales___ D. Gross profit__ What refers to the price at which the quantity demanded of a good is Average net receivables Net sales exactly equal to the quantity supplied? C. Gross profit____ Ans. B A. Equilibrium market price Current liabilities B. Fair market price The percentage of each peso of sales that is net income is called C. Real market price D. Gross profit__ ______. D. Exact market price Net sales A. Price-earning ratio Ans. A Ans. A B. Profit margin C. Profit margin ratio A principle that states that consumers will tend to spend an Which of the following represents the gross margin? D. Return of investment ratio increasing proportion of any additional income upon luxury goods and a smaller proportional on staple goods, so that a rise in income A. Net income__ Which one represents that price-earnings ratio? will lower the overall share of consumer expenditures spent on Owner’s equity stable goods (such as basic foodstuffs)and increase the share of A. Market price per share_ consumer expenditures on luxury goods (such as motor cars). B. Net credit sales___ Earnings per share Average net receivables A. Placibo effect B. Earnings per share___ B. Luxury effect C. Gross profit__ Market price per share C. Engel’s law Current liabilities D. Staple law C. Net credit sales__ Average net receivables Ans. C D. Gross profit__ 9 What is the disciple within economics that attempts to measure and Ans. D It is a series of equal payment occurring at equal interval of time estimate statistically the relationship between two or more a. Annuity economic variables? What refers to a temporary grouping of independent firms, b. Debt organization and governments, brought together to pool their c. Amortization A. Theory of values resources and skills in order to undertake a particular project? d. Deposit B. Econometrics C. Economatics A. Consortium Ans. A D. Econoscience B. Cartel C. Cooperative The place and buyers come together Ans. B D. Union a. Market b. Business What refers to the fall in the general price level, frequently Ans. A c. Recreational center accompanied by a reduction in the level of national income? d. Buy and sell of section What refers to a market for buying and selling of raw materials such A. Inflationary gap as tea, coffee, iron ore, etc.? Ans A B. Dissavings C. Disinflation A. Commodity market A market where by there is only one buyer of an item for which D. Inflation B. Raw market there are no good substitute C. Natural market a. Monopsony Ans. C D. National market b. Oligopoly A price for a product just covers its production and distribution Ans. A c. Monopoly costs with no profit margin added. d. Oligopsony The paper currency issued by the central bank which forms the A. Cost price part of the country’s money supply Ans A B. Actual price a. T-bills C. Real price b. Bank note It is a series of equal payment occurring at equal interval of time D. Original price c. Check where the first paymenyt is made after several periods, after the d. Coupon beginning of the payment Ans. A a. Perpetuity Answer B b. Ordinary Annuity A market where new entrants face cost similar to those of c. Annuity due established firms and where, on leaving, firms are able to recoup Reduction in the national income and output usually accompanied d. Deferred annuity their capital costs, less depreciation. by the fall in the general proce level a. Devaluatio ans.D A. Free market b. Deflation B. Competitive market c. inflation The total income equals the total operating cost. C. Limited market d. Depreciation a. Balance sheet D. Contestable market b. In-place value Ans. B c. Check and balance 10  d. Break even-no gain no loss Estimate value at the end of the useful life. c. Stocks a. Market value d. Goods Ans. D b. Fair value c. Salvage value Ans. B Kind of obligation which has no condition attached. d. Book value a. Analytic Work-in process is classified as b. Pure Ans. C a. An assets c. Gratuitous b. A liability d. Private Consists of the actual counting or determinination of the actual c. An expenses quantity of the materials on hand as of a given date. d. An owner’s equity Ans. C a. Physical inventory Direct labor costs incurred in the factory and direct material costs b. Material update Ans. A are the costs of all materials that go into production. The sum of c. Technological assessment these two direct costs is known as d. Material count a. GS and A expenses b. Operating and maintenance costs Ans. A c. Prime cost d. O and M costs Additional information of prospective bidders on contract What is the highest position in the corporation? documents issued prior to bidding date. a. President Ans. C a. Delict b. Board of directors b. Escalatory c. Chairman of the board An index of short term paying ability is called c. Technological assessment d. Stockholders a. Receivable turn-over d. Bid bulletin b. Profit margin ratio Ans. C c. Current ratio Ans. D d. Acid-test ratio Type of ownership in business where individuals exercise and A series of uniform accounts over an infinite period of time. enjoy the right in their own interest. Ans. D a. Depreciation a. Equitable b. Annuity b. Public An artificial expenses that spreads the purchase price of an assets c. Perpetuity c. Private or another property over a number of years. d. Inflation d. Pure a. Depreciation b. Sinking Fund Ans. C Ans. C c. Amnesty d. Bond The quantity of a certain commodity that is offered for sale at a Decrease in the value of a physical property due to the passage of certain price at a given place and time. time. Ans. A a. Demand a. Inflation b. Supply b. Depletion 11  c. Recession d. Salvage value b. Semi-monopoly d. Depreciation c. Monopoly Ans. B d. Perfect competition Ans. D This occurs in a situation where a commodity or service is Ans. A An association of two or more individuals for the purpose of supplied by a number of vendors and there is nothing to prevent operating a business as co-owners for profit. additional vendors entering the market. Grant total of the assets and operational capability of a a. Sole proprietorship a. Perfect competition corporation. b. Company b. Oligopoly a. Authorized capital c. Partnership c. Monopoly b. Investment d. Corporation d. Elastic demand c. Subscribed capital d. Money market Ans. C Ans. A Ans. A We may classify an interest rate, which specifies the actual rate of These are product or service that are desired by human and will interest on the principal for one year as be purchased if money is a available after the required necessities The worth of the property equals to the original cost less a. Nominal rate have been obtained. depreciation. b. Rate of return a. Utilities a. Scrap value c. Exact interest rate b. Necessities b. Face value d. Effective rate c. Luxuries c. Market value d. Product goods and service d. Book value Ans. D Ans. C Ans. D It is defined to be the capacity of a commodity to satisfy human want. These are product or services that are required to support human Money paid for the use of borrowed capital. a. Discount life ad activities that will be purchased in somewhat the same a. Discount b. Luxury quantity even though the price varies considerably. b. Credit c. Necessity a. Utilities c. Interest d. Utility b. Necessities d. Profit c. Luxuries Ans. B d. Product goods and services Ans. C It is the amount which a willing buyer will pay to a willing seller Ans. B Liquid assets such as cash and other assets that can be converted or a property where each has equal advantage and is under no quickly into cast such as accounts receivable and merchandise are compulsion to buy or sell. A condition where only few individuals produce a certain product called a. Fair value and that any action of one will lead to almost the same action of a. Total assets b. Market value the others. b. Fixed assets c. Book value a. Oligopoly c. Current assets 12  d. None of the above c. Bilateral monopoly Worth of the property as shown in the accounting records of an d. Bilateral monopsony Ans. C enterprise. a. Fair value Ans. C The length of time which the property may be operated at a profit. b. Market value a. physical life c. Salvage value A market situation where there are only two buyers with many b. Economic life d. Book value sellers. c. Operating life a. Duopoly d. All of the above Ans. D b. Oligopoly c. Duopsony Ans. B Those funds that are required to make the enterprise or project a d. Oligopsony going concern. The provision in the contract that indicates the possible a. Initial investment Ans. C adjustment of material cost and labor cost. b. Current accounts a. Secondary clause c. Working capital The cumulative effect of elapsed time on the money value of an b. Esclatory clause d. Subscribed capital event, based on the earning power of equivalent investment funds c. Contingency clause capital should or will earn. d. Main clause Ans. C a. Present worth factor b. Interest rate Ans. B A market situation where there are one seller and many buyers. c. Time value of money a. Monopoly d. Yield The present worth of all depreciation over the economic life of the b. Monopsony item is called c. Oligopoly Ans. C a. Book value d. Oligopsony b. Capital recovery Defined as the future value minus the present value. c. Depreciation recovery Ans. A a. Interest d. Sinking fund b. Rate of return A market situation where there are few sellers and few buyers. c. Discount Ans. C a. Oligopoly d. Capital b. Oligopsony Gross profit, sales less cost of goods sold, as a percentage of sales c. Bilateral oligopoly Ans. C is called d. Bilateral oligopsony a. Profit margin The flow back of profit plus depreciation from a given project is b. Gross margin Ans. C called. c. Net income a. Capital recovery d. Rate of return A market situation where there is one seller and one buyer. b. Cash flow a. Monopoly c. Economic flow Ans. B b. Monopsony d. Earning value 13  What is sometimes called second hand value? Ans. B Ans. B a. Scrap value b. Salvage value The profit derived from a project or business enterprise whithout The true value of interest rate computed by equations for c. Book value consideration of obligations to financial contribution or claims of compound interest for a 1 year period is known as d. Going value other based on profit. a. Expected return a. Economic life b. Interest Ans. B b. Yield c. Nominal interest c. Earning value d. Effective interest An intangible value which is actually operating concern has due to d. Expected yield its operation. Ans. D a. Book value Ans. A b. Fair value The intangible item of value from the exclusive right of a company c. Goodwill value to provide a specific product or service in a stated region of the d. Going value country. The payment for the use of borrowed money is called a. Market value Ans. D a. Loan b. Book value b. Maturity value c. Goodwill value The value which a disinterested third party, different from the c. Interest d. Franchise value buyer and seller, will determine in order to establish a price d. Principal acceptable to both parties. Ans. D a. Market value Ans. C b. Good value The recorded current value of an asset is known as c. Fair value The interest rate at which the present work of the cash flow on a a. Scrap value d. Franchise value project is zero of the interest earned by an investment. b. Salvage value a. Effective rate c. Book value Ans. C b. Nominal rate d. Present wort c. Rate of return A type annuity where the payments are made at the end of each d. Yield Ans. C payment period starting from the first period. a. Ordinary annuity Ans. C Scrap value of an asset is sometimes known as. b. Annuity due a. Book value c. Deferred annuity The ratio of the interest payment to the principal for a given unit b. Salvage value d. Perpetuity of time and usually expressed as a percentage of the principal. c. Replacement value a. Interest d. Future value Ans. A b. Interest rate c. Investment Ans. B It is a series of time where the first payment is made after several d. All of the above periods, after the beginning of the payment. 14  a. Deferred annuity b. Demand facetor A method of depreciation whereby the amount to recover is b. Delayed annuity c. Sinking fund factor spread uniformly over the estimated life of the asset in terms of c. Progressive annuity d. Present worth factor the periods or units of output. d. Simple annuity a. Straight line method Ans. D b. Sinking fund method Ans. A c. Declining balance method As applied to a capitalized asset, the distribution of the initial cost d. SYD method A type of annuity where the payments are made at the start of by a periodic changes to operation as in depreciation or reduction each period from the first period. of a debt by either periodic or irregular prearranged program is Ans. A a. Ordinary annuity called b. Annuity due a. Annuity Which of the following depreciation methods cannot have a c. Deferred annuity b. Capital recovery salvage value of zero? d. Perpetuity c. Annuity factor a. Declining balance method d. Amortization b. Sinking fund method Ans. B c. Straight line method Ans. D d. SYD method Which is not an essential element of an ordinary annuity? a. The amounts of all payments are equal. The reduction of the value of an asset due to constant use and Ans. A b. The payments are made at equal interval of time passage of time. c. The first payment is made at the beginning of a. Scrap value A method of depreciation where a fixed sum of money is regularly each period b. Depletion deposited at compound interest in a real or imaginary fund in d. Compound interest is paid on all amounts in the c. Depreciation order to accumulate an amount equal to the total depreciation of annuity d. Book value an asset at the end of the asset’s estimated life. a. Straight line method Ans. C Ans. C b. Sinking fund method c. Declining balance method A is a periodic payment and I is the interest rate, then present A method of computing depreciation in which the annual charge is d. SYD method worth of a perpetuity = a fixed percentage of the depreciated book value at the beginning a. Ai of the year to which the depreciation applies. Ans. B b. Ai^n a. Straight line method c. A^n/ i b. Sinking fund method The function of interest rate and time determines the cumulative d. A/i c. SYD method amount of a sinking fund resulting from specific deposits. d. Declining balance method a. Sinking fund factor Ans. D b. Present worth factor Ans. D c. Capacity A mathematical expression also known as the present value of one d. Demand factor is called a. Load factor Ans. A 15  a. sole propeitorship The first cost of any property includes b. partnership Ans. C a. The original purchase price and freight and c. enterprise transportation charges d. corporation What is the minimum number of incorporators in order that a b. Installation expenses corporation be organized? c. Initial taxes and permits fee ans. A a. 3 d. All of the above b. 5 an association of two or more person for a purpose of engaging in c. 10 Ans. A a profitable business d. 7 a. sole proprietorship In SYD method, the sum of years digit is calculated using which b. enterprise Ans. B formua with n= number of useful years of the equipment. c. partnership a. n(n-1)/2 d. corporation In case of bankruptcy of a partnership b. n(n+1)/2 a. The partners are not liable for the liabilities of the c. n(n+1) Ans. C partnership. d. n(n-1) b. The partnership assets (excluding the partner a distinct legal entity which can practically transact any business personal assets) only will be used to pay the ans. B transaction which a real person could do. liabilities. a. Sole proprietorship c. The partners personal assets are attached to the capitalized cost of any property is equal to the b. Enterprise debt of the partnership a. annual cost c. Partnership d. The partners may sell stock to generate additional b. first cost + cost of perpetual cost d. Corporation capital. c. first cost + cost of perpetual maintenance d. first cost + salvage value Ans. D Ans. C ans. C Double taxation is disadvatange of which business organization Which is TRUE about partnership? a. Sole proprietorship a. It has a perpetual life. the lessening of the value of an asset due to the decrease in the b. Partnership b. It will be desolved if one of the partners ceases to quantity available ( referring to the natural resources, coal, oil, c. Corporation be connected with the partnership etc) d. Enterprise c. It can be handed down from one generation of a. depreciation partners to another. b. depletion Ans. C d. Its capitalization must be equal for each partner. c. inflation d. incremental cost Which is NOT a type of business organization? Ans. D a. Sole proprietorship ans. B b. Corporation Which is TRUE about corporation? c. Enterprise a. It is the not best form of business organization. is the simplest form of business organization d. Partnership 16  b. The minimum number of incorporators to start a A certified of indebtness of a corporation usually for a period not Ans. C corporation is there. less than 10 years and guaranteed by a mortgage on certain assets c. Its life is dependent on the lives of the of the corporation. *** NOTHING FOLLOWS *** incorporators. a. Bond d. The stockholders of the corporation are only b. T-bill “Mastera ni kay mag negosyante man kaha ka” liable to the extent of their investments. c. Preferred stock d. Common stock Ans. D Ans. A Represent ownership, and enjoys certain preference than ordinary stock. A form of fixed- interest security issued by central or local a. Authorized capital stock governments, companies, banks or other institutions. They are b. Preferred stock usually a form of long-term security, buy may be irredeemable, c. Common stock secured or unsecured. d. Incorporator’s stock a. Bonds b. T-bills Ans. B c. Certificate of deposit Represent the ownership of stockholders who have a residual d. All of these claim on the assets of the corporation after all other claims have been settled. Ans. A a. Authorized capital b. Preferred stock A type of bond where the corporation pledges securities which it c. Incorporators stock owns (i.e. stock, bonds of its subsidiaries) d. Common stock a. Mortgage bond b. Register bond Ans. D c. Coupon Bond d. Collateral trust bond The amount of company’s profits that the board of directors of the corporation decides to distribute to ordinary shareholders. Ans. D a. Dividend b. Return c. Share stock A type of bond which does not have security except a promise to d. Par value pay by the issuing corporation. a. Mortgage bond Ans. A b. Register bond c. Collateral trust bond d. Debenture bond