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Multiple Choice Questions and Answers on Financial Management, Exercises of Economics

Polytechnic University of the Philippines (PUP)Economics

A series of multiple-choice questions and answers related to financial management concepts. It covers topics such as depreciation methods, annuities, economic return, working capital, market value, utility, balance sheets, and more. The questions are designed to test understanding of key financial principles and their application in business contexts.

Typology: Exercises

2019/2020

Available from 02/22/2025

luna-cruz-8 🇵🇭

2 documents

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1. The method of depreciation where 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 is

known as;

A. straight line method

B. SYD method

C. Declining balance method

D. Sinking fund method

Answer: D

2. The term used to express the series of uniform payments occurring at equal

interval of time is;

A. compound interest

B. annuity

C. perpetuity

D. depreciation

Answer: B

3. The profit derived from a project or business enterprise without consideration og

obligations to financial contributors and claims of others based on profit is known

as; A. yield

B. earning value

C. economic return

D. expected yield

Answer: C

4. As applied to capitalized asset, the distribution of the initial cost by periodic

changes to operation as in depreciation or the reduction of the depth by either

periodic or irregular prearranged program is called

A. amortization

B. annuity

C. depreciation

D. capital recovery

Answer: A

5. Those funds that are required to make the enterprise or project going conc

A. banking

B. accumulated amount

C. working capital

D. principal or present worth

Answer: C

Partial preview of the text

Download Multiple Choice Questions and Answers on Financial Management and more Exercises Economics in PDF only on Docsity!

The method of depreciation where 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 is known as; A. straight line method B. SYD method C. Declining balance method D. Sinking fund method Answer: D
The term used to express the series of uniform payments occurring at equal interval of time is; A. compound interest B. annuity C. perpetuity D. depreciation Answer: B
The profit derived from a project or business enterprise without consideration og obligations to financial contributors and claims of others based on profit is known as; A. yield B. earning value C. economic return D. expected yield Answer: C
As applied to capitalized asset, the distribution of the initial cost by periodic changes to operation as in depreciation or the reduction of the depth by either periodic or irregular prearranged program is called A. amortization B. annuity C. depreciation D. capital recovery Answer: A
Those funds that are required to make the enterprise or project going conc A. banking B. accumulated amount C. working capital D. principal or present worth Answer: C

These are product or services that are desired by humans and will be purchased if money is available after the required necessities have been obtained A. utilities B. necessities C. luxuries D. producer good and services Answer: C
These are product or services that are required to support human life and activities, that will be purchased in some what the same quantity even thought the price varies considerably. A. utilities B. necessities C. luxuries D. producers goods and services Answer : B
A condition where only a few individuals produce a certain product and that any action of one will lead to almost the same action of the others. A. oligopoly B. semi-monopoly C. monopoly D. perfect competition Answer : A
This occurs in a situation where a commodity or service is supplied by a number of vendors and there is nothing to prevent additional vendors entering the market. A. perfect competition B. monopoly C. oligopoly D. elastic demand Answer : A
It is the amount that a willing buyer will pay to a willing seller for a property where each has equal advantage and is under no compulsion to buy or sell. A. fair value B. use value C. market value D. book value Answer : C

What is the formula for a straight-line depreciation rate? A. 100% -%net salvage value Estimated service life

B. %net salvage value Estimated service life

C. 100% net salvage value estimated service life

D. average net salvage value estimated service life Answer : A

The amount received from the sale of an additional unit of a product is termed as: A. marginal cost B. marginal utility C. marginal unit D. marginal revenue Answer: D
An accounting book where the original record of all transaction is ordinarily recorded. A. journal B. credit entry C. debit entry D. transaction record Answer : A
An 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 some future date. A. amortization B. sinking fund C. annuity D. capitalized cost Answer : B

What is work-in-process classified as? A. an asset B. liability C. an expense D. owner’s equity Answer : A
Which is a form of business/company ownership? A. partnership B. corporation C. single proprietorship D. all of the list Answer : D
The decrease in value of a physical property due to the passage of time; A. inflation B. depletion C. recession D. depreciation Answer : D
We may classify an interest rate, which specifies the actual rate an interest on the principal for one year as: A. Nominal rate B. Rate of return C. Exact interest rate D. Effective rate Answer : D
This law states that “When the use of one of the factors of production is limited, either in increasing cost or by absolute quantity, a point will be reached beyond which an increase in the variable factors will result in less than proportionate increase in output.” A. Law of Supply and Demand B. Law of Diminishing Return C. Law of Gravity D. Law of diminishing Utility Answer : D

B. Life span C. Eternal life D. Physical life Answer : D

It is a distinct legal entity, separate from individuals who own it and which can engage in pratically any business transaction which real person can do. A. Partnership B. Single proprietorship C. Eternal Life D. Physical life Answer : A
A market whereby there is only one buyer of an item for which there are no goods substitute. A. Monopoly B. Oligopoly C. Oligopsony D. Monopsony Answer : D
This form of business ownership is a legal entity possessing many of the legal powers of individuals. It can hold title to property, sue and be sued in its own name. It is called: A. corporation B. company C. general partnersahip D. individual proprietorship Answer : A
The balance sheet is a statement showing the financial status of the company at any given time. Which of the statements is not a part of the balance sheet. A. liabilities B. assets C. cost of goods sold D. net worth Answer : C
Refers to cost of merchandise which excludes freight and insurance cost; A. freight-on-board B. sunk cost C. debentures D. book value Answer: D

A fund into which annual deposits of A are made in order to accumulate fund F at n years in the future. A. Amortization B. Annuity C. Depreciation D. Singking fund Answer : D
Cash money credit necessary to establish and operate an enterprise. A. funds B. capital C. liabilities D. assets Answer: B
the worth of property which is equal to the original cost less depreciation; A. scrap value B. earning value C. book value D. face value Answer: C
Intangible assets of a corporation or company A. dacion-en-pago B. investment C. patents D. equity Answer : C
additional information to prospective bidders on contract documents issued to bidding date; A. escalatory clause B. delicts C. technological assessments D. bid bulletin Answer: D

The ratio of the interest payment to the principal for a given unit of time and is usually expressed as percentage of the principal is known as: A. investment B. nominal interest C. interest D. interest rate Answer: D
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. Singking fund method Answer: C
The interest rate at which the present worth of cash flow of a project is zero, or the interest earned by an investment. A. Rate of return B. Effective rate C. Nominal rate D. Yield Answer: A
It is the amount of money earned by given capital: A. Interest B. Annuity C. Cash flow D. None of the above Answer: A
Which of the following is a type of simple interest; A. Ordinary B. Exact C. Both A and B D. None of the above Answer: C
The interest earned by the principal competed at the end of the investment period, it varies directly with time. A. Compound interest B. Simple interest C. Annuity

D. Perpetuity Answer: B

The interes is completed every end of each interest period and the interest earned for the period is added to the principal. A. Compound interest B. Simple interest C. Annuity D. Perpetuity Answer: A
It is rate quoted in describing a given variety of compound interest A. nominal rate B. effective rate C. simple rate D. compound rate Answer: A
It is the actual interest earned in one year period. A. Nominal rate B. Effective rate C. Simple rate D. Compound rate Answer: B
a series of uniform payments made at equal intervals of time. A. perpetuity B. interest C. rate D. annuity Answer: D
Which of the following is type of annuity. A. Ordinary B. Deferred C. Annuity due D. All of the above Answer: D
An annuity where thepayments periods extend forever or the periodic payments continue indefinitely. A. Perpetuity B. Interest

C. Sum of the years method D. All of the above. \ Answer: D

The most common method used in computing depreciation; A. Straight line depreciation B. Sinking fund method C. Sum of the years digit method D. Declining balance method Answer: A
The depreciation charge in this method is assumed to vary directly to the number of years and inversely to the sum of the year’s digit. A. Straight line depreciation B. Sinking fund method C. Sum of the year’s digit method D. Declining balance method Answer: C
It is invested yearly at a rate of I to amount to (FC –SV) at the end of the life to the property. A. Straight line depreciation B. Sinking fund method C. Sum of the years digit method D. Declining balance method Answer: B
A written contract to pay a certain redemption value on a specified redemption date and to pay equal dividends periodically A. Bond B. Capital C. Interest D. Annuity Answer; A
A method of determining when cost exactly equal to revenue. A. Exoerimental method B. Break-even method C. Break-add method D. None of the above Answer: B
Find the interest on P6,800.00 for 3 years at 11% simple interest.

A. P 1,875.

B. P 1,987.

C. P 2,144.

D. P 2,244.

Answer: D

A man borrowed P10,000.00 from his friend and agrees to pay at the end of 90 days under 8% swimple interest rate. What is the required amount? A, P 10,200. B P 11,500. C. P 9,500. D. P 10,700. Answer: A
Annie buys a television set from a merchant who offers P25,000.00 at the end of 60 days. Annie wished to pay immediately and the merchant offers to compute the required amount on the assumption that the money is worth 14% simple interest. What is the required amount? A. P 20,234. B. P 19,222. C. P 24,429. D. P 28,456. Answer: C
What is the principal amount if trhe amount of interes at the end of 21/2 year is P4,500. for a simple interest of 6% per annum? A. P 35,000. B. P 30,000. C. P 40,000. D. P 45,000. Answer: B
How long must a P40,000 note bearing 4% simple interest run to amount to P41,350.00? A. 340 days B. 403 days C. 304 days D. 430 days Answer:C

Accumulate P5,000.00 for 10 years at 8% compounded quarterly. A. P 12,456. B. P 13,876. C. P 10,345. D. P 11,040. Answer: D
Accumulate P5,000.00 for 10 years at 8% compounded semi-annually. A. P 10,955. B. P 10,233. C. P 9,455. D. P 11,876. Answer: A
Accumulate P5,000.00 for 10 years at 8% compounded monthly A. P 15,456. B. P 11,102. C. P 10,955. D. P 10,955. Answer: B
Accumulate P5,000.00 for 10 years at 8% compounded annually. A. P 10,794. B. P 8,567. C. P 10,987. D. P 7,876. Answer: A
How long it will take P1,000 to amount to P1,346 if invested at 6% compounded quarterly. A. 3 years B. 4 years C. 5 years D. 6 years Answer: C
How long will it take for an investment to double its amount if invested at an interest rate of 6% compounded bi-monthly A. 10 years B. 12 years C. 13 years D. 14 years

Answer: B

If the compound interest on P3,000.00 in years is P500.00 then the compound interest on P3,000.00 in 4 years is: A. P 956. B. P 1,083. C. P 1,125. D. P 1,526. Answer: B
The salary of Mr. Cruz is increased by 30% every 2 years beginning January 1,

Counting from that date, at what year will his salary just exceed twice his original salary? A. 1988 B. 1989 C. 1990 D. 1991 Answer: A

If you borrowed P10,000 from the bank with 18% interest per annum, what is the total amount to be repaid at the end of one year. A. P 11,800. B. P 19,000. C. P 28,000. D. P 10,180. Answer: A
What is the effective rate for an inteerest rate at 12% compounded continously? A. 12.01% B. 12.89% C. 12.42% D. 12.75% Answer: D
How long it will take for an investment to fivefold its amountif money is worth 14% compounded semiannually. A. 11 B. 12 C. 13 D. 14

D. 11.52%