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1) What refers to the saving which takes place because goods are not available for consumption rather than consumer really want to save ? a. Compulsory saving b. Consumer saving c. Forced saving d. All of the above
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2) The flow back of profit plus depreciation form a given project is called ___________________? a. Capital recovery b. Cash flow c. Economic return d. Earning value
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3) As applied to capitalized asset, the distribution of the initial cost by a periodic changes to operation as in depreciation or the reduction of a debt by either periodic or irregular prearranged programs is called ___________________? a. Annuity b. Amortization c. Capital recovery d. Annuity factor
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4) Capitalized cost of any structure or property is computed by which formula ? a. First cost + interest of first cost b. Annual cost – interest of first cost c. First cost + cost of perpetual maintenance d. First cost + salvage value
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5) The true value of interest rate computed by equations for compound interest for a 1 year period is known as __________________? a. Expected return b. Nominal interest c. Effective interest d. Economic return
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6) Return on investment ratio is the ratio of the_____________? a. Net income to owner’s equity b. Market price per share to earnings per share c. Cost of goods sold to average cost of inventory at hand d. Net credit sales to average net receivable
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7) Gross margin is the ratio of the gross profit to _________________? a. Net sale b. Owner’s equity c. Inventory turnover d. Quick assets
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8) What is another term for “acid-test ratio” ? a. Current ratio b. Quick ratio c. Profit margin ratio d. Price-earnings ratio
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9) What is a government bond which has an indefinite life rather than a specific maturity ? a. Coupon b. T-bill c. Debenture d. Consol
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10) A form of business firm which is owned and run by a group of individuals for their mutual benefit is called ___________________? a. Cooperative b. Corporation c. Enterprise d. Partnership
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11) What is a stock of a product which is held by a trade body or government as a means of regulating the price of that product ? a. Stock pile b. Hoard stock c. Buffer stock d. Withheld stock
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12) The ability to meet debts as they become due is known as __________________? a. Solvency b. Leverage c. Insolvency d. Liquidity
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13) The ability to convert assets to cash quickly is known as ________________? a. Solvency b. Liquidity c. Leverage d. Insolvency
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14) What is the basic accounting equation ? a. Assets = liability + owner’s equity b. Liability = assets + owners’ equity c. Owner’s equity = assets + liability d. Owner’s equity = liability – assets
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15) The financial health of the company is measured in terms of______________? a. Liquidity b. Solvency c. Relative risk d. All of the above
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16) What is an index of short-term paying ability ? a. Price-earnings ratio b. Current ratio c. Profit margin ratio d. Gross margin
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17) The common ratio is the ratio of_______________? a. Net credit sales to average net receivable b. Current assets to current liabilities c. Gross profit to net sales d. Net income to owner’s equity
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18) What is defined as the current assets minus inventories and prepaid expenses ? a. Profit margin ratio b. Price-earnings ratio c. Return of investment ratio d. Quick ratio
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