Plant-Economics Mcqs for Chemical - Set 9

1)   Depreciation________________?

a. Costs (on annual basis) are constant when the straight line method is used for its determination
b. Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time
c. Does figure in the calculation of income tax liability on cash flows from an investment
d. All A, B. and C.
Answer  Explanation 

ANSWER: All A, B. and C.

Explanation:
No explanation is available for this question!


2)   A shareholder has ______________ say in the affairs of company management compared to a debenture holder ?

a. More
b. Less
c. Same
d. No
Answer  Explanation 

ANSWER: More

Explanation:
No explanation is available for this question!


3)   Operating profit of a chemical plant is equal to___________________?

a. Profit before interest and tax i.e., net profit + interest + tax
b. Profit after tax plus depreciation
c. Net profit + tax
d. Profit after tax
Answer  Explanation 

ANSWER: Profit before interest and tax i.e., net profit + interest + tax

Explanation:
No explanation is available for this question!


4)   ____________ taxes are based on gross earnings ?

a. Property
b. Excise
c. Income
d. Capital gain
Answer  Explanation 

ANSWER: Income

Explanation:
No explanation is available for this question!


5)   Which of the following does not come under the sales expenses for a product of a chemical plant ?

a. Advertising
b. Warehousing
c. Legal fees
d. Customer service
Answer  Explanation 

ANSWER: Legal fees

Explanation:
No explanation is available for this question!


6)   If an amount R is paid at the end of every year for ‘n’ years, then the net present value of the annuity at an interest rate of i is _________________?

a. R [{(1 + i)n – 1}/ i ]
b. R [{(1 + i)n – 1}/ i (1 + i)n]
c. R(1 + i)n
d. R/(1 + i)n
Answer  Explanation 

ANSWER: R [{(1 + i)n – 1}/ i (1 + i)n]

Explanation:
No explanation is available for this question!


7)   Pick out the wrong statement ?

a. Gross revenue is that total amount of capital received as a result of the sale of goods or service
b. Net revenue is the total profit remaining after deducting all costs excluding taxes
c. The ratio of immediately available cash to the total current liabilities is known as the cash ratio
d. Consolidated income statement based on a given time period indicates surplus capital and shows the relationship among total income, costs & profit ove
Answer  Explanation 

ANSWER: Net revenue is the total profit remaining after deducting all costs excluding taxes

Explanation:
No explanation is available for this question!


8)   A balance sheet for an industrial concern shows ___________________?

a. The financial condition at any given time
b. Only current assets
c. Only fixed assets
d. Only current and fixed assets
Answer  Explanation 

ANSWER: The financial condition at any given time

Explanation:
No explanation is available for this question!


9)   Pick out the wrong statement ?

a. The annual depreciation rate for machinery and equipments in a chemical process plant is about 10% of the fixed capital investment
b. Annual depreciation rate of buildings in a chemical plant is about 3% of its initial cost
c. Insurance rates on annual basis in a chemical plant may be about 1% of the fixed capital investment
d. In a chemical industry, research and development cost amounts to about 15% of net sales realisation (NSR)
Answer  Explanation 

ANSWER: In a chemical industry, research and development cost amounts to about 15% of net sales realisation (NSR)

Explanation:
No explanation is available for this question!


10)   Pick out the correct statement ?

a. Difference between income and expense is termed as gross revenue
b. Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date
c. Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment
d. Scrap value is the net amount of money obtainable from the sale of used property over and above any charges involved in its removal & sale
Answer  Explanation 

ANSWER: Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date

Explanation:
No explanation is available for this question!


11)   Pick out the wrong statement?

a. Gross margin = net income – net expenditure
b. Net sales realisation (NSR) = Gross sales – selling expenses
c. At breakeven point, NSR is more than the total production cost
d. Net profit = Gross margin – depreciation – interest
Answer  Explanation 

ANSWER: At breakeven point, NSR is more than the total production cost

Explanation:
No explanation is available for this question!


12)   Pick out the wrong statement?

a. Net worth means paid up share capital and reserve & surplus (i.e. shareholders equity)
b. Return on equity = profit after tax/net worth
c. Working capital turnover ratio = sales/net working capital
d. Total cost of production is more than net sales realisation (NSR) at breakeven point
Answer  Explanation 

ANSWER: Total cost of production is more than net sales realisation (NSR) at breakeven point

Explanation:
No explanation is available for this question!