4

# Pick out the wrong statement.

Debt-equity ratio of a chemical company describes the lenders contribution for each rupee of owner's contribution i.e., debt-equity ratio = total debt/net worth

Return on investment (ROI) is the ratio of profit before interest & tax and capital employed (i.e. net worth + total debt)

Working capital = current assets + current liability

Turn over = opening stock + production closing stock

C. Working capital = current assets + current liability

4

# Depreciation

Costs (on annual basis) are constant when the straight line method is used for its determination

Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time

Does figure in the calculation of income tax liability on cash flows from an investment

All (A), (B) and (C)

4

# Scheduling provides information about the

Proper utilisation of machines

Means to minimise idle time for machines

Time of completion of job

Time of starting of job and also about how much work should be completed during a particular period

4

n

n0.6

n0.4

√n

4

# Which of the following relationship is not correct is case of a chemical process plant?

Manufacturing cost = direct product cost + fixed charges + plant overhead costs

General expenses = administrative expenses + distribution & marketing expenses

Total product cost = manufacturing cost + general expenses

Total product cost = direct production cost + plant overhead cost

4

# The payback method for the measurement of return on investment

Gives a correct picture of profitability

Underemphasises liquidity

Does not measure the discounted rate of return

Takes into account the cash inflows after the recovery of investments

4

p.i.n.

p(1 + i.n)

p(1 + i)n

p(1 - i.n)

4

More

Less

Same

No

4

# Optimum economic pipe diameter for fluid is determined by the

Viscosity of the fluid

Density of the fluid

Total cost considerations (pumping cost plus fixed cost of the pipe)

None of these

4

# Which of the following is not a component of the working capital for a chemical process plant?

Product inventory

In-process inventory

Minimum cash reserve

Storage facilities

4

# Factory manufacturing cost is the sum of the direct production cost

Fixed charges and plant overhead cost

None of these

4

# Pick out the correct statement.

Difference between income and expense is termed as gross revenue

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

Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment

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

4

# In financial accounting of a chemical plant, which of the following relationship is invalid?

Assets = equities

Assets = liabilities + net worth

Total income = costs + profits

Assets = capital

4

0.1

0.6

0.2

0.8

4

# An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the

Manufacturing cost

Depreciation by sinking fund method

Discrete compound interest

Cash ratio

4

# The depreciation during the year 'n', in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage 'N' to the

Initial cost

Book value at the end of (n - 1)th year

Depreciation during the (n - 1)th year

Difference between initial cost and salvage value

4

30

50

75

95

4

# Cost incurred towards __________ in a chemical plant is a component of the utilities cost.

Water supply

Running a control laboratory

Property protection

Medical services

4

# Expenditure on research and development (R & D) is categorised as the __________, while making an estimate of the total product cost for a chemical plant.

Fixed expenses

General expenses

Direct production cost

4

# A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as

Perpetuity

Capital charge factor

Annuity

Future worth

4

# Which of the following is not a mathematical method for evaluation of profitability of a chemical process plant?

Cash reserve

Rate of return on investment

Payout period

Discounted cash flow based on full life performance

4

# The __________ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities.

Cash ratio

Net working capital

Current ratio

Liquids assets

4

1.2 to 1.4

2.5 to 2.7

4.2 to 4.4

6.2 to 6.4

4

Book value

Total cost

Operating cost

None of these

4

Decrease

Increase

No change

None of these

4

# With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project

Decreases

Increases

Increases linearly

Remain constant

4

# Total product cost of a chemical plant does not include the __________ cost.

Market survey

Operating labour, supervision and supplies

Depreciation, property tax and insurance

4

# Which of the following is not a current asset of a chemical company?

Inventories

Marketable securities

Chemical equipments

None of these

4

# Break-even point is the point of intersection of

Fixed cost and total cost

Total cost and sales revenue

Fixed cost and sales revenue

None of these

4

# For a typical project, the cumulative cash flow is zero at the

End of the project life

Breakeven point

Start up

End of the design stage