Information Systems And Engineering Economics Set 9 MCQs

Q1 | Rate of depreciation chargeable on temporarywooden structure for the assessment year 2019-20 is:

a. 40%

b. 10%

c. 100%

d.50%

Q2 | DS acquired a building for Rs. ` 15 lakh in June, 2016 in addition to cost of land beneath the building of ` 3 lakh. It was used for personal purposes until he commenced business in June, 2018 and since thenit was used for business purposes. The amountof depreciation eligible in his case for the assessment year 2019-20 would be -

a. rs.` 1,50,000

b. rs.` 75,000

c. rs.` 37,500

d. rs.` 1,21,500

Q3 | XYZ Ltd is engaged in production of textile articles. Opening WDV of the block of assets was Rs.` 15, 00,000. During the year, plant was acquired under this block on 15th June 2018 amounting to Rs.` 10, 00,000. One of the asset falling within the block was sold for Rs. ` 5, 50,000 on 14-01- 2019. Rate of depreciation of the block is 15%.Calculate the total amount of depreciation including additional depreciation available during the previousyear for the block. C

a. rs.` 2,92,500

b. rs.`4,92,500

c. rs.` 3,92,500 88

d. rs.` 3,52,500

Q4 | What is the rate of depreciation charged oncomputer software?

a. 40%

b. 15%

c. 60%

d. 100%

Q5 | Your accounting records indicate that an asset in use has a book value of $8,640. The asset cost $30,000 when it was purchased, and it has been depreciated under the 5 MACRS method. Based on the information available, determine how many years the asset has beenin service.

5 years

6 years

4 years

3 years

Q6 | Which of the following statements is correct?

the reason why the u.s. congress allows business to use macrs depreciation as opposed to conventional methods is to reduce the business tax burden over the project life.

under the declining balance depreciation system, it is always desirable to switch to straight line depreciation.

when determining the cost basis for an asset’s depreciation, you must include all the costs that were incurred to keep the asset in operable condition.

the main reason why a typical ?rm may use a straight line depreciation method in reporting an income to outside investors (as opposed to any other accelerated tax depreciation methods) is to abide by the accounting principle— that is to report the truecost of doing business

Q7 | Which of the following statements is correct?

over a project’s life, a typical business will generate a greater amount of total project cash ?ows (undiscounted) if a faster depreciation method is adopted.

no matter which depreciation method you adopt, total tax obligations over a project’s life remain unchanged.

depreciation recapture equals cost basis minus an asset’s book value at the time of disposal, that is, if the salvage value is less than the asset’scost basis.

cash ?ows normally include depreciation expenses since they represent a cost of doing business.

Q8 | You purchased a computer system which cost $50,000 5 years ago. At that time, the system was estimated to have a service life of 5 years with salvage value of $5,000. These estimates are still good. The property has been depreciated according to a 5 year MACRS property class. Now (at the end of year 5 from purchase) you are considering selling the computer at $10,000. What book value should you use indetermining the taxable gains?

8640

5760

10368

11520

Q9 | Gilbert Corporation had a gross income of $500,000 in tax year 1,$150,000 in salaries, $30,000 in wages, $20,000 in interest, and $60,000 in depreciation expenses for an asset purchased 3 years ago. Ajax Corporation has a gross income of $500,000 in tax year 1, and $150,000 in salaries, $90,000 in wages, and $20,000 in interest expenses. Apply the current tax rates and determine which of the following statements is correct.

both corporations will pay the same amount of income taxes in year 1.

both corporations will have the same amount of net cash ?ows in year 1.

ajax corporation will have a larger net cash ?ow than gilbert in year 1.

gilbert corporation will have a larger taxable income than ajax corporation in year 1.

Q10 | A company purchased an industrial fork-lift for $75,000 in year 0. The company expects to use it for the next 7 years after which it plans to sell it for $10,000. The estimated gross income and expenses excluding depreciation for the ?rst year are given below. The fork-lift will be depreciated according to a 5-year MACRS.:Determine the average tax rate applicable in the ?rst year of operation, using the current corporate tax rate schedule.

0.1875

0.1731

0.25

0.15

Q11 | What effect would have on the break-even point and expected pro?t ifthere is an increase in ?xed cost?

(decrease, decrease)

(increase, decrease)

(increase, increase)

(decrease, decrease)

Q12 | What effect would have on the break-even point and expected pro?t ifthere is an increase in labor cost?

(decrease, decrease)

(increase, decrease)

(increase, increase)

Q13 | What effect would have on the break-even point and expected pro?t ifthere is an increase in unit price?

(increase, decrease)

(decrease, decrease)

(increase, increase)

(decrease, increase)

Q14 | What effect would have on the break-even point and expected pro?t ifthere is an increase in ?nancing cost?

(decrease, decrease)

(increase, decrease)

(increase, increase)

(decrease, increase)

Q15 | What effect would have on the break-even point and expected pro?t ifthere is an increase in sales expense?

(increase, increase)

(decrease, decrease)

(increase, decrease)

(decrease, decrease)

Q16 | Mistakes made in the system analysis stage show up in

system design

system development

implementation

all of the above

Q17 | The everyday tasks of management include:

planning and creativity

planning and leading

publicity and loss adjustment

plotting and leading

Q18 | Studying the future and arranging the means for dealing with it is part of the process of

organising

controlling

commanding

planning

Q19 | Bureaucracy theory means

the development of management functions and administrative principles

a scientific study of work

a hierarchy of command based on a rational-legal authority structure

a shared responsibility of authority and delegation

Q20 | An in depth study on a single organisation using a variety of data collection methods is known as

case study

field survey

field experiment

laboratory experiment

Q21 | The method of research that gathers data about perceptions, feelings, opinions through interviews and questionnaires in their actual work setting is known as

case study

field survey

field experiment

laboratory experiment

Q22 | The consistency of data obtained from a particular research method is known as

reliability

validity

credibility

casuality

Q23 | The degree to which a research method actually measures what it is supposed to measure is known as

reliability

validity

credibility

casuality

Q24 | Managing the human resource is

the smallest department in an organisation

better managed outside the organisation

vital for the success of an organisation

an unnecessary expense

Q25 | A method of helping is to understand management and organisational behaviour is to look at _________ that has been done before

experiments

research

management

behaviour