Chemical Engineering Plant Economics(Chemical Engineering ) Questions and Answers

Question 1. The depreciation during the year 'n', in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage 'N' to the
  1.    Initial cost
  2.    Book value at the end of (n - 1)th year
  3.    Depreciation during the (n - 1)th year
  4.    Difference between initial cost and salvage value
Explanation:-
Answer: Option B. -> Book value at the end of (n - 1)th year
Question 2. A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as
  1.    Perpetuity
  2.    Capital charge factor
  3.    Annuity
  4.    Future worth
Explanation:-
Answer: Option C. -> Annuity
Question 3. Generally, income taxes are based on the
  1.    Total income
  2.    Gross earning
  3.    Total product cost
  4.    Fixed cost
Explanation:-
Answer: Option B. -> Gross earning
Question 4. Which of the following is not a current asset of a chemical company?
  1.    Inventories
  2.    Marketable securities
  3.    Chemical equipments
  4.    None of these
Explanation:-
Answer: Option C. -> Chemical equipments
Question 5. In declining balance method of depreciation calculation, the
  1.    Value of the asset decreases linearly with time
  2.    Annual cost of depreciation is same every year
  3.    Annual depreciation is the fixed percentage of the property value at the beginning of the particular year
  4.    None of these
Explanation:-
Answer: Option C. -> Annual depreciation is the fixed percentage of the property value at the beginning of the particular year
Question 6. A shareholder has __________ say in the affairs of company management compared to a debenture holder.
  1.    More
  2.    Less
  3.    Same
  4.    No
Explanation:-
Answer: Option A. -> More
Question 7. Effluent treatment cost in a chemical plant is categorised as the __________ cost.
  1.    Fixed
  2.    Overhead
  3.    Utilities
  4.    Capital
Explanation:-
Answer: Option C. -> Utilities
Question 8. Pick out the wrong statement.
  1.    Gross revenue is that total amount of capital received as a result of the sale of goods or service
  2.    Net revenue is the total profit remaining after deducting all costs excluding taxes
  3.    The ratio of immediately available cash to the total current liabilities is known as the cash ratio
  4.    Consolidated income statement based on a given time period indicates surplus capital and shows the relationship among total income, costs & profit over the time interval
Explanation:-
Answer: Option B. -> Net revenue is the total profit remaining after deducting all costs excluding taxes
Question 9. A balance sheet for an industrial concern shows
  1.    The financial condition at any given time
  2.    Only current assets
  3.    Only fixed assets
  4.    Only current and fixed assets
Explanation:-
Answer: Option A. -> The financial condition at any given time
Question 10. Chemical engineering plant cost index is used for finding the present cost of a particular chemical plant, if the cost of similar plant at some time in the past is known.
The present cost of the plant = $${\text{original cost}} \times \frac{{{\text{index value at present}}}}{{{\text{index value at time original cost was obtained}}}}.$$
The most major component of this cost index is
  1.    Fabricated equipment and machinery
  2.    Process instruments and control
  3.    Pumps and compressor
  4.    Electrical equipments and material
Explanation:-
Answer: Option A. -> Fabricated equipment and machinery
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