Practice Test

Question 1

Three main forms of business in New Zealand:

i Sole traders own all the assets of a business and are responsible for all the risks, obligations and debts

ii A company must have a registered name, more than one shareholder, more than one director

Answer 1

i true

ii false

Question 2

Structure of Companies:

i Good governance is the effective separation, management and execution of the relationships, duties, obligations and accountability of an entity, such that the entity is best able to fulfill its purpose

ii The board of directors owns the company, but it hires a CEO to run it on a daily basis.

Answer 2

i true

ii false

Question 3

Accounting, Economics, Finance:

i Accounting relates to preparation of accounting records, preparation, analysing and interpretation of financial statements

ii Economics is a study of choices made by people who are faced with scarcity

Answer 3

i true

ii true

Question 4

The following activities belong to the Finance Manager:

i Hedging, investing

ii Planting, spacing

Answer 4

i true *

ii false

Question 5

Which of the following statements is/are true?

i The payback rule specifies that a project be accepted if its payback period is less than the specified cut off period.

ii By using the payback rule the emphasis is on profitability

Answer 5

i true

ii false

Question 6

Which of the following statements is/are true?
Return on investment (ROI) uses the ratio of cashflows (gained) and initial investment, it takes

i no account of time value of money

ii no account of the size of a project

Answer 6

i true

ii true

Question 7

In a normal costing method (accounting terminology),

i Actual costs are used to calculate the overhead for projects

ii A predetermined overhead, based on previous figures is used

Answer 7

i false

ii true

Question 8

Which of the following statements is/are true?

i Process costing differentiates the (direct) costs per job (or process) to see how profitable each job is

ii Job-order costing assigns average costs to each unit of production (job)

Answer 8

i false

ii false

Question 9

Estimating:

i If your average profit on projects is 4%, then the estimates must be more accurate than 4% before we should use them in a tender or offer

ii The objective of estimating is to be as accurate as possible

Answer 9

i true

ii false *

Question 10

Estimating:

i At about 30-40% finished design, many critical design decisions, such as building footprint, major equipment types, processes, etc. have been made

ii At 90% finished design, a set of documents will be sent to the permitting authorities for their review

Answer 10

i true

ii true

Question 11

An estimate usually would not specify the cost of the following subcomponent:

a. Labour (required for installing the materials)
b. Consumables, such as fuel
c. Company overhead (like cost of the head office)
d. Productivity rates

Answer 11

a

b

c

d

Question 12

Which of the following is not an example of jobsite overhead

a. Jobsite personnel wages and fringe benefits
b. Jobsite personnel project-related travel expenses
c. Bonds, insurance, permits, and taxes (contract general conditions)
d. All of the above are jobsite overhead costs

Answer 12

d.

Question 13

According to Project Dynamics, the difference between outsourcing and collaboration goes according to 2 basic ‘laws’

i Two or more players which want to deliver the same products or same processes at an equal scale level should collaborate

ii Two or more players which want to deliver complimentary products or complimentary processes at an equal scale level preferably should always be placed in an outsourcing competition

Answer 13

i false

ii false

Question 14

There are several risk mitigation handling options:

i Avoid: adjust program requirements or constraints to eliminate or reduce the risk. This adjustment could be accommodated by a change in funding, schedule, or technical requirements.

ii Control: Implement actions to minimize the impact or likelihood of the risk

Answer 14

i true

ii true

Question 15

A balance sheet shows a company’s financial position at a point in time (end of fiscal year), a snap shot. There are three major items in a balance sheet: assets, liabilities, and equity ( net worth)

a. Underbilled work belongs to the assets
b. Overbilled work belongs to the assets
c. Under and over billed work belongs to the assets
d. Neither under of over work belongs to the assets

Answer 15

a.

Question 16

A company can increase its working capital by

i Paying of bank loans with credit cards

ii Purchasing equipement

Answer 16

i false

ii false

Question 17

Company Finance:

i The purpose of the income statements is to show whether or not a a company’s business is profitable. It shows the profit or the loss over a period of time (financial year)

ii In an income statement, the difference between the ‘profit before income tax’ and ‘gross profit’ is the finance cost (like interest paid or received)

Answer 17

i true

ii false