Fundamentals Of Intermediate Accounting, Kieso - Complete test bank - exam questions - quizzes (updated 2022)

APPENDIX A
ACCOUNTING AND THE TIME VALUE OF MONEY

MULTIPLE CHOICE—Conceptual
Answer No. Description
d 1. Definition of present value.
c 2. Understanding compound interest tables.
a 3. Identification of correct compound interest table.
d 4. Identification of correct compound interest table.
c 5. Identification of correct compound interest table.
c 6. Identification of correct compound interest table.
b 7. Identification of correct compound interest table.
d 8. Identification of number of compounding periods.
a 9. Adjust the interest rate for time periods.
c 10. Identification of present value of 1 table.
c 11. Determine present value of an ordinary annuity.
b 12. Identification of a future value of an ordinary annuity of 1.
a 13. Appropriate use of an annuity due table.
c 14. Determine the timing of rents of an annuity due.
b 15. Present value of an ordinary annuity and an annuity due.
b 16. Factors of an ordinary annuity and an annuity due.
b 17. Difference between an ordinary annuity and an annuity due.
d 18. Definition of deferred annuities.


MULTIPLE CHOICE—Computational
Answer No. Description
c 19. Calculate present value of a future amount.
b 20. Calculate a future value.
a 21. Calculate a future value of an annuity due.
b 22. Calculate a future value.
c 23. Calculate a future value.
c 24. Calculate present value of a future amount.
d 25. Calculate present value of a future amount.
a 26. Calculate present value of an annuity due.
d 27. Interest compounded quarterly.
d 28. Calculate the future value of 1.
a 29. Calculate future value of an annuity due.
a 30. Calculate present value of an ordinary annuity.
b 31. Calculate present value of an annuity due.
a 32. Calculate future value of an ordinary annuity.
d 33. Calculate future value of an annuity due.
c 34. Calculate annual deposit for annuity due.
d 35. Calculate cost of machine purchased on installment.

,A-2 Test Bank for Fundamentals of Intermediate Accounting

MULTIPLE CHOICE—Computational (cont.)

Answer No. Description
b 36. Calculate cost of machine purchased on installment.
c 37. Calculate cost of machine purchased on installment.
a 38. Calculate the annual rents of leased equipment.
b 39. Calculate present value of an investment in equipment.
b 40. Calculate proceeds from issuance of bonds.
b 41. Calculate proceeds from issuance of bonds.


MULTIPLE CHOICE—CPA Adapted
Answer No. Description
d 42. Identification of correct compound interest table.
a 43. Appropriate use of an ordinary annuity table.
b 44. Calculate annual deposit of annuity due.
a 45. Calculate the present value of a note.
a 46. Calculate the present value of a note.
c 47. Calculate interest revenue of a noninterest-bearing note.
d 48. Determine the issue price of a bond.
c 49. Calculate interest expense of bonds.
b 50. Determine the acquisition cost of a franchise.


EXERCISES
Item Description
EA-51 Present and future value concepts.
EA-52 Present value of an annuity due.
EA-53 Future value of an annuity due.
EA-54 Compute goodwill.
EA-55 Compute the annual rent.
EA-56 Present value of an investment in equipment.
EA-57 Calculate the market price of a bond.
EA-58 Calculate the market price of a bond.


PROBLEMS
Item Description
PA-59 Present value and future value computations.
PA-60 Present value of ordinary annuity and annuity due.
PA-61 Annuity with change in interest rate.
PA-62 Finding the implied interest rate.
PA-63 Calculation of unknown rent and interest.
PA-64 Deferred annuity.
PA-65 Future value and present value.

, Accounting and the Time Value of Money A-3

APPENDIX LEARNING OBJECTIVES

1. Identify accounting topics where time value of money is relevant.
2. Distinguish between simple and compound interest.
3. Learn how to use appropriate compound interest tables.
4. Identify variables fundamental to solving interest problems.
5. Solve future and present value of 1 problems.
6. Solve future value of ordinary and annuity due problems.
7. Solve present value of ordinary and annuity due problems.
8. Solve present value problems related to deferred annuities and bonds.
9. Apply expected cash flows to present value measurement.


SUMMARY OF LEARNING OBJECTIVES BY QUESTIONS
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
13. MC
Learning Objective 2
49. MC
Learning Objective 3
2. MC 4. MC 6. MC 10. MC 42. MC
3. MC 5. MC 7. MC 27. MC
Learning Objective 4
8. MC 9. MC
Learning Objective 5
1. MC 20. MC 23. MC 25. MC 47. MC 51. E 56. E
19. MC 22. MC 24. MC 28. MC 49. MC 54. E 59. P
Learning Objective 6
14. MC 21. MC 32. MC 53. E 65. P
16. MC 29. MC 33. MC 61. P
Learning Objective 7
11. MC 17. MC 34. MC 38. MC 45. MC 55. E 63. P
12. MC 26. MC 35. MC 39. MC 46. MC 59. P 65. P
15. MC 30. MC 36. MC 43. MC 50. MC 60. P
16. MC 31. MC 37. MC 44. MC 52. E 62. P
Learning Objective 8
18. MC 40. MC 41. MC 48. MC 57. E 58. E 64. P

Note: MC = Multiple Choice P = Problem E = Exercise

, A-4 Test Bank for Fundamentals of Intermediate Accounting

MULTIPLE CHOICE—Conceptual
1. Present value is
a. the value now of a future amount.
b. the amount that must be invested now to produce a known future value.
c. always smaller than the future value.
d. all of these.

2. Which of the following tables would show the largest value for an interest rate of 5% for
six periods?
a. Future value of 1
b. Present value of 1
c. Future value of an ordinary annuity of 1
d. Present value of an ordinary annuity of 1

3. Which table would you use to determine how much you would need to have deposited
three years ago at 10% compounded annually in order to have $1,000 today?
a. Future value of 1 or present value of 1
b. Future value of an annuity due of 1
c. Future value of an ordinary annuity of 1
d. Present value of an ordinary annuity of 1

4. Which table would you use to determine how much must be deposited now in order to
provide for 5 annual withdrawals at the beginning of each year, starting one year hence?
a. Future value of an ordinary annuity of 1
b. Future value of an annuity due of 1
c. Present value of an annuity due of 1
d. None of these

5. Which table has a factor of 1.00000 for 1 period at every interest rate?
a. Future value of 1
b. Present value of 1
c. Future value of an ordinary annuity of 1
d. Present value of an ordinary annuity of 1

6. Which table would show the largest factor for an interest rate of 8% for five periods?
a. Future value of an ordinary annuity of 1
b. Present value of an ordinary annuity of 1
c. Future value of an annuity due of 1
d. Present value of an annuity due of 1

7. Which of the following tables would show the smallest factor for an interest rate of 10% for
six periods?
a. Future value of an ordinary annuity of 1
b. Present value of an ordinary annuity of 1
c. Future value of an annuity due of 1
d. Present value of an annuity due of 1