Test Bank for Financial & Managerial Accounting ISE Paperback 20th e by Mark S. Bettner Jan Williams

TEST BANK
Test Bank for Financial & Managerial Accounting, 20th Edition


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TEST BANK 1

,Jan Williams: Financial & Managerial Accounting

Answers Included
Appendix B
1) Future value is the amount that must be invested today at a specific interest rate to receive a
particular amount at some future date.
⊚ true
⊚ false



2) The present value of an ordinary annuity is the amount that must be invested today at a
specific interest rate to in order to receive a particular amount at the end of a specified
number of future periods.
⊚ true
⊚ false



3) The future value of an investment gradually increases toward its present value amount.
⊚ true
JN
⊚ false



4) Compound interest assumes that the interest earned on a particular investment is reinvested.
U
⊚ true
⊚ false
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5) Discounting a future value amount will determine its present value amount.
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⊚ true
⊚ false



6) The lower the discount rate of an investment, the lower the present value of the investment.
⊚ true
⊚ false



7) Annuities provide a series of cash flows to investors at regular intervals for a specified period
of time.
⊚ true
⊚ false




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,8) The market price of a bond is equal to the discounted present value of its future cash flows.
⊚ true
⊚ false



9) An ordinary annuity is the discounted present value of a series of cash flows made at the
beginning of each of a specified number of periods.
⊚ true
⊚ false



10) Interest rate percentages can be expressed in a variety of ways, including monthly, quarterly,
semiannually, and annually.
⊚ true
⊚ false
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11) The difference between a present value and a related future value amount depends on (1) the
discount rate and (2) the length of time over which the present value accumulates interest.
U
⊚ true
⊚ false
R

12) The liability for post-retirement benefits is reported at the discounted present value of
anticipated future cash outlays to retired employees in the form of pensions, health insurance
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premiums, etc.
⊚ true
⊚ false



13) As discount rates used to value investments increase, the present values of those investments
decreases.
⊚ true
⊚ false




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, 14) Present values of future cash flows can only be calculated through the application of complex
formulas.
⊚ true
⊚ false



15) The future value of an investment’s present value today can be determined by multiplying its
present value by the appropriate factor obtained from a future value table.
⊚ true
⊚ false



16) The future value of an ordinary annuity can be determined by multiplying the periodic
annuity payment by the appropriate factor obtained from a future value of an ordinary
annuity table.
JN
⊚ true
⊚ false
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17) The present value of an investment that promises to pay a single lump-sum amount in the
future can be calculated by multiplying the future lump-sum amount by the appropriate factor
obtained from a present value of $1 table.
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⊚ true
⊚ false
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18) The present value of an ordinary annuity is calculated by multiplying the annuity’s periodic
cash payments by the appropriate factor obtained from a future value of an ordinary annuity
table.
⊚ true
⊚ false



19) If Larraine invested $33,000 at 6% on her 20th birthday, how much would Larraine have on
her 40th birthday?
A) $105,831.00
B) $100,803.28
C) $121,824.94
D) $131,903.58




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