Test Bank - Financial and Managerial Accounting 20th Edition - Williams, All 26 Chapters with Appendix B & C, Covered

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,Test Bank for Financial & Managerial Accounting, 20th Edition by Jan Williams
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Answers Included S2


Appendix B S2



1) Future value is the amount that must be invested today at a specific interest rate to recei
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ve a particular amount at some future date.
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2) The present value of an ordinary annuity is the amount that must be invested today
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at a specific interest rate to in order to receive a particular amount at the end of a s
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pecified number of future periods.
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3) The future value of an investment gradually increases toward its present value amount.
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4) Compound interest assumes that the interest earned on a particular investment is reinvested.
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5) Discounting a future value amount will determine its present value amount.
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6) The lower the discount rate of an investment, the lower the present value of the investment.
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7) Annuities provide a series of cash flows to investors at regular intervals for a specified per
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iod of time.
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, 8) The market price of a bond is equal to the discounted present value of its future cash flows.
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9) An ordinary annuity is the discounted present value of a series of cash flows made at
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2the beginning of each of a specified number of periods.
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10) Interest rate percentages can be expressed in a variety of ways, including monthly, quarter
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ly, semiannually, and annually.
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11) The difference between a present value and a related future value amount depends on (1)
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the discount rate and (2) the length of time over which the present value accumulates int
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erest.
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12) The liability for post-
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retirement benefits is reported at the discounted present value of anticipated future cash o
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utlays to retired employees in the form of pensions, health insurance premiums, etc.
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13) As discount rates used to value investments increase, the present values of those investme
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nts decreases.
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