WGU D103
Intermediate Accounting I
OA2 (Units 5-7)
Actual Questions with Verified Answers
Pass the Exam with Confidence
What You Will Get:
➢100 OA Exam Questions w/ Answers
➢ Complete Units 5, 6, and 7
➢ Unit 5 - Time Value of Money = 20%
➢ Unit 6 - Cash & Receivables = 40%
➢ Unit 7 - Inventory = 40%
Take and pass the OA :)
,PREVIEW PAGES BELOW
Get the Complete PDF
After Purchase
"If you require further clarification or in need of
any study resources, feel free to Message me."
,A customer signs a noninterest-bearing note, promising to pay the company
$11,664 in two years. The payment amount is based on an annual interest rate of 8%,
which the company believes is appropriate, resulting in the present value of the note of
$11,664 × 0.85734 = $10,000.
Which amount should the company record as sales revenue from this transaction to be
in accordance with generally accepted accounting principles (GAAP)?
The note is recorded at its present value of $10,000. No calculation is required.
Accounting Rule: A note received in exchange for goods is valued at its present value.
A company requires $8,000 cash in a savings account earning 2% interest at the end of
the year. Assuming an annual interest rate of 2% is appropriate, the implied annual
interest is $8,000 × 0.02 = $160, and the present value of the savings is $8,000 ×
0.98039 = $7,843.
What amount should be deposited into the savings account at the beginning of the
year?
The present value of $8,000 at the beginning of the year is $7,843. No calculation is
required.
This is a single-sum problem that requires determining the unknown present value of a
known single sum of money in the future that is discounted for a certain number of
periods at a certain interest rate.
Accounting Rule: Present value is the amount that must be invested now to produce a
known future value. It is always a smaller amount than the given future value.
A company collects $1,500 of rent from a tenant at the end of the year. The company
invests the rent money in an investment earning 4% interest per year. Assuming a 4%
annual interest rate is appropriate, the implied annual interest is $1,500 × 0.04 = $60,
and the present value of the rent is $1,500 × 0.96154 = $1,442.
, What is the discounted value of this rent at the beginning of Year 1?
Discounting is the process of reducing the face/principal amount to a present value. The
present value of $1,500 at the beginning of the year is $1,442. No calculation is required.
This is a single-sum problem that requires determining the unknown present value of a
known single sum of money in the future that is discounted for a certain number of
periods at a certain interest rate.
Accounting Rule: Present value is the amount that must be invested now to produce a
known future value. It is always a smaller amount than the given future value.
A company issues a five-year zero-interest-bearing note for a new lathe it purchased for
$25,000. The market rate of interest at the time the note was issued is 4%. Assuming an
annual interest rate of 4% for five years is appropriate, the present value of the principal
is $25,000 × 0.82193 =
$20,548. Assuming an annual interest rate of 5% for 4 years is appropriate, the present
value of the principal is $25,000 × 0.82270 =
$20,568.
What amount should be recorded for the cost of the lathe?
The lathe is recorded at its present value of $20,548. No calculation is required.
Accounting Rule: An asset acquired in exchange for a noninterest-bearing note is valued
at the present value of the note.
Equipment is exchanged for a noninterest-bearing note. Payment of $20,000 on the
note is to be made in one year. The market rate for notes of similar risk is 5%. Assuming
an annual interest rate of 5% is appropriate, the present value of the principal is $20,000
× 0.95238 = $19,048. Assuming that a semiannual interest rate of 2.5% is appropriate,
the present value of the principal is ($20,000/2) × 1.92742 = $19,274.
What amount should be recorded for the purchase of this equipment?
Intermediate Accounting I
OA2 (Units 5-7)
Actual Questions with Verified Answers
Pass the Exam with Confidence
What You Will Get:
➢100 OA Exam Questions w/ Answers
➢ Complete Units 5, 6, and 7
➢ Unit 5 - Time Value of Money = 20%
➢ Unit 6 - Cash & Receivables = 40%
➢ Unit 7 - Inventory = 40%
Take and pass the OA :)
,PREVIEW PAGES BELOW
Get the Complete PDF
After Purchase
"If you require further clarification or in need of
any study resources, feel free to Message me."
,A customer signs a noninterest-bearing note, promising to pay the company
$11,664 in two years. The payment amount is based on an annual interest rate of 8%,
which the company believes is appropriate, resulting in the present value of the note of
$11,664 × 0.85734 = $10,000.
Which amount should the company record as sales revenue from this transaction to be
in accordance with generally accepted accounting principles (GAAP)?
The note is recorded at its present value of $10,000. No calculation is required.
Accounting Rule: A note received in exchange for goods is valued at its present value.
A company requires $8,000 cash in a savings account earning 2% interest at the end of
the year. Assuming an annual interest rate of 2% is appropriate, the implied annual
interest is $8,000 × 0.02 = $160, and the present value of the savings is $8,000 ×
0.98039 = $7,843.
What amount should be deposited into the savings account at the beginning of the
year?
The present value of $8,000 at the beginning of the year is $7,843. No calculation is
required.
This is a single-sum problem that requires determining the unknown present value of a
known single sum of money in the future that is discounted for a certain number of
periods at a certain interest rate.
Accounting Rule: Present value is the amount that must be invested now to produce a
known future value. It is always a smaller amount than the given future value.
A company collects $1,500 of rent from a tenant at the end of the year. The company
invests the rent money in an investment earning 4% interest per year. Assuming a 4%
annual interest rate is appropriate, the implied annual interest is $1,500 × 0.04 = $60,
and the present value of the rent is $1,500 × 0.96154 = $1,442.
, What is the discounted value of this rent at the beginning of Year 1?
Discounting is the process of reducing the face/principal amount to a present value. The
present value of $1,500 at the beginning of the year is $1,442. No calculation is required.
This is a single-sum problem that requires determining the unknown present value of a
known single sum of money in the future that is discounted for a certain number of
periods at a certain interest rate.
Accounting Rule: Present value is the amount that must be invested now to produce a
known future value. It is always a smaller amount than the given future value.
A company issues a five-year zero-interest-bearing note for a new lathe it purchased for
$25,000. The market rate of interest at the time the note was issued is 4%. Assuming an
annual interest rate of 4% for five years is appropriate, the present value of the principal
is $25,000 × 0.82193 =
$20,548. Assuming an annual interest rate of 5% for 4 years is appropriate, the present
value of the principal is $25,000 × 0.82270 =
$20,568.
What amount should be recorded for the cost of the lathe?
The lathe is recorded at its present value of $20,548. No calculation is required.
Accounting Rule: An asset acquired in exchange for a noninterest-bearing note is valued
at the present value of the note.
Equipment is exchanged for a noninterest-bearing note. Payment of $20,000 on the
note is to be made in one year. The market rate for notes of similar risk is 5%. Assuming
an annual interest rate of 5% is appropriate, the present value of the principal is $20,000
× 0.95238 = $19,048. Assuming that a semiannual interest rate of 2.5% is appropriate,
the present value of the principal is ($20,000/2) × 1.92742 = $19,274.
What amount should be recorded for the purchase of this equipment?
