Test Bank for Financial & Managerial Accounting, 20th Edition by Jan Williams, All 26 Chapters Covered with Appendix B & C

TEST BANK
Financial & Managerial Accounting, 20th Edition by
Jan Williams.




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, 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`s
pecific`interest`rate`to`in`order`to`receive`a`particular`amount`at`the`end`of`a`specified`n
umber`of`future`periods.
⊚` true
⊚` false



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



4) Compound`interest`assumes`that`the`interest`earned`on`a`particular`investment`is`reinvested.
⊚` true
⊚` false



5) Discounting`a`future`value`amount`will`determine`its`present`value`amount.
⊚` 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



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.
⊚` true
⊚` false



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



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.
⊚` true
⊚` false



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`t
able.
⊚` 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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