Financial & Managerial Accounting – 20th Edition by Jan Williams & Mark S. Bettner | Complete Test Bank (Chapters 1–26 with Questions & Answers)

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Test bank Financial & Managerial




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Accounting 20th Edition by Jan




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Williams, Mark S. Bettner




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All Chapters 1-26 Q & A’s| A+ GRADED




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Chapter 1: Accounting: Information for Decision Making
1) Future value is the amount that must be invested today at a specific interest rate to receive a particular




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amount at some future date.
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⊚ 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.
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⊚ 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.
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⊚ false


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


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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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⊚ true




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⊚ 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.
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⊚ false


10) Interest rate percentages can be expressed in a variety of ways, including monthly, quarterly,
semiannually, and annually.
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⊚ 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.
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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 premiums, etc.
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⊚ false


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




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




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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.
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⊚ 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 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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