,Financial Accounting, 9e (Wild)
Appendix B Applying Present and Future Values
1) Interest is the borrower's payment to the owner of an asset, for its use.
Answer: TRUE
Difficulty: 1 Easy
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Remember
AACSB: Communication
AICPA: BB Industry; FN Measurement
2) From the perspective of an account holder, a savings account is a liability with interest.
Answer: FALSE
Difficulty: 1 Easy
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Remember
AACSB: Communication
AICPA: BB Industry; FN Measurement
3) An interest rate is also called a discount rate.
Answer: TRUE
Difficulty: 1 Easy
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Remember
AACSB: Communication
AICPA: BB Industry; FN Measurement
,4) Present and future value computations enable companies to measure or estimate the interest
component of holding assets or liabilities over time.
Answer: TRUE
Difficulty: 2 Medium
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Understand
AACSB: Communication
AICPA: BB Industry; FN Measurement
5) The number of periods in a present value calculation may only be expressed in years.
Answer: FALSE
Difficulty: 1 Easy
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Remember
AACSB: Communication
AICPA: BB Industry; FN Measurement
The present value factor for determining the present value of $6,300 to be received three years
from today at 10% interest compounded semiannually is 0.7462. (PV of $1, FV of $1, PVA of
$1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Answer: TRUE
Difficulty: 2 Medium
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Understand
AACSB: Communication
AICPA: BB Industry; FN Measurement
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