Test Bank for Financial and Managerial Accounting, 5th Edition by Jerry J. Weygandt, Paul D. Kimmel A+
Solution Manual for Financial And Managerial Accounting 5th Edition by Weygandt, Kimmel, Mitchel, Verified Chapters 1 - 25, Complete Newest Version
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Test Bank for Financial and Managerial Accounting, 5th Edition
By Jerry J. Weygandt, Paul D. Kimmel - Complete Guide A+
Financial and Managerial Accounting, 5e (Weygandt)
Appendix G Time Value of Money
1) Interest is the difference between the amount borrowed and the principal.
Answer: FALSE
Diff: 1
LO: 1
Bloom / IFRS: K
AACSB/ IMA: Reflective Thinking / Investment Decision
AICPA: BB: Resource Management; FC: Measurement; PC: Project Management
Minutes: 1
2) Compound interest is computed on the principal and any interest earned that has not
been paid or received.
Answer: TRUE
Diff: 1 LO: 1
Bloom / IFRS: K
AACSB/ IMA: Reflective Thinking / Investment Decision
AICPA: BB: Resource Management; FC: Measurement; PC: Project Management
Minutes: 1
3) The future value of a single amount is the value at a future date of a given amount
invested now, assuming compound interest.
Answer: TRUE
Diff: 1
LO: 1 Bloom / IFRS: K
AACSB/ IMA: Reflective Thinking / Investment Decision
AICPA: BB: Resource Management; FC: Measurement; PC: Project Management
Minutes: 1
4) When the periodic payments are not equal in each period, the future value can be
computed by using a future value of an annuity table.
Answer: FALSE
Diff: 1
LO: 1
5) The process of determining the present value is referred to as discounting the future
amount.
Answer: TRUE
Diff: 1
LO: 2
Bloom / IFRS: K
AACSB/ IMA: Reflective Thinking / Investment Decision
AICPA: BB: Resource Management; FC: Measurement; PC: Project Management
Minutes: 1
7) In computing the present value of an annuity, it is not necessary to know the number
of discount periods.
Answer: FALSE
Diff: 1
LO: 2
Bloom / IFRS: C
AACSB/ IMA: Reflective Thinking / Investment Decision
AICPA: BB: Resource Management; FC: Measurement; PC: Project Management
Minutes: 1
8) The present value of a long-term note or bond is a function of two variables.
Answer: FALSE
Diff: 1
LO: 2
Bloom / IFRS: K
9) The present value of an annuity is the value now of a series of future receipts or
payments, discounted assuming compound interest.
Answer: TRUE
Diff: 1
LO: 2
Bloom / IFRS: K
AACSB/ IMA: Reflective Thinking / Decision Analysis
AICPA: BB: Resource Management; FC: Measurement; PC: Project Management
Minutes: 1
10) With a financial calculator, one can solve for any interest rate or for any number of
periods in a time value of money problem.
Answer: TRUE
Diff: 1
LO: 4
Bloom / IFRS: K
AACSB/ IMA: Reflective Thinking / Decision Analysis
AICPA: BB: Resource Management; FC: Measurement; PC: Project Management
Minutes: 1
11) Compound interest is the return on principal
A) only.
B) for one or more periods.
C) plus interest for two or more periods.
D) for one period.
Answer: C
Diff: 1
LO: 1
Bloom / IFRS: K
AACSB/ IMA: Reflective Thinking / Investment Decision
AICPA: BB: Resource Management; FC: Measurement; PC: Project Management
Minutes: 1
12) The factor 1.0609 is taken from the 3% column and 2 periods row in a certain table.
From what table is this factor taken?
Page | 3
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A) Future value of 1
B) Future value of an annuity of 1
C) Present value of 1
D) Present value of an annuity of 1
Answer: A
Diff: 2
LO: 1
Bloom / IFRS: C
AACSB/ IMA: Analytic / Investment Decisions
AICPA: BB: Resource Management; FC: Measurement; PC: Problem Solving/Decision
Making
Minutes: 1
13) If $40,000 is put in a savings account paying interest of 4% compounded annually,
what amount will be in the account at the end of five years?
A) $32,878
B) $48,000
C) $48,620
D) $48,666
Answer: D
Explanation: 1.21665 × $40,000 = $48,666
(FVIF n= 5, i = 4% × PV) = FV
Diff: 2
LO: 1
Bloom / IFRS: AP
AACSB/ IMA: Analytic / Quantitative Methods
AICPA: BB: Resource Management; FC: Measurement; PC: Problem Solving/Decision
Making
Minutes: 2
14) The future value of 1 factor will always be
A) equal to 1.
B) greater than 1.
C) less than 1.
D) equal to the interest rate.
Answer: B
Diff: 1
LO: 1
Bloom / IFRS: K
Page | 4
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