ACCY 111 Chapter 6

15 Questions | Total Attempts: 361

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Accounting Quizzes & Trivia

Questions and Answers
  • 1. 
    Compound interest includes interest earned on interest.
    • A. 

      T

    • B. 

      F

  • 2. 
    When interest is compounded, the stated rate of interest exceeds the effective rate of interest.
    • A. 

      T

    • B. 

      F

  • 3. 
    The calculation of future value requires the removal of interest.
    • A. 

      T

    • B. 

      F

  • 4. 
    The company's credit-adjusted risk-free rate of interest is used when computing present value applying the expected cash flow approach.
    • A. 

      T

    • B. 

      F

  • 5. 
    The calculation of present value eliminates interest from future cash flows.
    • A. 

      T

    • B. 

      F

  • 6. 
    With an ordinary annuity, a payment is made or received on the date the agreement begins. 
    • A. 

      T

    • B. 

      F

  • 7. 
     In the future value of an ordinary annuity, the last cash payment will not earn any interest. 
    • A. 

      T

    • B. 

      F

  • 8. 
    An annuity consists of level principal payments plus interest on the unpaid balance. 
    • A. 

      T

    • B. 

      F

  • 9. 
    With an annuity due, a payment is made or received on the date the agreement begins. 
    • A. 

      T

    • B. 

      F

  • 10. 
    An annuity is a series of equal periodic payments.
    • A. 

      T

    • B. 

      F

  • 11. 
    Given identical current amounts owed and identical interest rates, annual payments of an ordinary annuity will be greater than annual payments of an annuity due.
    • A. 

      T

    • B. 

      F

  • 12. 
     Other things being equal, the present value of an annuity due will be less than the present value of an ordinary annuity.
    • A. 

      T

    • B. 

      F

  • 13. 
    A deferred annuity is one in which interest charges are deferred for a stated time period.
    • A. 

      T

    • B. 

      F

  • 14. 
    Monetary assets include only cash and cash equivalents.
    • A. 

      T

    • B. 

      F

  • 15. 
     Most, but not all, liabilities are monetary liabilities. 
    • A. 

      T

    • B. 

      F

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