ACCY 111 Chapter 6

15 Questions | By Mehleezah | Last updated: Mar 19, 2022 | Total Attempts: 361

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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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