Question
Some accounting problems I need help with: 1. Which of the following statements is true? Money grows linearly with compound interest When time periods are
Some accounting problems I need help with:
1.
Which of the following statements is true?
Money grows linearly with compound interest
When time periods are short (less than one year) the time value of money is usually ignored
As time passes, the amount in the Discount account, which is the result of the present value being less than the amount which will ultimately be paid in the future, increases
None of the other alternatives are correct
When time periods are short (less than one year) the time value of money is essential to consider
2.
Selden Co. purchases a factory and pays $5,000,000 cash and uses the factory to produce microchips and then a year later turns around and sells the building for the same amount it originally paid. (money is worth 8% compounded quarterly). Selden will record:
Not record this as a sale until payment in full is received
A gain on the sale
Neither a gain nor a loss on the sale
A loss on the sale
There is insufficient information to answer the question
3.
Which of the following concepts is true regarding the time value of money? Present value represents the current value of a future amount of money given a specified rate of return. II) When time periods are less than one year, the time value of money may be ignored. III) When time periods are longer than one year, assets and liabilities are valued at the present value of future payments. IV) When the present value is more than the amount which will ultimately be paid/received, the difference is called a "discount".
All of the above statements are true
I and IV only are true
I, II and III are true but IV is false
I and II only are true
All of the above statements are false
4.
If 8% is compounded semiannually for 3 years then the number of periods used in a time-value money calculation would be
3 periods
6 periods
None of the other alternatives are correct
8 periods
12 periods
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