Match each of the following terms related to interest and time value of money
calculations to their appropriate definition.
a. Time value of money
b. Simple interest
c. Compound interest
d. Future value of a single amount
e. Present value of a single amount
f. Annuity
g. Future value of an annuity
h. Present value of an annuity
The concept that indicates that people should prefer to receive an immediate amount at
the present time over an equal amount in the future.
Use the following codes to indicate how the cash flow effect, if any, of each transaction
or event would be reported on a statement of cash flows if the operating activities
section is prepared using the indirect method.
a. Operating activity-add to net income
b. Operating activity-deduct from net income
c. Inflow from investing activity
d. Outflow from investing activity
e. Inflow from financing activity
f. Outflow from financing activity
g. Noncash investing and financing activity
h. Not reported on statement of cash flows
Obtained a long-term bank loan.
Bonds are generally issued in denominations of $1,000.
a. True
b. False
The data presented below is for Craft, Inc. for 2015.
What amount will Craft show on its year-end balance sheet for the net realizable value
of its accounts receivable?
a. $295,000
b. $267,000
c. $250,000
d. $ 28,000
Which of the following invests funds into a business and is considered an owner?
a. Stockholders
b. Creditors
c. Bankers
d. Lenders
Land is purchased on credit. For this transaction, identify the effect on the accounting
equation.
a. Assets increase and liabilities increase.
b. Assets increase and owners’ equity increases.
c. Liabilities increase and owners’ equity decreases.
d. Liabilities decrease and assets decrease.
Klein Corp. acquired land by issuing its common stock. How should this transaction be
disclosed when a statement of cash flows is prepared?
a. In a supplemental schedule of noncash investing and financing activities or in a note.
b. The acquisition of land should be reported as an investing activity and the issuance of
the stock as a financing activity.
c. Using the master T-account approach.
d. The transaction does not need to be disclosed.
Givens Corp.
Givens Corp. is a merchandising company that uses the periodic inventory system.
Selected account balances are listed below:
Refer to the information for Givens Corp. Calculate net income.
a. $289,000
b. $141,000
c. $131,000
d. $116,000
Serial bonds are unique because the interest is paid as a series of daily payments.
a. True
b. False
Select the ratio that each statement below most properly satisfies.
a. Dividend yield ratio
b. Cash flow from operations to capital expenditures ratio
c. Debt service coverage ratio
d. Return on common stockholders’ equity ratio
e. Times interest earned ratio
f. Asset turnover ratio
g. Debt-to-equity ratio
h. Dividend payout ratio
i. Price/earnings ratio
A measure of a company’s success in earning a return for the common stockholders
For each ratio listed, select whether an increase or decrease in the ratio is generally
considered to be better.
a. increase
b. decrease
Number of days’ sales in receivables