ACC 340 Exam 4 (the final)

The time value of money means that

Time value of money concepts are useful in valuing

The time value of money concept has nothing to do with _________ of those dollars; this concept concerns only ________ in the dollar amounts of money

________ is the amount paid or received in excess of the amount borrowed or lent

__________ includes interest not only on the initial investment but also on the accumulated interest in previous periods

Simple interest is computed by multiplying

The effective rate is the rate at which

Interest rates are typically stated as

The __________ is the amount of money that a dollar will grow to at some point in the future

FV =

FV = __ x FV factor

n is

the present value of a single amount is

the farther into the future a dollar is to be received, the less _____ it is now

FV = PV x ____

PV = FV/_____

The calculation of FV requires the ________ of interest while the calculation of PV requires the ______ of interest

Accountants use ____ calculation much more frequently than ____

There are 4 variables in the process of adjusting a single cash flow amount for the time value of money: ________. If you know any ______, the other can be found

Most monetary assets and monetary liabilities are valued at

Many assets and most liabilities are

Monetary assets include _________, the amount of which is fixed or determinable

Monetary liabilities are _________, the amounts of which are fixed or determinable

Financial instruments frequently involve

If the same amount of cash is paid or received at the end of each period, the series of cash flows is referred to as

An agreement that creates an annuity can produce either _______ or ______ (sometimes referred to as an annuity in advance)

In an ordinary annuity, cash flows occur at the

In an annuity due, cash flows occur at the

In the future value of an ordinary annuity, the last cash payment will not

It’s possible to calculate the FV of the annuity by separately calculating the FV of each payment and adding these amounts together. However, this is only necessary when

FVA stands for

In the future value of an annuity due, the last cash payment

FVAD stands for

In the PVAD, ________ needs to be removed from the first cash payment

A _________ exists when the first cash flow occurs more than one period after the date the agreement begins

Calculating PV of a deferred annuity can be a two-step process. Step one: _________. Step two: _________

Alternative ways of calculating the PV of a deferred annuity are to calculate ___ and discount that amount three periods or to subtract the _______ from the ________ and use the difference

In PV problems involving annuities, there are 4 variables:

When applying the expected cash flow approach to the calculation of present value, a company uses the

Liabilities and owners' equity accounts represent

Most liabilities obligate the debtor to _____ at specified times and result from _______

Some liabilities are not ____ and may not be ____

Liabilities involve the past, present, and future:

Current liabilities are expected to require current assets and usually are ____

Classifying liabilities as either current or long term helps investors and creditors assess the _____ of a business's liabilities

Liabilities should be recorded at their ____, but current liabilities ordinarily are reported at their ____

____ are obligations to suppliers of merchandise or of services purchased on open account

In practice, there is little uniformity regarding precise captions used to describe current liabilities or in extent to which accounts are combined into ____

Amounts reported on the face of the sheet seldom are sufficient to adequately describe current liabilities:

Buying merchandise on account in the ordinary course of business creates

Open account means that the only formal credit instrument is the

____ typically is noninterest-bearing and is reported at the face amount

The key accounting considerations relating to accounts payable are determining their ____ and ensuring that they are ____ in the appropriate accounting period

____ differ from accounts payable in that they are formally recognized by a written promissory note. Often these are of a somewhat longer term than open accounts and bear interest.

The most common way for a corporation to obtain temporary financing is to arrange a

____ are sometimes bank loans or short-term borrowings

Short-term funds usually offer ____ than long-term debt

_____ allows a company to borrow cash without having to follow formal loan procedures and paperwork

____ is an informal agreement that permits a company to borrow up to a prearranged limit without having to follow formal loan procedures and paperwork. Banks sometimes require the company to maintain a compensating balance on deposit with the bank

____ is a more formal agreement that usually requires the firm to pay a commitment fee to the bank and may also require a compensating balance

Interest on notes =

Noninterest-bearing loans actually do bear interest, but the interest is

The ____ are reduced by the interest in a noninterest-bearing note

When interest is discounted from the face amount of a note, the ___ is higher than the stated discount rate

Inventory or accounts receivable often are _____ for short-term loans

Large, highly rated firms sometimes sell ____ to borrow funds at a lower rate than through a bank loan

When accounts receivable serve as collateral, we refer to the arrangement as ___

Sometimes, the receivables are sold outright to a finance company as a means of short-term financing—this is called

Commercial paper refers to unsecured notes sold in minimum denominations of ___ with maturities ranging from __ days (beyond 270 days the firm would be required to file a registration statement with the SEC)

Interest often is ____ at the issuance of the note

In a statement of cash flows, the cash a company receives from using short-term notes to borrow funds as well as the cash it uses to repay the notes are reported among cash flows from ____ activities. Most of the other liabilities, such as accounts payable, interest payable, and bonuses payable, are integrally related to a company's primary operations and thus are part of ___ activities

___ represent expenses already incurred but not yet paid (accrued expenses)

Accrued liabilities are recorded by ___ at the end of the reporting period, prior to preparing financial statements

Liabilities accrue for expenses that are ___

An employer should accrue an expense and the related liability for employees' compensation for future absences (such as vacation pay) if the obligation meets all of the four conditions

The liability for paid absences usually is accrued at the existing wage rate rather than at a rate estimated to be in effect when absences occur. So, if wage rates have risen, the difference between the accrual and the amount paid

____ should be considered when deciding whether an obligation exists

Accrual of ___ is not required, but may be appropriate in some circumstances

A wide variety of bonus plans provide compensation tied to performance other than

___ sometimes take the place of permanent annual raises and are compensation expense of the period in which they are earned

At times, businesses require ___ from customers that will be applied to the purchase price when goods are delivered or services provided

These customer advances, also called unearned revenue or deferred revenue, represent liabilities until

A customer advance produces an obligation that is satisfied when

Gift cards or gift certificates are particularly common forms of

When a company sells a gift card, it initially records the cash received as unearned revenue, and then recognizes revenue either when the gift card is redeemed or when

____ collected from customers represent liabilities until remitted

Amounts collected from employees in connection with payroll also represent ___ until remitted

Most businesses would prefer to classify liabilities as ___ because they can report higher working capital and a higher current ratio

____ is current assets minus current liabilities

The currently maturing portion of the long-term debt must be reported as a

If debt is callable by the creditor in the upcoming year or the creditor can demand payment because of an existing violation, the debt should be classified as

Short-term obligations can be reported as noncurrent liabilities if the company

The feature that distinguishes the loss contingencies is ___ even though the circumstance giving rise to the contingency has already occurred

A loss contingency is accrued only if a loss is ___ and __

The amount of the potential loss is classified as either

Likelihood of a loss is either

Some loss contingencies do not involve __ (like uncollectable receivables)

A loss contingency is disclosed in notes to the financial statements if there is

Most consumer products are accompanied by a

The contingent liability for guarantees or product warranties almost always is

The costs of satisfying guarantees should be recorded as

Extended warranties are a separate sales transaction, and the revenue from such a sale is deferred and recognized on ___ (or a pattern proportional to the costs)

The estimated amount of the cash rebates or the cost of noncash premiums estimated to be given out represents both

The costs of promotional offers should be recorded as

Companies may accrue estimated lawyer fees and other legal costs, but usually do not record a loss until ___ or ___ for settlement are substantially completed

When the cause of a loss contingency occurs before the year-end, ___ are issued to determine how the contingency is reported

If an event giving rise to a contingency occurs after the year-end, a liability

Any event occurring after the fiscal year-end but before the financial statements are issued that has a material effect on the company's financial position

It must be __ that an unasserted claim or assessment or an unfiled lawsuit will occur before considering whether and how to report the possible loss

When a claim or assessment is unasserted as yet, a two-step process is involved in deciding how it should be reported:

Gain contingencies are

The most common type of liability is:

T/F: estimated income taxes are a type of liability

The interest rate that is printed on the bond certificate is not

In each succeeding payment on an installment note, the amount of principal paid

An annuity due can also be called

annuity payments must be

Non-interest bearing notes payable are saleable and are sold at a

Inventory or accounts receivable often are pledged as security for

A lawsuit arising from an incident in 2012 would ___ in the 2011 financial statements

The employer's payroll tax expense includes

Withheld taxes are a

The gain or loss on extinguishment is the difference between

The interest expense for the year is ___ times the ___ of interest

Interest is calculated on the __ debt balance at the effective rate

using common stock (equity) to pay a current liability creates a __ liability

When using the straight-line method to amortize a discount/premium, interest expense