Intermediate Accounting Chapter 6
All things being equal, if a company borrows money it prefers to pay simple interest.
True or False - correct answer True
Future value is
A. Always greater than the present value
B. the amount that must be invested now to produce a known future value.
C. the value now of a future amount.
D. all of these answer choices are correct. - correct answer A. Always greater than
the present value
On January 1, 2014, Simmons Company sold to Flay Corporation $400,000 of its
10% bonds for $354,118 to yield 12%. Interest is payable semiannually on January 1
and July 1. What amount should Simmons report as interest expense for the six
months ended June 30, 2014? - correct answer $354,118 X 12% X (6/12) equals
$21,247.
Accounting topics where present value-based accounting measurements are
relevant include:
A. inventory.
B. taxes.
C. environmental liabilities
D. all of these answer choices are correct. - correct answer C. environmental
liabilities
Which of the following is not a variable that is a part of all compound interest
problems?
A. Future value.
