Money received today is worth more than the same amount in the future because you can invest it today and receive more in the future, thanks to interest. This defines a concept known as
time value of money
Which is not part of the basic definition of an annuity
variable dollar amounts
True of False: Interest Rates are generally expressed as annual rates
True
What is the formula to calculate basic interest
Interest = Principle X Rate X Time
Which of the following would not be part of payroll tax liability
Net amount of paycheck
In order to calculate bond premium or discount you need four pieces of information. Which is NOT one of them
Discount date
True or False: If you adjust your allowance for doubtful accounts based on a percentage of total credit sales at the end of each month, you are using the Percentage of Credit Sales Method
True
True or False:If you issue a bond at a premium, you receive more than face value
True
You purchase a $25 gift card from Starbucks. On Starbucks balance sheet, which type of liability would this represent
Unearned Revenue
A bank loans a customer $10,000. On the customers books how would this transaction be recorded?
Debit Cash, Credit Notes Payable
A bank loans a customer $10,000. ON the banks books how would this transaction be recorded?
Debit Notes Receivable, Credit Cash
Which of the following should NOT be done if you want to minimize credit losses?
Become a factor for another company's account receivable
True of false: the allowance is required by the Internal Revenue Service for tax reporting purposes, while the direct write off method is required by GAAP
False
If you won the lottery and wanted to calculate how much you would receive as a lump sum, which table would you use
Present value of an annuity of $1
True of False: Under the direct write off method for accounting for bad debt you will establish an allowance for doubtful accounts
False
Which of the following payroll taxes is withheld from an employees paycheck
Federal Income Tax Withholding
Factoring of Accounts Receivable
involves selling accounts receivable to a third party called a factor.