Quiz 05.12 – T/F Components of Annuities
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
An annuity includes uniform principal payments along with interest on the outstanding balance.
An annuity includes uniform principal payments along with interest on the outstanding balance.
An annuity due entails the payment or receipt of funds on the contract’s starting date.
An annuity involves making identical payments at regular intervals.
Annual payments of an ordinary annuity are lower or equal to those of an annuity due, when current amounts owed and interest rates are identical.
When all else is equal, the present value of an annuity due is lower than the present value of an ordinary annuity.
In a deferred annuity, interest accrual is postponed for a specified duration.
Monetary assets consist solely of cash and assets readily convertible to cash.
The majority of liabilities are monetary in nature, although not all of them.
Which type of annuity does Column 1 represent in the time value of money tables for the 8% interest rate?
What does Column 2 represent in the time value of money tables for the 8% interest rate?