An Annuity Due

question 94

Multiple Choice

An annuity due:

• A) is an annuity in which the cash flows occur at the beginning of each period.
• B) makes the cash flow in the beginning of year 1 look like it's a cash flow of today.
• C) moves the cash flow from the end of the year to the beginning, which looks like the end of the previous year.
• D) the appropriate tax rate.

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Definitions:

Audit

An examination of the financial reports to ensure that they represent what they claim and conform with generally accepted accounting principles.

Contra-Asset

A contra-asset account is an asset account where the balance of the account will either be a zero or a negative figure, which offsets the balance of the related asset account.

Doubtful Accounts

Receivable accounts that may potentially become bad debts as the likelihood of collection is uncertain.

Balance Sheet

The balance sheet is a financial statement that shows a company's financial position at a specific point in time, listing assets, liabilities, and shareholders' equity.