Which,if Any,of the Present Values Below Are Correctly Computed

question 155

Multiple Choice

Which,if any,of the present values below are correctly computed?

• A)A payment of $1,000 to be received one year from today,with a 8 percent interest rate,has a present value of $945.45.
• B)A payment of $1,000 to be received one year from today,with a 9 percent interest rate,has a present value of $911.11.
• C)A payment of $1,000 to be received one year from today,with a 10 percent interest rate,has a present value of $905.06.
• D)None of the above are correct to the nearest cent.

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Definitions:

Completed-Contract

Completed-contract method is an accounting technique used to recognize the revenues and expenses of long-term projects only upon their completion.

Percentage-of-Completion

A method of revenue recognition in accounting where revenue and expenses are recognized as a project progresses, based on the percentage of work completed.

Revenue Recognition

The accounting principle that dictates the process and timing by which revenue is recorded and recognized as income on the financial statements.

Specific Industry Guidance

Regulations and recommendations tailored to the operating practices and challenges of particular sectors.