Items 65 Through 68 Apply to the Appropriate Use of Interest

question 143

Multiple Choice

Items 65 through 68 apply to the appropriate use of interest tables. Given below are the future value factors for 1 at 8% for one to five periods. Each of the items 65 to 68 is based on 8% interest compounded annually.

-What amount will be in a bank account three years from now if $8,000 is invested each year for four years with the first investment to be made today?

• A) ($8,000 × 1.260) + ($8,000 × 1.166) + ($8,000 × 1.080) + $8,000
• B) $8,000 × 1.360 × 4
• C) ($8,000 × 1.080) + ($8,000 × 1.166) + ($8,000 × 1.260) + ($8,000 × 1.360)
• D) $8,000 × 1.080 × 4

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Definitions:

Journal Entries

The basic method of recording financial transactions in the accounts of a business using a double-entry bookkeeping system.

Cash Sales

Transactions where payment is made in cash at the time of sale, immediately impacting a company's cash balance.

Deposits In Transit

Funds that have been deposited by a company but not yet recorded by the bank, leading to discrepancies in account balances.

Bank Debit Memo

A notice from a bank that decreases a customer's account balance due to charges like fees for service or for issuing a check without sufficient funds.