The Present Worth Factor

question 52

Multiple Choice

The present worth factor

• A)converts an annuity into the equivalent present amount.
• B)gives the future value equivalent to a series of equal payments.
• C)converts a series of repeated equal payments into the equivalent future amount.
• D)gives the present amount that is equivalent to some future amount.
• E)gives the future amount that is equivalent to a present amount.

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Definitions:

Adjusting Entries

Entries recorded at the conclusion of an accounting period to adjust the balances of accounts prior to the compilation of financial statements.

Income Statement Accounts

Accounts used to record transactions affecting a company’s income, expenses, and the resulting net income or loss over a period of time.

Balance Sheet Accounts

Categories within the balance sheet that include assets, liabilities, and shareholders' equity, each of which is essential for showcasing the company's financial health.

Natural Business Year

A fiscal year that ends when a business's sales activities are at their lowest point, facilitating easier inventory and activity analysis.