Steve Just Computed the Present Value of a $10,000 Bonus

question 34

Multiple Choice

Steve just computed the present value of a $10,000 bonus he will receive in the future.The interest rate he used in this process is referred to as which one of the following?

• A)current yield
• B)effective rate
• C)compound rate
• D)simple rate
• E)discount rate

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Definitions:

General Ledger

A comprehensive set of accounts that records all financial transactions of a business, serving as the primary source for preparing financial statements.

Income Statement Accounts

These include revenue, expense, gain, and loss accounts that summarize the financial performance of a company over a period of time.

Sales Returns and Allowances

A reduction in the amount of sales that accounts for the return of goods by customers and allowances for unsatisfied goods or services.

Purchases Discount

An accounting reduction in the price paid for goods or services if payment is made within a specified period.