Net Present Value – Quiz Packets – Accounting & Finance

The key terms in these Accounting chapters include Net Present Value, Salvage Value, Adjusted Cash Balance, Present Value, Allowance for Doubtful Accounts, Accounts Receivable Quiz Packets – Accounting & Finance

Which of the following is how the present value index is calculated?

Present Value PV of Outflows – PV of Inflows

(PV of Inflows)/(PV of Outflows)

(PV of Outflows)/(PV of Inflows)

Present Value, PV of Inflows – PV of Outflows

Franklin Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on August 31, its Cash account shows a debit balance of \$14,162. Franklin’s August bank statement shows \$15,037 on deposit in the bank. Determine the adjusted cash balance using the following information:

The adjusted cash balance should be:

\$19,837

\$10,937.

\$15,797

\$14,102

\$15,737 – Correct

Explanation

What is the net present value of the freezer?

101.67

What is the net present value of the stand?

28.6

Your parents tell you that they will give you \$10,000 as a gift when you graduate in four years.  Assuming you can earn a return of 10% per year, what amount of money could they give you today that would be of equivalent value?

6,830.13

Westbrook Corp is considering purchasing a triple-double producing machine to help with overall company production.  The machine costs \$175,000 and is expected to have an eight-year useful life with a salvage value of \$16,000.  Westbrook also expects to pay \$15,000 to update the machine after 3 years of use.  The machine is expected to generate \$30,000 of net cash flow each year.  Westbrook desires to earn a rate of return of 7%.

What is the present value of the salvage value?

9,312.15

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the \$4,100 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:

Correct

What is the net present value of the freezer?

101.67

What is the net present value of the stand?

28.6

A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that \$24,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of \$675. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Correct

Explanation

Which of the following is how the present value index is calculated?

Present Value PV of Outflows – PV of Inflows

(PV of Inflows)/(PV of Outflows)

(PV of Outflows)/(PV of Inflows)

Present Value, PV of Inflows – PV of Outflows

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