Match One of the Following Terms to the Descriptive Phrases Below (1 Point Each)

Match One of the Following Terms to the Descriptive Phrases Below (1 Point Each)

Quiz

ACCT 350

(20 points)

  1. Match one of the following terms to the descriptive phrases below (1 point each).

A. feedback valueH. verifiability

B. relevanceI. consistency

C.decision usefulnessJ. representational faithfulness

D. reliabilityK. neutrality

E. comparabilityL. cost/benefit

F. predictive valueM. understandability

G. conservatismN. timeliness

1. Accounting information capable of making a difference in a decision. / B
2. Making information available before it loses its capacity to influence a decision. / N
3. Similar information about the same company in different periods. / I
4. Factual unbiased information that doesn't favor one type of user over another. / K
5. Using the same measurement methods, you would obtain similar results. / H
6. The overall qualitative characteristic to be used in judging the quality of accounting information
. / C
7. Helps decision makers to confirm or correct prior expectations and predictions. / A
8. Similar information about different companies. / E
9. Quality of information that permits reasonably informed users to perceive its significance. / M
10. When more than one alternative accounting method is acceptable, the one that is least likely to overstate assets and income is preferable. / G
  1. On December 1, 2001, Alpha Corporation purchased machinery from Beta Company for expanding its production operation. Beta has given Alpha three options for payment:
  1. $440,000 one year from today.
  2. $45,000 down payment today and $50,000 per year for the next ten (10) years beginning December 1, 2002 (compounded annually).
  3. $40,000 every 6 months for six (6) years beginning December 1, 2001 (compounded semiannually).

Determine which of the above payment plans you would select. Calculate and identify the present value for each option in the space provided on the reverse side. The effective annual interest rate is expected to be 6% during this period. You must use the tables provided and show all work to receive any credit. Round to the nearest dollar. (5 points total)

a.

b.

c.

Decision (show amount):

  1. Sue's parents intend to provide for her college education by making an investment that pays 5% interest compounded annually. Sue's mother estimates that Sue (who is now only 11 years old) will need to withdraw $5,000 on the first day of college and $10,000 at the beginning of each year for the next three years thereafter to pay for room, board, tuition, and books. Sue's parents will deposit the lump sum on September 1, 2002, and Sue will make the first withdrawal of $5,000 on September 1, 2009 (seven years later). How much must Sue's parents deposit on September 1, 2002? Create a timeline to assist you. You must use at least one of the annuity tables provided. Failure to show your work will result in no credit. (5 points total)