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5. Ann Ruth wants to invest a certain sum of money at the end of each year for five years.
The investment will earn 6% compounded annually. At the end of five years, she will
need a total of $40,000 accumulated. How should she compute her required annual
investment? (Points: 6)
$40,000 times the future value of a 5year, 6% ordinary annuity of 1.
$40,000 divided by the future value of a 5year, 6% ordinary annuity of 1.
$40,000 times the present value of a 5year, 6% ordinary annuity of 1.
$40,000 divided by the present value of a 5year, 6% ordinary annuity of 1.
6. If an annuity due and an ordinary annuity have the same number of equal payments
and the same interest rates, then (Points: 6)
the present value of the annuity due is less than the present value of the ordinary
annuity.
the present value of the annuity due is greater than the present value of the
ordinary annuity.
the future value of the annuity due is equal to the future value of the ordinary
annuity.
the future value of the annuity due is less than the future value of the ordinary
annuity.
7. If a shortterm obligation is excluded from current liabilities because of refinancing,
the footnote to the financial statements describing this event should include all of the
following information except (Points: 6)
a general description of the financing arrangement.
the terms of the new obligation incurred or to be incurred.
the terms of any equity security issued or to be issued.
the number of financing institutions that refused to refinance the debt, if any.
8. In accounting for compensated absences, the difference between vested rights and
accumulated rights is (Points: 6)
vested rights are normally for a longer period of employment than are accumulated
rights.
vested rights are not contingent upon an employee's future service.
vested rights are a legal and binding obligation on the company, whereas
accumulated rights expire at the end of the accounting period in which they arose.
vested rights carry a stipulated dollar amount that is owed to the employee;
accumulated rights do not represent monetary compensation.
9. An employee's net (or takehome) pay is determined by gross earnings minus amounts
for income tax withholdings and the employee's (Points: 6)
portion of FICA taxes, and unemployment taxes.
and employer's portion of FICA taxes, and unemployment taxes.
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View Full Documentportion of FICA taxes, unemployment taxes, and any voluntary deductions.
portion of FICA taxes, and any voluntary deductions.
10. Which of these is not included in an employer's payroll tax expense? (Points: 6)
F.I.C.A. (social security) taxes
Federal unemployment taxes
State unemployment taxes
Federal income taxes
11. Which of the following is a condition for accruing a liability for the cost of
compensation for future absences? (Points: 6)
The obligation relates to the rights that vest or accumulate.
Payment of the compensation is probable.
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 Spring '11
 Smith

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