F4 M3 - Long-Term Liabilities

Question 1

Time Value of Money

Answer 1

The use of money over a period of time

Question 2

Annuities

Answer 2

Identical periodic payments

Question 3

Ordinary Annuity

Answer 3

Payments made at the end of the period

Question 4

Annuity Due

Answer 4

Payments made at the beginning of the period

Question 5

Equation

Present Value

Answer 5

Future value / (1 + r)^n

n = number of period
r = periodic interest rate

Question 6

If interest compounds are not annual

Answer 6

The interest rate needs to be divided

Question 7

Equation

Future Value

Answer 7

Present value x (1 + r)^n

Question 8

The difference between present and future value

Answer 8

The amount of interest earned over the period

Question 9

Equation

Present Value of an Ordinary Annuity

Answer 9

Annuity payment x (1 + r)^n

Question 10

Equation

Present Value of an Annuity Due

Answer 10

Present value of ordinary annuity x (1+ r)

Question 11

Equation

Future Value of an Ordinary Annuity

Answer 11

Periodic payment x (1+r)^n

Question 12

Notes Payable are recorded

Answer 12

At present value at the time of issurance - discount

Question 13

Debt Covenants

Answer 13

Used to limit or prohibit actions of debtors

Question 14

Equation

Debt to Equity

Answer 14

Total Debt / Stockholders’ Equity

Question 15

Equation

Installement Note Receivable Balance

Answer 15

The present value of the remaining monthly payments at discount