M2 TERMS

Question 1

An ______ is a series of uniform payments made at equal Intervals/periodic over a range of periods.

Answer 1

annuity

Question 2

In _______, the specific number (amounts) of payments are set to begin and end at a specific length of time.

Answer 2

annuity certain

Question 3

In ______, the annuitant may be paid according to certain event.

Answer 3

annuity uncertain

Question 4

is a series of equal payments or receipts occurring over a specified number of periods with the payments or receipts occurring at the END of first (each) period.

Answer 4

Ordinary Annuity

Question 5

are annuities that are computed on different present year and/or future year. It is annuity where the first payment is made at the END of the deferred period.

Answer 5

Deferred Annuity

Question 6

Are uniform/series of equal payments which are done infinitely (ending indefinitely).

Answer 6

Perpetuity

Question 7

first payment is done one period after the focal date.

Answer 7

Ordinary Perpetuity

Question 8

first payment is done several periods after the focal date.

Answer 8

Deferred Perpetuity

Question 9

is the present worth of a project that has a very long life (more than, say, 35 or 40 years) or when the planning horizon is considered very long or infinite.

Answer 9

Capitalized Cost

Question 10

is a series of equal payments or receipts occurring over a specified number of periods with the payments or receipts occurring at the beginning/start of the first period.

Answer 10

Annuity Due

Question 11

is one wherein the cash flow changes (increases or decreases) by the same/constant amount in each cash flow period.

Answer 11

Arithmetic gradient cash flow

Question 12

________ of an asset is the sum of the first cost and the present worth of all future payments and replacements assumed to continue for a long time or perpetual.

Answer 12

Capitalized Cost

Question 13

It refers to the installment payment of the loan. It is a process of spreading out or gradual repayment of a loan or a debt over a period of time.

Answer 13

Amortization

Question 14

is a measurement of how much an asset loses in value as a result of external influences impacting its market value.

Answer 14

Depreciation

Question 15

is the present worth of all the future profits that are to be received through the ownership of a particular property.

Answer 15

Value (First Cost)

Question 16

is the amount, which a willing buyer will pay to a willing seller for the property where each has equal advantage and is under no compulsion to buy and sell.

Answer 16

Market Value of a Property

Question 17

is what the property is worth to the owner as an operating unit.

Answer 17

Utility or Use Value of Property

Question 18

is the value that is usually determined by the disinterested third party in order to establish a price that is fair to both seller and buyer.

Answer 18

Fair Value

Question 19

is the worth of the property as shown in the accounting records of an enterprise. It is sometimes called depreciated book value.

Answer 19

Book Value

Question 20

is the price that can be obtained from the property after it has been used. Salvage Year is the year when scrap value is equal to book value.

Answer 20

Salvage or Resale Value

Question 21

is the price that can be recovered if an asset is disposed of as junk.

Answer 21

Scrap Value or Junk Value

Question 22

it is due to wear and tear of the asset.

Answer 22

Physical Depreciation

Question 23

it is due to the obsolescence of the asset.

Answer 23

Functional Depreciation

Question 24

refers to the decrease in the value of a property due to the gradual extraction of its contents.

Answer 24

Depletion

Question 25

depreciation due to changes in price level.

Answer 25

Monetary Depreciation

Question 26

is the length of time during which it is capable of performing the function for which it was designed and manufactured.

Answer 26

Physical Life of a Property

Question 27

is the length of time during which the property may be operated at a profit.

Answer 27

Economic Life or Useful Life

Question 28

This method assumes that the loss in value is directly proportional to the property’s age.

Answer 28

Straight Line Method

Question 29

The ________ is a technique for depreciating an asset while generating enough money to replace it at the end of its useful life. As depreciation charges are incurred to reflect the asset’s falling value, a matching of cash is invested.

Answer 29

sinking fund method