Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

10. Time Value of Money

Time Value of Money Equations

Financial Accounting

10. Time Value of Money

Time Value of Money Equations

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Multiple Choice

Which of the following best describes an ordinary annuity in the context of time value of money equations?

A single lump-sum payment made at the beginning of the investment period.

A series of equal payments made at the end of each period for a specified number of periods.

A series of equal payments made at the beginning of each period for a specified number of periods.

A series of unequal payments made at irregular intervals.

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Verified step by step guidance

Step 1: Understand the concept of an ordinary annuity. An ordinary annuity refers to a series of equal payments made at the end of each period for a specified number of periods. This is a key distinction from other types of annuities, such as an annuity due, where payments are made at the beginning of each period.

Step 2: Analyze the options provided in the problem. The options describe different types of payment structures, and you need to identify which one aligns with the definition of an ordinary annuity.

Step 3: Eliminate incorrect options. For example, a single lump-sum payment made at the beginning of the investment period does not describe an ordinary annuity, as it involves only one payment rather than a series of payments.

Step 4: Compare the remaining options. A series of equal payments made at the beginning of each period describes an annuity due, not an ordinary annuity. Similarly, a series of unequal payments made at irregular intervals does not fit the definition of an ordinary annuity.

Step 5: Confirm the correct answer. Based on the definition, the correct description of an ordinary annuity is 'A series of equal payments made at the end of each period for a specified number of periods.'