Table of contents

Skip topic navigation

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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

In the context of time value of money equations, discounting is the opposite of:

Depreciation

Compounding

Amortization

Accrual

Previous problemNext problem

Verified step by step guidance

Understand the concept of 'time value of money' (TVM), which states that a dollar today is worth more than a dollar in the future due to its earning potential.

Recognize that 'discounting' refers to the process of determining the present value of a future amount of money by applying a discount rate. It essentially reverses the process of compounding.

Recall that 'compounding' is the process of calculating the future value of a present amount of money by applying an interest rate over time.

Compare the options provided: Depreciation, Amortization, Accrual, and Compounding. Note that only 'Compounding' is directly related to the time value of money and is the opposite of discounting.

Conclude that the correct answer is 'Compounding' because discounting and compounding are inverse processes in the context of time value of money equations.