The Interest That Is Earned or Charged on Both the Principal

question 6

Multiple Choice

The interest that is earned or charged on both the principal amount and on the accrued interest that has been previously earned or charged is

• A)compound interest.
• B)simple interest.
• C)stated interest.
• D)accrued interest.

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Definitions:

Net Operating Income

The profit derived from a company's regular business operations, excluding deductions for interest and taxes.

Variable Costing

An approach in accounting where only direct materials, direct labor, and variable manufacturing overhead costs are considered in calculating the cost of products.

Net Operating Income

The total profit of a company after operating expenses are deducted, but before interests and taxes are subtracted.

Fixed Cost

Costs that do not change with the level of production or sales activity, such as rent or salaries.