When More Than One Payment Is Made on a Simple

question 7

Multiple Choice

When more than one payment is made on a simple interest loan,the method of computing interest is known as the:

• A)add-on interest method.
• B)average daily balance method.
• C)adjusted balance method.
• D)declining balance method.
• E)previous balance method.

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Definitions:

Accounting Entities

Organizations or business units considered separate from their owners for accounting purposes.

Prospective

Relating to or effective in the future, often used in planning and forecasting scenarios.

Adjusting Entry

A journal entry made in accounting records at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Depreciation Expense

The portion of the cost of a fixed asset that is considered consumed in each period of the asset's useful life.