You Borrow $20 000 to Be Repaid in a Lump

question 31

Multiple Choice

You borrow $20 000 to be repaid in a lump sum five years from now.The interest rate is 7.2% per annum (nominal) ,payable quarterly.How much interest will you pay over the term of the loan?

• A)$4519.82
• B)$8 574.96
• C)$7 200.00
• D)$3 993.09

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Definitions:

Multi-Column Purchases Journal

A specialized accounting journal that records the purchase transactions of a business in multiple columns for different types of purchases.

Accounts Payable Account

An accounting entry that represents a company's obligation to pay off a short-term debt to its creditors or suppliers.

Cash Account

An account that tracks the flow of cash transactions, including receipts and payments, impacting a business's overall cash balance.

Subsidiary Ledger

A detailed ledger that provides a breakdown of individual transactions affecting a specific general ledger account, facilitating in-depth analysis and reconciliation.