In Order to Charge Interest on Outstanding Accounts, the Method

question 30

Multiple Choice

In order to charge interest on outstanding accounts, the method of calculating the interest, as well as the total interest charged, administrative costs or other fees must be set out specifically in the contract. Which of the following statements is TRUE?

• A)The total interest charged may not exceed 45% per annum.
• B)Only the interest rate has to be stated for it to be a legal charge.
• C)This is required for consumer transactions only
• D)This is required for all contracts regardless of the parties.
• E)The interest must be expressed in a monthly form totaling no more than 50% annum.

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Definitions:

Fixed Percentage

A specified, constant proportion or rate that does not change with variation in base quantities, often used in financial contexts like interests or commissions.

Deferred Profit-Sharing Plans

A type of profit-sharing plan where contributions are deferred and placed in a trust for the employee until a set time, often retirement.

Quasi Pension Plans

Programs that mimic traditional pension plans but typically offer more flexibility and are often funded by the employees, sometimes with employer contributions.

Monetary Reward

Financial compensation given to employees as a form of acknowledgment for their work performance or achievement.