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Reversing Entries Are Optional

question 36

True/False

Reversing entries are optional.


Definitions:

Effective Annual Rate

The effective annual rate is the real return on an investment, taking into account the effect of compounding interest over a year.

Annual Rate

The interest rate charged per year on a loan, or earned on an investment, not accounting for the effect of compounding within that year.

Actual Rate

The real interest rate or return rate earned on an investment, as opposed to the nominal or advertised rate.

Interest

The cost of borrowing money or the return on investment capital, usually expressed as a yearly percentage.

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