When the Amount Earned on a Deposit Has Become Part

question 34

Multiple Choice

When the amount earned on a deposit has become part of the principal at the end of a specified time period, the concept is called

• A) future value.
• B) primary interest.
• C) discount interest.
• D) compound interest.

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Definitions:

Assets

Economic resources owned by a business or individual that are expected to benefit future operations.

Expenses

Financial outlays or obligations incurred by a company as part of its operational activities, leading to a reduction in owners' equity.

Compound Entry

An accounting entry that involves more than two accounts, where there are multiple debits and/or credits in a single transaction.

Trial Balance

A financial worksheet that consolidates all ledger balances into debit and credit columns, verifying the mathematical accuracy of a company's accounting system.