Loans on Which the Interest Is Paid in Advance Are

question 20

Multiple Choice

Loans on which the interest is paid in advance are often called

• A) premium loans.
• B) discount loans.
• C) reduced-principle loans.
• D) called loans.

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Definitions:

Historical Cost

The original monetary value of an asset or transaction, used as a basis for accounting and not adjusted for inflation.

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to be reinvested in its core business or to pay debt.

Current Market Value

The amount of money for which an asset can be sold in the marketplace at the current time, reflecting the most recent transaction price possible.

Historical Cost

The original monetary value of an asset, based on the purchase price or investment cost at the time of acquisition, without adjustments for inflation or market value changes.