More Frequent Compounding Results in ____ Future Values and ____

question 77

Multiple Choice

More frequent compounding results in ____ future values and ____ present values than does less frequent compounding at the same interest rate.

• A) higher; higher
• B) lower; higher
• C) higher; lower
• D) lower; lower

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Definitions:

Allowance Method

An accounting technique used to estimate and record uncollectible accounts receivable, reducing the net value of accounts receivable to an amount expected to be collected.

Credit Sales

Sales in which revenue is recognized at the point of sale but payment is deferred till a later date, typically employed in business-to-business transactions.

Uncollectible Accounts

Receivables that are deemed to be uncollectable from debtors, leading to their recognition as a loss.

Credit Policy

Guidelines that define the credit limits and terms extended by a business to its customers.