Ford Enterprises Paid a Creditor on Account

question 72

Multiple Choice

Ford Enterprises paid a creditor on account. Assuming the use of special journals, this entry would be recorded in the:

• A)cash payments journal.
• B)purchases journal.
• C)general journal.
• D)cash receipts journal.

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Definitions:

Compounded Monthly

Refers to the process where interest is calculated and added to the principal sum every month, resulting in interest earning interest.

Amortized

The process of gradually reducing a debt through periodic payments of both principal and interest over a set period of time.

Compounded Semi-annually

Interest calculated twice a year on the initial principal and accumulated interest from previous periods.

Amortized

Gradually reducing a debt through regular payments of both principal and interest.