The Amount Owed by an Entity When It Makes a Purchase

question 75

Multiple Choice

The amount owed by an entity when it makes a purchase on account is termed a(n) :

• A)accounts receivable.
• B)accounts payable.
• C)note receivable.
• D)note payable.

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Definitions:

Annual Interest

The amount of interest paid or earned over a one-year period, typically expressed as a percentage of the principal sum.

Loan Amount

The total sum of money borrowed from a lender that is expected to be repaid with interest.

Interest Rate

This is a fee, calculated as a percentage, that lenders charge borrowers for the use of their money or that borrowers earn on deposits.

Interest Payments

Payments made to lenders as compensation for the use of borrowed money, typically calculated as a percentage of the principal amount.