Which Type of Account Is Decreased When a Company Pays

question 21

Multiple Choice

Which type of account is decreased when a company pays its employees with cash?

• A)A prepaid asset
• B)A liability
• C)An asset
• D)Owners' equity

Understand the principles of compound interest and how it differs from simple interest.

Calculate present and future values of lump sum investments using different interest rates and time periods.

Distinguish between present value and future value concepts in finance.

Apply the concept of the time value of money to evaluate investment opportunities.

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Definitions:

Income Distribution

The way in which total income is divided among individuals or households in an economy.

Labor

The human effort, both physical and mental, used in the production of goods and services.

Capital

Economic resources or assets used in the production of goods and services, such as machinery, buildings, or tools.

Marginal Product

The additional output resulting from the use of one more unit of a production input, holding other inputs constant.