Nominal Interest Rate Is Calculated by

question 54

Multiple Choice

Nominal interest rate is calculated by

• A)summing up all interest rates for all compounding periods.
• B)converting a given interest rate with a compounding period to an equivalent interest rate with a one-year compounding period.
• C)dividing the interest rate per compounding period by the number of compounding periods per year.
• D)multiplying the simple interest rate by the number of years.
• E)multiplying the interest rate per compounding period by the number of compounding periods per year.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed overhead costs.

LIFO Inventory

A method of inventory valuation where the most recently produced or acquired items are recorded as sold first, standing for Last In, First Out.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Variable Costing

A costing approach where variable costs are assigned to inventory and fixed costs are treated as expenses in the period they are incurred, focusing on the costs that change with production levels.