Which of the Following Methods of Calculating Finance Charges on Credit

question 51

Multiple Choice

Which of the following methods of calculating finance charges on credit cards is least favorable to the cardholder?

• A) Previous balance method
• B) Ending balance method
• C) Average daily balance method
• D) Adjusted balance method

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Definitions:

Combined Margin

refers to the total margin generated by a product or entity after accounting for various types of costs, merging both gross and net margins to provide an overall profitability measure.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period.

Turnover

A measure of the efficiency and effectiveness of a company's operations, often calculated as total revenues divided by total assets.

Operating Assets

Assets used by a company in its day-to-day operations to generate revenue, including cash, inventory, and equipment.