Which of the Following Accounts Is a Liability

question 26

Multiple Choice

Which of the following accounts is a liability?

• A) Interest Expense
• B) Interest Payable
• C) Interest Revenue
• D) Interest Receivable

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Definitions:

Compounded Monthly

The method of computing interest that includes both the original amount and the interest accrued over past months, applied each month.

Annual Nominal Rate

The annual rate of interest without taking into account the compounding of interest within that year, not reflecting the actual interest earned or paid.

Monthly Compounding

Interest calculation method where interest is added to the principal sum at the end of each month, compounding the amount over time.

Compounded Quarterly

The process of calculating interest on an initial investment where the interest is reinvested and additional interest is earned on interest, done four times a year.